Direct Energy Sees 50% Higher C&I Unit Margins, Residential Customer Count Drops

Direct Energy is seeing improved margins in its commercial and industrial supply business, but saw its residential customer count fall during the third quarter, Centrica said in an interim management statement.

"We have ... continued to build on the sales margin increases we saw in the first half of the year, with sold B2B unit margins 35% higher for gas and 51% higher for power in the third quarter of 2014 compared to the second half of 2013," Centrica said of Direct Energy Business.

"Although the lower margin business written in prior years will continue to impact operating performance in the remainder of 2014, we expect much improved second half profitability in Direct Energy Business compared to the second half of 2013 and we expect to deliver good underlying profit growth in Direct Energy in 2015," Centrica said.

Centrica reported that the number of residential energy customer accounts at Direct Energy fell by 99,000 in the third quarter of 2014, "reflecting the roll-off of aggregation customers and competitive market conditions in the US North East."

"Against this backdrop we continue to focus on delivering high levels of customer service, increasing our acquisition margins and developing innovative product offerings that are attractive to more valuable customer segments. We have sold over 130,000 bundled energy and protection plan products, and over 25,000 smart thermostats through our partnerships with Nest and Honeywell," Centrica said.

"We have completed 351 residential solar installations following the acquisition of Astrum Solar in July 2014, 77% more than Astrum installed over the same period in 2013," Centrica added.

"In Direct Energy Services, we completed the disposal of the Ontario home services business, as we focus on delivering growth in Alberta and the United States. We now have 265,000 protection plan customers across the country, having already exceeded our year-end target of 250,000," Centrica said.