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Vistra Reports Nearly 200,000 Decline In Residential Customers In "Value-Accretive Exits" In Certain Markets

Reports Marginally Negative Adjusted EBITDA For Retail Segment

November 4, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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In reporting third quarter 2022 earnings, Vistra reported a nearly 200,000 decline in its residential customer count, due to "value-accretive exits from NY and CT."

Vistra, the parent of TXU and various other retail energy brands, had 2,535,000 residential customers as of Q3 2022, versus 2,717,000 as of Q2 2022 and 2,707,000 a year ago. The residential customer counts reflect direct-to-consumer electric/gas residential counts excluding municipal-aggregation and international customers

Concerning the residential customer count, Vistra said, "Growth in ERCOT offset by a decline in the Midwest and Northeast driven by value-accretive exits from NY and CT."

Jim Burke, president and CEO of Vistra, cited a lag in default service rates, making retail customers unprofitable, in certain East markets, particularly New York which requires an ESCO to provide guaranteed savings, absent a PSC-approved value-added product.

The exit of Ambit, a brand of Vistra, from the New York market had been exclusively first reported by in June

The Connecticut exit reflects a previously reported settlement (details here)

Vistra reported third quarter 2022 Ongoing Operations Adjusted EBITDA from the Retail segment of $(2) million, approximately $67 million lower than third quarter 2021 results, "driven by favorable Winter Storm Uri related resettlements in 2021 and ex-ERCOT margin headwinds, partially offset by ERCOT performance," Vistra said. Vistra said that an expected negative Adjusted EBITDA contribution from its Retail segment for the third quarter of 2022 had been contemplated in its prior full-year 2022 guidance. Vistra said that expected full year consolidated results are tracking at the midpoint of guidance, and narrowed its consolidated 2022 Ongoing Operations Adjusted EBITDA guidance to a range of $2,960 million to $3,160 million, affirming the $3,060 million midpoint

More specifically, Vistra said that the Retail segment's results were driven by, "Favorable ERCOT margins and customer counts, along with strong large business market sales performance, partially offset by higher bad debt expense and ex-ERCOT headwinds."

In terms of the drivers of the change in Retail Adjusted EBITDA versus the year-ago quarter, Vistra reported a $37 million improvement from higher margins reflecting ERCOT performance and favorable weather in 2022, offset by the following: $(45) million due to Winter Storm Uri, including bill credits, $(9) million due to timing of commodity costs, including self-help gains in 2021, intra-year seasonality and backwardation on multi-year customer contracts; and $(50) million from "other", primarily driven by higher bad debt expense due to higher revenues in 2022

Of the Retail segment, Vistra said, "The business earned strong margins in a higher commodity cost environment," and that, "Retail maintained strong counts and margins despite rising commodity price environment."

Vistra in particular cited, "Continued strong performance in Texas," for its Retail segment, with the Texas Retail results reflecting, "Favorable margins and customer counts performance," and, "Large business markets sales performance ahead of expectations."

"Midwest and Northeast market dynamics are improving headed into 2023, as default service prices are increasing while commodity costs are declining, inverting the dynamic seen in late 2021 and 2022," Vistra said of the Retail segment

Of note concerning Vistra's Generation segment, which includes its load serving default service supply business, Vistra cited, "lower margins on higher-than-expected migration of customers to default service providers." Vistra in particular cited the return of a majority of NOPEC electric customers to default service.

Third quarter 2022 Ongoing Operations Adjusted EBITDA from the Generation segment, on an aggregate basis, totaled $1,040 million, approximately $88 million lower than third quarter 2021 results

As of Sept. 30, 2022, Vistra had total available liquidity of approximately $3,438 million, including cash and cash equivalents of $535 million, $1,202 million of availability under its corporate revolving credit facility, and $1,701 million of availability under its commodity-linked revolving credit facility. As of Sept. 30, 2022, available capacity under the commodity-linked revolving credit facility reflects the borrowing base, which is lower than the aggregate commitments of $2,250 million. In October 2022, the commodity-linked revolving credit facility was amended to (i) extend the maturity date to October 2023 and (ii) reduce the aggregate commitments to $1,350 million. As of Nov. 1, 2022, Vistra had total available liquidity of approximately $4,080 million.


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