Spark Energy, Our Energy Acquire Customers of Abacus Resources Energy as Abacus Defaults

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February 11, 2011  

Spark Energy and Our Energy have split the customer book of Abacus Resources Energy LLC due to Abacus' default on financial obligations to ERCOT.

No customers will be transferred to POLRs.  The potential for a REP default was first reported by Matters yesterday (2/10).

Abacus had been serving 7,743 customers, including 7,615 residential customers, 125 small non-residential customers, three medium non-residential customers, and zero large non-residential customers.  The size of the associated load is approximately 383 megawatt-hours per day.

Spark Energy confirmed yesterday evening that it will acquire approximately 6,200 customers from Abacus.  Spark was not able yesterday to speak as to whether its acquired customers were segmented in any way (fixed vs. variable product, residential versus non-residential, or by TDU service area) but will be following up with Matters.

Spark will honor the customer's current rate, and is also allowing the customer to choose another Spark rate at any time.  There were apparently some Abacus customers whose contract had an error or did not contain a specified rate.  If the customer is not currently under contract, Spark Energy will provide these customers with its most competitive 12 month fixed rate, with no termination fee.

Spark is also offering the acquired customers either a $20 or $10 rate credit.  Customer enrolling in Spark's electronic billing program will automatically receive a $20 credit.  Customers electing not to opt for automatic bill payments will be mailed a $10 credit coupon as part of their welcome letter and switch confirmation, which can then be remitted with their bill.

Several market observers, speaking confidentially due to the competitively sensitive nature of the information, speculated that Spark Energy is currently in an acquisition mode, and were not surprised by the announcement.

Hal Poel, Director of Marketing Strategy and Planning for Spark Energy, said that acquisitions are not a cornerstone of Spark's strategy, but that Spark is growth oriented and will pursue opportunities which are favorable to its strategy.  Poel emphasized that Spark's growth to date has mostly been organic.

Our Energy is acquiring the approximately 1,500 remaining Abacus customers, several sources confirmed, though Our Energy did not return a phone call or an email from Matters, and thus particulars of its transition plan are not known.  However, it is known that Our Energy will honor the customer's current rate, or if the customer's contract does not specify a rate, give the customer a range of options.

Market sources report that the acquisition of customers by Our Energy was facilitated by the two companies having engaged in prior transactions, and/or having past relationships.

Abacus' residential customers by TDU area were as follows:

Oncor 4,318

AEP Texas Central 1,551

CenterPoint 1,446

Texas New Mexico Power 325

AEP Texas North 103

Sharyland Utilities 0

 

The transition of customers to their new providers began yesterday and most switching will be completed by Saturday, Feb. 12.

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