NRG Reports Divestment Of Whole Home Warranty Business -- EnergyChoiceMatters.com

NRG Reports Divestment Of Whole Home Warranty Business

May 6, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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In reporting first quarter 2022 earnings, NRG reported the divestment of its whole home warranty business

Specifically, this whole home warranty business consisted of Home Warranty of America

NRG said that it ended the first quarter of 2022 with 5.55 million Home customers. NRG said that this, "Reflects 1Q22 divestment of Whole Home Warranty with ~160,000 customers y/y."

During an earnings call, NRG Energy CEO Mauricio Gutierrez said that NRG is still advancing home protection services -- distinct from whole home warranty -- and continues in a testing and learning mode on home protection services

Gutierrez noted that, as previously stated, NRG does not necessarily see a need to be completely vertically integrated for all of its home and energy services, and will continue to rely on third-party partners for some services, while owning others (such as NRG's owned Goal Zero resilience services, which Gutierrez highlighted today)

Gutierrez expects NRG to work with strategic partners to offer whole home warranty going forward

Overall, NRG reported Adjusted EBITDA of $509 million for the first quarter of 2022, versus $567 million a year-ago. The year-ago figure excludes the loss due to Winter Storm Uri of $967 million in 2021

NRG said that drivers for the decline in Adjusted EBITDA was a previously reported 4.8 GW asset sale as well as an outage at its Limestone unit. NRG said that the Limestone extended forced outage ended in April of 2022 and the unit has returned to service.

NRG cited, "strong core operations."

"Net of divestitures, [NRG] delivered comparable results to prior year despite continued market volatility and rising commodity costs," the company said

For NRG's Texas segment, first quarter Adjusted EBITDA was $198 million, $48 million lower than first quarter of 2021. This decrease was driven by increased supply costs primarily due to the extended forced outage at Limestone Unit 1 and the Company's more conservative winter hedge profile in the first quarter of 2022 after Winter Storm Uri in 2021, partially offset by increased retail load from favorable weather, NRG said

For NRG's East segment, first quarter Adjusted EBITDA was $325 million, $64 million higher than first quarter of 2021. This increase was primarily driven by higher natural gas economic gross margin including the impact of transportation and storage contract optimization, as NRG said that, "significant results [were] realized in the East from the natural gas platform," partially offset the sale of 4.8 GW fossil generation assets in December 2021, NRG said

For NRG's West/Services/Other segment, first quarter Adjusted EBITDA was $(14) million, $74 million lower than first quarter of 2021. This decrease was primarily driven by the sale of 4.8 GW fossil generation assets in December 2021, the sale of the whole home warranty business in January 2022 and increased retail natural gas supply costs, partially offset by increased retail natural gas revenue rates and load, NRG said

NRG provided an update on expected Texas uplift securitization proceeds for the second quarter of 2022

"The Texas Legislature passed House Bill 4492 in May of 2021, which among other things, authorized ERCOT to obtain $2.1 billion of securitization financing to distribute to LSEs that were charged and paid to ERCOT exceptionally highly priced real-time Online Reliability Deployment Price Adder and ancillary service costs during Winter Storm Uri (the 'Uplift Securitization'). The Company expects to receive proceeds of $689 million from ERCOT in the second quarter of 2022. As previously disclosed, the total Winter Storm Uri impact on capital available for allocation in 2022 is $599 million, net of bill credits owed to large Commercial and Industrial ("C&I") customers," NRG said

NRG reported first quarter 2022 retail volumes as follows:

36 TWh Electricity

     13 TWh Home / Residential 
         (70% of volumes are in Texas)

     23 TWh Business / C&I  
         (38% of volumes are in Texas)


651 MMDth Natural Gas
     79 MMDth Home / Residential 
    572 MMDth Business / C&I

As of March 31, 2022, NRG's cash was at $0.4 billion, and $2.5 billion was available under the Company’s credit facilities. Total liquidity was $2.9 billion, which was approximately $0.2 billion higher than at the end of 2021.

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