NRG Energy Retail Business Sees Consistent Customer Growth; Higher Margins

NRG Energy's retail businesses saw consistent growth in customer count during the three months ended June 30, 2012, the company said today in reporting earnings.

Collectively, NRG's retail businesses grew customer count by a net of 31,000 customers from March 31, 2012 to June 30, 2012 -- essentially even with the net growth of 30,000 customers from December 31, 2011 to March 31, 2012.

NRG's retail businesses were collectively serving 2.130 million customers as of June 30, 2012, versus 2.099 million as of March 31, 2012. The totals exclude utility partner customers of Green Mountain Energy (e.g. REC add-on programs where Green Mountain does not serve load).

NRG reported that over 300,000 customers now buy more than one service from its retail business.

NRG also said that its retail business saw increased unit margins. Gross margin for the second quarter of 2012 was just north of $25/MWh, versus slightly under $25/MWh for the first quarter of 2012.

Retail load served during the second quarter of 2012 was 15,308 GWh.

While discussing the impact on retail from NRG's pending acquisition of GenOn Energy, NRG Energy CEO David Crane noted during an earnings call that NRG's Energy Plus brand has largely offered variable rate contracts, and that the acquisition of physical generating assets in Energy Plus' markets will make it easier for Energy Plus to offer fixed rates, expanding its potential customer base.

NRG's retail segment reported Adjusted EBITDA for the second quarter of 2012 of $219 million, versus $199 million a year ago.

Gross margin was favorable $52 million driven by the acquisition of Energy Plus, which added $35 million, increased customer usage on higher customer count, and lower supply costs partially offset by unfavorable year over year weather. Lower supply costs resulting from depressed natural gas prices were partially offset by competitive pricing on acquisitions and renewals, and lower rates on index-based customers, resulting in an $8 million net benefit. The higher margin realized in 2012 was offset by an increase in operating costs which were the result of the inclusion of Energy Plus of $23 million and increased marketing to drive market expansion and customer growth totaling $8 million.

The retail segment's GAAP net income was $797 million for the second quarter of 2012, versus $17 million a year ago.