Integrys Energy Services Margins Decline on Expired Contracts; Looks to Aggregation

Core earnings at Integrys Energy Services for the first quarter were lower at $5.8 million, versus $11.6 million a year ago, due to, among other things, lower margins.

For the first quarter, realized retail electric margins were $16.9 million, versus $20.3 million a year ago.

Realized per unit retail electric margins were lower at $5.79/MWh in the quarter, versus $6.88/MWh a year ago.

Realized retail electric margins decreased due to the expiration at the end of 2011 of several large, lower margin customer contracts.

Physical retail electric volumes were 2,918.9 GWh for the quarter, versus 2,952.5 GWh a year ago.

Realized retail natural gas margins, excluding the impact of lower of cost or market accounting, were flat versus the year-ago at $23.5 million.

Realized retail natural gas per unit margins were $0.54 per dekatherm versus $0.48 per dekatherm a year ago.

Physical retail natural gas volumes were 43.8 billion cubic feet in the first quarter, versus 48.5 billion cubic feet a year ago.

Integrys Energy Services reported that its non-aggregation, mass market electric customers in Illinois increased from 33,000 as of December 31, 2011 to 44,000 as of March 31, 2012.

Additionally, Integrys Energy Services' Illinois electric aggregation customers under contract increased from 44,000 as of December 31, 2011 to 74,000 as of March 31, 2012.

Integrys Energy Services reported that it has also been awarded 85,000 additional aggregation customers from seven different communities, with service to start in the third quarter.

Executives said that aggregation will continue to be an opportunity in Illinois, reporting that while some 240 communities in Illinois approved retail electric aggregation during their municipal referendums in March, less than 20% have chosen a supplier.

Apart from the retail margin impacts, Integrys Energy Services said that energy asset margins decreased due to the expiration of a long-term capacity contract in the fourth quarter of 2011.

Revenues for Integrys Energy Services were $273.0 million for the quarter, versus $455.5 million a year ago