Retail Supplier Says Earnings "Pressure[d]" by PJM Volatility

"[V]olatile electricity costs in the PJM market continue to pressure the earnings of our retail energy-marketing business," WGL Holdings said in reporting earnings for the quarter ending December 31, 2013 (first fiscal quarter).

For the quarter ended December 31, 2013, WGL Holdings' retail energy marketing segment recorded non-GAAP operating earnings of $1.0 million, compared to non-GAAP operating earnings of $12.0 million for the same quarter of the prior fiscal year.

Non-GAAP operating earnings reflect lower realized electric margins primarily due to higher electric capacity charges and higher ancillary services charges from the regional power grid operator (PJM) versus the same quarter of the prior year. Natural gas realized margins decreased due to timing issues on gas supply costs partially offset by higher realized gas margins on portfolio optimization activity.

GAAP net income for the retail energy marketing segment was $3.3 million, compared to net income of $13.0 million reported for the same quarter of the prior fiscal year.

Washington Gas Energy Services saw its customer base increase from September 30, 2013 to December 31, 2013, aided by the acquisition of the Castlebridge Energy accounts.

WGES was serving 357,000 customers as of December 31, 2013, versus 347,800 customers as of September 30, 2013, and 360,800 a year ago.

WGES electric customers were 189,000 as of December 31, 2013, versus 179,900 customers as of September 30, 2013, and 186,800 a year ago.

WGES natural gas customers were 168,000 as of December 31, 2013, versus 167,900 customers as of September 30, 2013, and 174,000 a year ago.

Castlebridge Energy was serving more than 20,000 residential and small commercial customers at the time its book was acquired by WGES in October of last year.