FirstEnergy Reports Improved Commodity Margin from Higher Retail Volumes, Impact Offset by Lower Capacity Revenues

FirstEnergy reported that increased volumes of contracted sales at FirstEnergy Solutions, including retail sales, were responsible for a $38 million gain in earnings versus the year-ago quarter, but these gains were offset by negative drivers, including lower capacity revenues.

Increased government aggregation sales, net of the impact from lower rates, led to a $29 million improvement in earnings versus the year-ago quarter.

The net improvement from higher non-aggregation mass market retail sales was $21 million, and the net improvement from higher direct sales to C&I customers was $4 million.

These gains were partially offset by decreased margin from POLR sales, consistent with FirstEnergy Solutions' previously stated strategy shift.

Additionally, lower capacity revenues more than offset the gains in commodity margin from increased retail volumes.

During an earnings call, executives reported that lower PJM capacity prices of $16 to $28 per megawatt-day should have resulted in a drop of about $6 per megawatt hour in its overall competitive rate, but its actual decrease was just $3 per megawatt hour, which executives said show the benefits of its channel-shifting strategy. FirstEnergy's average competitive retail rate of $54 per megawatt hour was consistent with prior forecasts.

FirstEnergy Solutions' total number of retail customers was 2.7 million as of March 31, 2013, an increase of 800,000 customers, or 42%, since March 2012.

Governmental aggregation sales increased by 1.4 million MWh, or 36%, primarily due to expansion in Illinois.

Non-aggregation mass market sales increased by 560,000 MWh, or 46%, primarily in Pennsylvania and Ohio.

Direct sales to large and medium commercial/industrial customers increased by 835,000 MWh, or 7%, primarily in central and southern Ohio.

FirstEnergy Solutions' quarterly report to investors includes a breakdown of retail sales volumes by channel and by state on page 13 (click here)

Page 12 of the document linked above also includes aggregate shopping data for each FirstEnergy EDC as of March 31, 2013.