Via Renewables, Inc. operates as an independent retail energy services company.
The company provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. The company purchases its electricity and natural gas supply from a variety of wholesale providers and bills the company’s customers monthly for the delivery of electricity and natural gas based on their consumption at either a fixed or variable p...
Via Renewables, Inc. operates as an independent retail energy services company.
The company provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. The company purchases its electricity and natural gas supply from a variety of wholesale providers and bills the company’s customers monthly for the delivery of electricity and natural gas based on their consumption at either a fixed or variable price. Electricity and natural gas are then distributed to the company’s customers by local regulated utility companies through their existing infrastructure.
Segments
The company operates through two operating segments: Retail Electricity and Retail Natural Gas.
Retail Electricity
This segment purchases electricity supply through physical and financial transactions with market counterparties and ISOs; and supplies electricity to residential and commercial consumers pursuant to fixed-price and variable-price contracts.
Retail Natural Gas
This segment purchases natural gas supply through physical and financial transactions with market counterparties; and supplies natural gas to residential and commercial consumers pursuant to fixed-price and variable-price contracts.
Operations
As of December 31, 2022, the company operated in 102 utility service territories across 19 states and the District of Columbia and had approximately 331,000 residential customer equivalents (‘RCEs’). The company serves natural gas customers in fifteen states (Arizona, California, Colorado, Connecticut, Florida, Illinois, Indiana, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, Ohio and Pennsylvania) and electricity customers in twelve states (Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Pennsylvania and Texas) and the District of Columbia using seven brands (Electricity Maine, Electricity N.H., Major Energy, Provider Power Mass, Respond Power, Spark Energy, and Verde Energy).
Customer Contracts and Product Offerings
Fixed and Variable-Price Contracts
The company offers a variety of fixed-price and variable-price service options to the company’s natural gas and electricity customers. Under the company’s fixed-price service options, the company’s customers purchase natural gas and electricity at a fixed price over the life of the customer contract, which provides the company’s customers with protection against increases in natural gas and electricity prices. The company’s fixed-price contracts typically have a term of one to two years for residential customers and up to four years for commercial customers, and most provide for an early termination fee in the event that the customer terminates service prior to the expiration of the contract term.
In a typical market, the company offers fixed-price electricity plans for 6, 12 and 24 months and fixed-price natural gas plans from 12 to 24 months, which may or may not provide for a monthly service fee and/or a termination fee, depending on the market and customer type. The company’s variable-price service options carry a month-to-month term and are priced based on the company’s forecasts of underlying commodity prices and other market and business factors, including the competitive landscape in the market and the regulatory environment, and may also include a monthly service fee depending on the market and customer type. The company’s variable plans may or may not provide for a termination fee, depending on the market and customer type.
Green Products and Renewable Energy Credits
The company offers renewable and carbon neutral (‘green’) products in several markets. Renewable electricity products allow customers to choose electricity sourced from wind, solar, hydroelectric and biofuel sources, through the purchase of renewable energy credits (‘RECs’). When the company procures RECs on behalf of the company’s customers, the company is claiming their share of renewable generation that was delivered to the electric grid, directly supporting renewable generators.
The company utilizes RECs to offset customer volumes related to customers enrolled in renewable energy plans. As of December 31, 2022, approximately 29% of the company’s customers utilized green products. Also, as a key element of the company’s corporate rebranding and its commitment to sustainability, the company began offsetting 100% of customer volume beginning in the second quarter of 2021, by procuring RECs on behalf of the company’s customers.
In addition to the RECs the company purchases to satisfy its voluntary requirements under the terms of the company’s green contracts with the company’s customers and to support its corporate sustainability initiatives, the company must purchase a specified number of RECs based on the amount of electricity the company sells in a state in a year pursuant to individual state renewable portfolio standards.
Customer Acquisition and Retention
The company is focused on growing through organic sales channels, however, the company continues to evaluate opportunities to acquire customers through acquisitions and pursue such acquisitions when it makes sense economically or strategically.
The company identifies and acquires customers through a variety of sales channels, including the company’s inbound customer care call center, outbound calling, online marketing, opt-in web-based leads, email, direct mail, door-to-door sales, affinity programs, direct sales, brokers and consultants. For residential customers, the company has historically used indirect sales brokers, web based solicitation, door-to-door sales, outbound calling, and other methods. For 2022, the largest channels were direct sales, telemarketing and web-based sales. The company typically uses brokers or direct marketing to obtain C&I customers, which are typically larger and have greater natural gas and electricity requirements. As of December 31, 2022, the company’s customer base was 67% residential and 33% C&I customers.
Seasonality
The company’s overall operating results fluctuate substantially on a seasonal basis depending on the geographic mix of the company’s customer base; the relative concentration of the company’s commodity mix; weather conditions, which directly influence the demand for natural gas and electricity and affect the prices of energy commodities; and variability in market prices for natural gas and electricity.
The company’s accounts payable and accounts receivable are impacted by seasonality due to the timing differences between when the company pays its suppliers for accounts payable versus when the company collects from its customers on accounts receivable. The company typically pays its suppliers for the purchases of natural gas on a monthly basis and electricity on a weekly basis. However, it takes approximately two months from the time the company delivers the electricity or natural gas to its customers before the company collects from its customers on accounts receivable attributable to those product deliveries. This timing difference affects the company’s cash flows, especially during peak cycles in the winter and summer months.
Natural gas accounted for approximately 24% of the company’s retail revenues for the year ended December 31, 2022, which exposes the company to a high degree of seasonality in the company’s cash flows and income earned throughout the year as a result of the high concentration of heating load in the winter months. The company utilizes a considerable amount of cash from operations and borrowing capacity to fund working capital, which includes inventory purchases from April through October each year. The company sells its natural gas inventory during the months of November through March of each year.
Regulatory Environment
The company’s marketing efforts to consumers, including but not limited to telemarketing, door-to-door sales, direct mail and online marketing, are subject to consumer protection regulation including state deceptive trade practices acts, Federal Trade Commission (‘FTC’) marketing standards, and state utility commission rules governing customer solicitations and enrollments, among others. By way of example, telemarketing activity is subject to federal and state do-not-call regulation and certain enrollment standards promulgated by state regulators. Door-to-door sales are governed by the FTC’s ‘Cooling-Off Rule’, as well as state-specific regulation in many jurisdictions. In markets in which the company conducts customer credit checks, these checks are subject to the requirements of the Fair Credit Reporting Act.
The company’s participation in natural gas and electricity wholesale markets to procure supply for its retail customers and hedge pricing risk is subject to regulation by the Commodity Futures Trading Commission (the ‘CFTC’), including regulation pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. In order to sell electricity, capacity and ancillary services in the wholesale electricity markets, the company is required to have market-based rate authorization, also known as ‘MBR Authorization,’ from the Federal Energy Regulatory Commission (‘FERC’).
As a shipper of natural gas on interstate pipelines, the company is subject to those interstate pipelines' tariff requirements and FERC regulations and policies applicable to shippers.
Competition
The company’s primary competition comes from the incumbent utility and other independent retail energy companies. In the electricity sector, these competitors include larger, well-capitalized energy retailers, such as Calpine Energy Solutions, LLC, Constellation Corporation, NRG Energy, Inc. and Vistra Corp.
In the natural gas sector, the company’s national competitors are primarily NRG Energy, Inc. and Constellation Energy Group, Inc.
History
The company was founded in 1999. It was incorporated in 2014. The company was formerly known as Spark Energy, Inc. and changed its name to Via Renewables, Inc. in 2021.
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