WGL Holdings Retail Marketing Earnings Rise on Higher Margins, Customer Growth

WGL Holdings' retail energy marketing segment reported higher operating earnings of $7.9 million for the quarter ended March 31, 2011, up from $3.5 million a year ago, on higher electric and natural gas margins.

GAAP earnings for the quarter were $9.6 million, versus a loss of $11.4 million a year ago. GAAP results reflect unrealized mark-to-market gains or losses attributable to certain wholesale energy supply and retail sales contracts.

The increase in operating earnings reflects higher realized natural gas and electricity margins, partially offset by higher operating expenses.

Increases in natural gas sales margins were attributed to favorable price spreads on higher gas sales volumes driven by additional natural gas retail customers and favorable market conditions for portfolio optimization activity.

Electric sales margins were higher due to higher electric sales volumes associated with customer growth. In addition, electricity unit margins were higher in the current quarter, as the prior year was impacted by increased balancing supply costs resulting from warmer weather which occurred in March 2010, and the pattern of margin recognition that results from sales under generally fixed-priced contracts with customers.

Operating expenses were higher due to increased marketing initiatives (both mass market and large commercial) and higher labor costs.

Washington Gas Energy Services' customer count stood at 357,100 as of March 31, 2011, up from 337,700 as of December 31, 2010, and 289,800 year ago.

WGES' electric customer count grew to 183,700 from 168,300 as of December 31, 2010, and 130,100 a year ago.

WGES' natural gas customer count grew to 173,400 from 169,400 as of December 31, 2010, and 159,700 a year ago.

Electric volumes at WGES for the quarter ending March 31, 2011 were 2,611 GWh, versus 2,135 GWh a year ago. Gas volumes at WGES were 302 million therms for the quarter, versus 266 million therms a year ago.

WGL Holdings is conducting an earnings call this morning.