XML 32 R20.htm IDEA: XBRL DOCUMENT v3.7.0.1
Segment Reporting
 3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Segment Reporting
14. Segment Reporting
The Company’s determination of reportable business segments considers the strategic operating units under which the Company makes financial decisions, allocates resources and assesses performance of its retail and asset optimization businesses.
The Company’s reportable business segments are retail natural gas and retail electricity. The retail natural gas segment consists of natural gas sales to, and natural gas transportation and distribution for, residential and commercial customers. Asset optimization activities, considered an integral part of securing the lowest price natural gas to serve retail gas load, are part of the retail natural gas segment. The Company recorded asset optimization revenues of $61.9 million and $42.3 million and asset optimization cost of revenues of $62.1 million and $41.8 million for the three months ended March 31, 2017 and 2016, respectively, which are presented on a net basis in asset optimization revenues. The retail electricity segment consists of electricity sales and transmission to residential and commercial customers. Corporate and other consists of expenses and assets of the retail natural gas and retail electricity segments that are managed at a consolidated level such as general and administrative expenses.
To assess the performance of the Company’s operating segments, the Chief Operating Decision Maker analyzes retail gross margin. The Company defines retail gross margin as operating income (loss) plus (i) depreciation and amortization expenses and (ii) general and administrative expenses, less (i) net asset optimization revenues (expenses), (ii) net gains (losses) on non-trading derivative instruments, and (iii) net current period cash settlements on non-trading derivative instruments. The Company deducts net gains (losses) on non-trading derivative instruments, excluding current period cash settlements, from the retail gross margin calculation in order to remove the non-cash impact of net gains and losses on non-trading derivative instruments.
Retail gross margin is a primary performance measure used by our management to determine the performance of our retail natural gas and electricity business by removing the impacts of our asset optimization activities and net non-cash income (loss) impact of our economic hedging activities. As an indicator of our retail energy business’ operating performance, retail gross margin should not be considered an alternative to, or more meaningful than, operating income, as determined in accordance with GAAP.
Below is a reconciliation of retail gross margin to income before income tax expense (in thousands):

  
Three Months Ended March 31,
  
2017

2016
Reconciliation of Retail Gross Margin to Income before taxes



Income before income tax expense
$
13,792


$
16,729

Interest and other income
(199
)

95

Interest expense
3,445


753

Operating Income
17,038


17,577

Depreciation and amortization
9,232


6,789

General and administrative
24,377


17,380

Less:



Net asset optimization (expenses) revenues
(194
)

527

Net, Losses on non-trading derivative instruments
(21,037
)

(9,620
)
Net, Cash settlements on non-trading derivative instruments
7,574


11,277

Retail Gross Margin
$
64,304


$
39,562



The Company uses retail gross margin and net asset optimization revenues as the measure of profit or loss for its business segments. This measure represents the lowest level of information that is provided to the chief operating decision maker for our reportable segments.

Financial data for business segments are as follows (in thousands):
Three Months Ended March 31, 2017
Retail
Electricity

Retail
Natural Gas

Corporate
and Other

Eliminations

Spark Retail
Total Revenues
$
131,733

 
$
62,612

 
$
—

 
$
—

 
$
194,345

Retail cost of revenues
106,780

 
36,918

 
—

 
—

 
143,698

Less:
 
 
 
 
 
 
 
 
 
Net asset optimization expenses
—

 
(194
)
 
—

 
—

 
(194
)
Losses on non-trading derivatives
(19,287
)
 
(1,750
)
 
—

 
—

 
(21,037
)
Current period settlements on non-trading derivatives
7,764

 
(190
)
 
—

 
—

 
7,574

Retail Gross Margin
$
36,476

 
$
27,828

 
$
—

 
$
—

 
$
64,304

Total Assets at March 31, 2017
$
666,742


$
272,045


$
163,806


$
(736,776
)

$
365,817

Goodwill at March 31, 2017
$
76,877


$
2,530


$
—


$
—


$
79,407


Three Months Ended March 31, 2016
Retail
Electricity
 
Retail
Natural Gas
 
Corporate
and Other
 
Eliminations
 
Spark Retail
Total revenues
$
61,933

 
$
48,613

 
$
—

 
$
—

 
$
110,546

Retail cost of revenues
46,300

 
22,500

 
—

 
—

 
68,800

Less:

 

 

 

 

Net asset optimization revenues
—

 
527

 
—

 
—

 
527

Losses on non-trading derivatives
(9,390
)
 
(230
)
 
—

 
—

 
(9,620
)
Current period settlements on non-trading derivatives
9,617

 
1,660

 
—

 
—

 
11,277

Retail Gross Margin
$
15,406

 
$
24,156

 
$
—

 
$
—

 
$
39,562

Total Assets at December 31, 2016
$
577,695


$
242,739


$
169,404


$
(613,670
)

$
376,168

Goodwill at December 31, 2016
$
76,617


$
2,530


$
—


$
—


$
79,147

Three Months Ended March 31, 2017
Retail
Electricity

Retail
Natural Gas

Corporate
and Other

Eliminations

Spark Retail
Total revenues




$
—


$
—


$
—


$
—

Retail cost of revenues



—


—


—




Less:









Net asset optimization expenses
—


—


—


—




(Losses) gains on non-trading derivatives



2,519


—


—


2,519

Current period settlements on non-trading derivatives



3,341


—


—


3,341

Retail Gross Margin
$
—


$
(5,860
)

$
—


$
—


$
(5,860
)
Total Assets at March 31, 2017
$
666,742


$
272,045


$
163,806


$
(736,776
)

$
365,817

Goodwill at March 31, 2017
$
76,877


$
2,530


$
—


$
—


$
79,407

Three Months Ended March 31, 2016
Retail
Electricity

Retail
Natural Gas

Corporate
and Other

Eliminations

Spark Retail
Total revenues




$
—


$
—


$
—


$
—

Retail cost of revenues



—


—


—




Less:









Net asset optimization revenues
—


—


—


—




(Losses) gains on non-trading derivatives



(5,876
)

—


—


(5,876
)
Current period settlements on non-trading derivatives



12,643


—


—


12,643

Retail Gross Margin
$
—


$
(6,767
)

$
—


$
—


$
(6,767
)
Total Assets at December 31, 2016




$
376,168










$
376,168

Goodwill at December 31, 2016




$
79,147


$
—


$
—


$
79,147