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Vistra Reports Higher Retail Adjusted EBITDA; Loss Of Residential Customers Slows; Again Sees Net Residential Growth In Texas

November 5, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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Vistra reported third quarter 2021 Adjusted EBITDA from the Retail segment of $65 million, $205 million higher than third quarter 2020 results (which saw negative $140 million in Adjusted EBITDA for the Retail segment), "driven by the execution of Vistra's self-help initiatives following Uri and lower cost of goods sold period-over-period."

Vistra's overall residential customer count across all markets was 2.707 million as of Q3 2021, versus 2.716 million as of Q2 2021 and 2.725 million a year ago. Vistra said that the year-over-year decline reflects a decline in Midwest and Northeast customers, partially offset by an increase in ERCOT customers

The net loss of 9,000 customers from Q2 2021 to Q3 2021 compares to a net loss of 12,000 customers from Q1 2021 to Q2 2021

Vistra said that it grew its residential customer counts year-over-year and quarter-over-quarter in Texas through its multi-brand and channel strategy

Retail volumes for the third quarter were as follows by customer segment (in TWh):

Vistra Retail Volumes (TWh)
            Q3 2020   Q3 2021
Residential  10.9      10.5
Business     12.0      13.9
Muni Agg.     4.8       3.4

Total        27.7      27.8

Vistra is raising and narrowing its 2021 Ongoing Operations Adjusted EBITDA guidance range to $1,890 to $2,090 million and revising and narrowing its 2021 Ongoing Operations Adjusted FCFbG guidance range to $100 to $300 million. Vistra's 2021 Ongoing Operations Adjusted EBITDA guidance range includes ~$500 million from ERCOT's securitization of certain Uri-related costs borne by load-serving entities, which partially offsets the retail portion of the greater than $2 billion financial loss Vistra recorded in the first quarter of 2021. Vistra expects to receive the ~$500 million of securitization proceeds in the first half of 2022. As a result, the cash flow impact of securitization is included in Vistra's 2022 Ongoing Operations Adjusted FCFbG guidance range.

Vistra is initiating its 2022 Ongoing Operations guidance ranges, forecasting Ongoing Operations Adjusted EBITDA of $2,810 to $3,310 million and Ongoing Operations Adjusted FCFbG1 of $2,070 to $2,570 million, an expected Adjusted EBITDA to Adjusted FCFbG conversion of ~76%. Vistra's 2022 guidance ranges include the negative impact of ~$185 million from bill credits applied to large commercial and industrial customers that curtailed during Uri and the negative impact of ~$55 million from the execution of NPV-positive, long-dated contracts with retail customers that will contribute positive EBITDA in future years. Excluding these impacts, which is reflective of the long-term earnings power of the business, Vistra's Ongoing Operations Illustrative Adjusted EBITDA guidance range is $3,050 to $3,550 million.

Vistra's 2022 Ongoing Operations Adjusted EBITDA guidance for the Retail segment is $600 - $800 million

In announcing capital allocation plans through 2026, among various other initiatives, Vistra said that it expects to develop an additional nearly 5 GW renewable and battery pipeline using ~$500 million of Vistra capital over the 5-year period

Heading into this winter, Vistra said that it implemented a series of steps designed to significantly improve risk profile in the event of future weather-driven volatility events, including:

• Investing ~$80 million in the ERCOT fleet to further harden generation for cold temperatures and improve security of fuel.

• Added incremental gas storage capacity, as well as dual fuel capabilities at gas steam units.

• Revised risk management policy to reserve additional generation length as physical insurance leading into peak periods.

Vistra noted that it acquired Angus Solar, LLC, owner of the 110-MW Angus solar development project located in Bosque County, Texas, from developer Cypress Creek. Angus is estimated to begin commercial operations by year-end 2023

Vistra noted that it has announced the planned development of up to 300 MW of utility-scale solar and up to 125 MW of battery energy storage facilities at nine retired or to-be-retired Vistra coal plant sites across central and southern Illinois, supported by the passage of Illinois' Energy Transition Act, which Vistra said, "incorporated Vistra's legislative priority known as the Illinois Coal to Solar & Energy Storage Initiative."

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