Just Energy Sees Return to Higher Customer Growth Levels

After seeing a slowed pace of net customer growth during the three months ended September 30, 2012, Just Energy saw net customer growth return to recent highs during the three months ended December 31, 2012.

As of December 31, 2012 Just Energy's energy marketing segment reported serving 4.124 million long-term Residential Customer Equivalents (RCEs), versus 4.024 million as of September 30, 2012 and 3.758 million a year ago.

The net growth of 100,000 RCEs from September 30, 2012 to December 31, 2012 is up from the net growth of 47,000 from June 30, 2012 to September 30, 2012, and is line with growth seen earlier in 2012 -- specifically, growth of 107,000 RCEs from April 1, 2012 to June 30, 2012 and 112,000 RCEs from December 31, 2011 to March 31, 2012.

The net growth of 100,000 RCEs came on gross additions of 341,000 RCEs during the quarter, and the loss of 111,000 RCEs due to attrition and 130,000 RCEs which failed to renew.

U.S. electric RCEs as of December 31, 2012 were 2.461 million, versus 2.331 million as of September 30, 2012 and 1.943 million a year ago.

U.S. natural gas RCEs as of December 31, 2012 were 481,000, versus 469,000 as of September 30, 2012 and 566,000 a year ago

At the corporate level, Just Energy reported adjusted EBITDA for the three months ended December 31, 2012 of $72.5 million, versus $88.5 million in the prior-year quarter. Profit for the quarter was $40.2 million, versus a year-ago loss of $97 million (all $ Canadian).

Gross margin for the quarter was $142.5 million, down 3% from $147.4 million in the year-ago quarter.

Gas margin was down 21% versus the year-ago reflecting a 12% decline in customers, lower realized commercial margins per customer and $0.9 million in payout on weather options versus $9.0 million in fiscal 2012.

Electricity margin was up 11% due to a 19% increase in customers and high residential margins driven by JustGreen consumption offset by lower margins per new customer in the commercial book.

New customer annual margins averaged $169 per RCE for residential customers and $64 per RCE for commercial customers, less than the annual margin on customers lost of $182 per RCE for residential and $94 per RCE for commercial. The lower commercial margins reflect a stabilized level in major markets. While less profitable than in the past, commercial customers continue to generate margins more than double annual aggregation costs, maintaining it as a very profitable business segment, Just Energy said.

Aggregation cost per residential customer was down 22% to $158 from $203 a year prior. Commercial customer aggregation costs were, on average, down slightly. "This continued positive trend has been driven by the use of multiple sales channels and economies of scale as fixed marketing costs are spread across more customers," Just Energy said.

Bad debt equaled 2.1% of relevant sales down from 2.5% in the year-ago quarter.

"Management believes that a broadening of the customer relationship is the next step in the evolution of Just Energy," the company said. Apart from its National Home Services water heater business in Canada, Just Energy has been working to offer smart thermostats as a long-term access point to consumers' commodity needs.

"While the funding platform for NHS supports this growth in Canada, there is a need to provide the capital to expand the business in the U.S. This step will contribute to an increasingly profitable customer relationship less impacted by natural gas prices," Just Energy said.