Reliant Margins, Bad Debt Lower

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February 23, 2011  

Reliant Energy reported adjusted EBITDA for the quarter ending December 31, 2010 of $117 million, up from $104 million a year ago, on lower operating costs primarily due to better customer payment habits and attendant decrease in bad debt expense.

Reliant's customer count and attrition were reported in our 2/22 story.

Gross margin at Reliant for the fourth quarter was unchanged versus the prior quarter as a decline in volumes, due to mass market attrition and slightly warmer weather, were offset by favorable supply costs. Bad debt expense improved $19 million as compared to the fourth quarter of 2009 due to the improvement in customer payment patterns.

Net income for Reliant during the fourth quarter was $289 million, versus $159 million a year ago.

For the eight months ended December 31, 2010, Reliant reported operating income of $503 million, versus $1.0 billion for the eight months ended December 31, 2009 (the period in 2009 during which Reliant was owned by NRG).

For the eight months ended December 31, 2010, Reliant's retail gross margin was lower at $823 million, versus $909 million a year ago. The decline in gross margin was driven by price reductions enacted following NRG's acquisition of the retailer, and lower margins on acquired and renewed customers which resulted in a 13% decline in unit margins.

Reliant's full-year 2010 mass market sales were 22,255 GWh, and Commercial and Industrial sales were 26,124 GWh.

Full-year 2010 Reliant mass market revenues were $3.08 billion, and Commercial and Industrial revenues were $1.98 billion.

During an earnings call, executives said that during 2010 Reliant enrolled over 175,000 customers on its e-Sense smart energy products and services (see 1/6).

NRG said that Green Mountain Energy recorded $69 million in retail revenues and $46 million in retail cost of sales for the period November 5, 2010 (its acquisition date), to December 31, 2010. Executives said that Green Mountain has established a "small but fast-growing footprint" in New York Zone J, and, aside from the previously reported expansion to additional commercial segments and geographic markets, Green Mountain is pursuing expansion of its value-added product offerings to include distributed green generation.

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