TXU Expects Higher Retail Pricing due to ERCOT Conditions

Wholesale prices in ERCOT have to recognize scarcity of generation assets, "and that will eventually flow through to the retail business," Energy Future Holdings CEO John Young said during an earnings call Friday.

Young was discussing the expectation that retail rates will rise due to the August ERCOT pricing, expectations of a repeat of such pricing due to the current generation/demand balance, and expectations of increased volatility.

It's a sentiment also expressed by Constellation on its earnings call Friday (see story today), and by NRG Energy earlier this month.

However, there has been no material increase in retail rates in ERCOT as of yet.

Nevertheless, TXU Energy CEO Jim Burke said that he believes that August put a lot of retail electric providers "under some pressure," and that such REPs will be forced to "revisit" their margins.

Turning to TXU's results, Matters already detailed the customer churn seen during the quarter in our Friday story.

TXU residential volumes for the quarter were 9,586 GWh, versus 9,473 GWh a year ago, with weather-driven demand offsetting lower customer count. Total volumes at TXU were down at 15,147 GWh versus 16,184 GWh a year ago.

TXU also reported a $13 million reduction in retail bad debt expense reflecting improved collection initiatives and customer mix. TXU has seen improved bad debt levels in the past three quarters.