NRG Energy Sees Acceleration in Retail Growth, Gross Margin Higher

NRG Energy saw faster customer growth during the three months ended September 30, 2012, and reported higher gross margin from its retail segment.

From June 30, 2012 to September 30, 2012, NRG saw its aggregate customer count across all of its retail brands increase by 63,000. This compares to growth of about 30,000 in each of the first two quarters of the year.

The customer growth since June 30, 2012 was primarily due to marketing efforts in ERCOT and new territories.

Retail customer count has increased 124,000 since year-end 2011, including 79,000 in the Northeast markets.

NRG's total retail customer count now stands at 2.192 million, versus 2.129 million as of June 30, 2012 and 1.875 million a year ago. These totals exclude utility partner customers of Green Mountain Energy (e.g. REC add-on programs where Green Mountain does not serve load).

As of September 30, 2012, 2.073 million customers in NRG's portfolio were mass market customers, with the balance (119,000) classified as commercial and industrial.

Retail gross margin for the three months ended September 30, 2012 was $384 million, up from $297 million a year ago.

Drivers for the increase were the acquisition of Energy Plus (+$41 million), the favorable impact of fewer scarcity intervals versus the year-ago (+40 million), and an increase in usage and customer count (+19 million). Partially offsetting these gains was a reduction in unit margins, driven primarily by weather-related risk management activities, as well as lower pricing and lower supply costs on acquisitions and renewals, which negatively impacted gross margin by $13 million, versus the year-ago.

Gross margin year-to-date through September 2012 was about $25/MWh, versus just over $20/MWh for the year-ago period.

While margin compression has been a theme of several recent earnings reports from retail suppliers, NRG CEO David Crane said of retail margins, "we're comfortable with the margins that we're achieving."

NRG retail load for the third quarter was 18,333 GWh; 10% of Q3 load was served outside of ERCOT.

Retail segment Adjusted EBITDA for the third quarter of 2012 was $173 million, $28 million higher than in 2011

On a GAAP basis, the retail segment recorded a net loss of $300 million, on mark-to-market charges, versus the year-ago income of $36 million.