Reliant Energy Customer Growth Accelerates

Reliant Energy reported accelerated customer growth in the quarter ending September 30, 2011, parent NRG Energy reported this morning.

Reliant's mass market customer count as of September 30, 2011 was 1.493 million, versus 1.477 million as of June 30, 2011 and 1.468 million as of September 30, 2010.

The net growth of 16,000 mass market customers during the past three months is up from net growth of 7,000 mass market customers from March 31, 2011 to June 30, 2011.

Previously, Reliant recorded a net gain of 11,000 mass market customers from December 31, 2010 through March 31, 2011, and a net loss of 9,000 customers from September 30, 2010 through December 31, 2010.

Reliant's Commercial and Industrial customer count was up at 63,000 as of September 30, 2011, versus 61,000 as of June 30, 2011 and 62,000 a year ago.

Total Reliant customer count stood at 1.556 million as of September 30, 2011, versus 1.538 million as of June 30, 2011 and 1.530 million as of September 30, 2010.

Reliant President Jason Few, in response to an analyst question, said that the customer growth represents some margin compression on new customer acquisition pricing, but less so for Reliant's core base of customers.

Few also said that investors should expect 2012 margins to mirror 2011 margins as Reliant maintains a similar focus.

Reliant reported that it now has 400,000 customers on one of its e-Sense (smart energy) products. The e-Sense products range from weekly usage summary emails and other information tools to formal pricing plans such as Time of Use.

Additionally, Reliant said that it has almost 200,000 customers on its Home Solutions products.

Reliant said that it now has over 2 TWh under contract in its Northeast book. NRG CEO David Crane said that NRG would, "like to own more generation in Northeast," but cited the current "challenging" of economics for coal plants in the Northeast, which are the assets most likely to be on the block.

Crane also said that growth in the Northeast retail business will be focused to "line up" the retail book with NRG's 7,000 MW of generation in the Northeast.

Few said that in 2012, across all of NRG's retail books, investors should expect 2.1 million to 2.2 million customers, and volumes in the mid-60 TWh range.

Reliant posted Adjusted EBITDA of $135 million for the third quarter, down from $209 million a year ago.

Reliant's reduction in Adjusted EBITDA was driven by lower gross margins of $101 million as unit margins declined due to a combination of competitive offerings and increased energy costs. The increase in energy costs was the result of price spikes during the August heat wave.

Partially offsetting the decline were increased volumes resulting from mass market customer growth.

Net income at Reliant for the quarter was $65 million, versus a loss of $20 million a year ago. Net income figures include the impact of mark-to-market losses and gains.