Dominion Retail Reports Higher Margins; "Very, Very Pleased" With Results

Dominion executives have been "very, very pleased" with results at Dominion Retail year-to-date, as executives reported higher retail margins during an earnings call yesterday.

Dominion Retail EBIT and customer count were reported by Matters yesterday

Executives said that Dominion Retail recorded a "very strong" quarter, with results about $29 million better than expectations. Of that, about $11 million was due to better margins (with the rest reflecting mark-to-market contracts that will roll off largely over the next 12 months).

"I'd say we're doing better in retail than we thought we'd be doing. Our margins particularly in our electric books have been better than expected, so we've been very, very pleased with the retail results so far," said Dominion CFO Mark McGettrick.

A research note authored by UBS Securities' Electric Utilities & IPPs Group called Dominion Retail's margins "robust," estimating year-to-date margins at about $15/MWh for electricity and about $1/Bcf for gas. Matters emphasizes that the numbers are estimates and not necessarily clean.

"While customer migration continued to accelerate in the quarter (-7% for electric customers), we see the latest results as a datapoint counter to the trend of compressing margins among other retailers -- and indicative of the counter-cyclical nature of retail margins in a declining commodity price environment," said the note authored by UBS's Julien Dumoulin-Smith.