TXU's Burke: Too Early to Tell if ERCOT Price Spikes Will Change Competitive Retail Pricing

It's "too early to tell" if the weather-related price spikes in the ERCOT market will change current retail pricing strategies, TXU Energy CEO Jim Burke said during an earnings call Friday.

As first noted Friday (see 2/18), TXU saw continued churn in the quarter with a net loss of 29,000 residential customers. This was due to the continued competitive retail pricing environment during the quarter ending December 31, 2010, which was sustained due to a lack of volatility in the ERCOT wholesale market. Burke told investors that it is unclear at this time whether the recent spikes in ERCOT prices would lessen the competitive pressures on retail pricing going forward.

Similar to recent quarters, TXU recorded customer retention levels at or above its targets, and the net churn came from a slowdown in residential customer acquisitions, given the "tough" retail pricing environment, Burke said.

TXU's retail electric revenues were lower for the year 2010 at $5.926 billion, versus $6.231 billion a year ago. Lower average pricing decreased revenues by $429 million reflecting declines in both the business and residential markets. Lower average pricing reflected competitive activity in a lower wholesale power price environment and a change in business customer mix. A 2% increase in sales volumes increased revenues by $124 million, reflecting increases in both the business and residential markets. A 4% increase in business markets sales volumes reflected a change in customer mix resulting from contracts executed with new customers. Residential sales volumes increased 1% reflecting higher average consumption driven by colder winter weather and hotter summer weather, partially offset by the decline in residential customer counts.

Total retail electricity volumes for 2010 were 51,589 GWh, versus 50,581 a year ago. Residential retail volumes in 2010 were 28,208 GWh.

Energy Future Holdings' competitive segment also reported $8 million in lower bad debt expense in 2010.