Segment Reporting

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting

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 $45.9 million and $225.4 million and asset optimization cost of revenues of $46.0 million and $223.7 million for the three and nine months ended September 30, 2014, respectively, and recorded asset optimization revenues of $54.2 million and $214.7 million and asset optimization cost of revenues of $54.2 million and $217.6 million for the three and nine months ended September 30,2013, 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 plus (i) depreciation and amortization expenses and (ii) general and administrative expenses, less (i) net asset optimization revenues, (ii) net gains (losses) on derivative instruments, and (iii) net current period cash settlements on derivative instruments. The Company deducts net gains (losses) on 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 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.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Reconciliation of Retail Gross Margin to Income before taxes
Income before income tax expense	$	1,032		$	(1,583	)	$	7,906		$	12,110
Interest and other income	(40		)	(124		)	(111		)	(135		)
Interest expense	615			597			1,150			1,267
Operating Income	1,607			(1,110		)	8,945			13,242
Depreciation and amortization	4,113			3,390			10,324			12,704
General and administrative	10,634			7,577			28,494			26,289
Less:
Net asset optimization revenue	(141		)	17			1,681			(2,922		)
Net, Gains (losses) on derivative instruments	(1,163		)	1,787			5,847			(401		)
Net, Cash settlements on derivative instruments	3,039			(539		)	(9,959		)	(1,843		)
Retail Gross Margin	$	14,619		$	8,592		$	50,194		$	57,401

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 September 30, 2014	Retail Electricity		Retail Natural Gas			Corporate and Other		Eliminations			Total Spark Retail
Total Revenues	$	51,748	$	16,469		$	—	$	—		$	68,217
Retail cost of revenues	41,628		10,235			—		—			51,863
Less:
Net asset optimization revenues	—		(141		)	—		—			(141		)
Gains (losses) on retail derivative instruments	445		(1,608		)	—		—			(1,163		)
Current period settlements on non-trading derivatives	2,906		133			—		—			3,039
Retail gross margin	$	6,769	$	7,850		$	—	$	—		$	14,619
Total Assets	$	47,677	$	92,974		$	20,309	$	(38,886	)	$	122,074

Three Months Ended September 30, 2013	Retail Electricity			Retail Natural Gas			Corporate and Other		Eliminations			Total Spark Retail
Total revenues	$	57,014		$	12,885		$	—	$	—		$	69,899
Retail cost of revenues	52,165			7,877			—		—			60,042
Less:
Net asset optimization revenues	—			17			—		—			17
Gains (losses) on retail derivative instruments	(444		)	2,231			—		—			1,787
Current period settlements on non-trading derivatives	896			(1,435		)	—		—			(539		)
Retail gross margin	$	4,397		$	4,195		$	—	$	—		$	8,592
Total Assets	$	41,174		$	81,401		$	548	$	(34,629	)	$	88,494

Nine Months Ended September 30, 2014	Retail Electricity			Retail Natural Gas			Corporate and Other		Eliminations			Total Spark Retail
Total Revenues	$	137,968		$	102,166		$	—	$	—		$	240,134
Retail cost of revenues	114,997			77,374			—		—			192,371
Less:
Net asset optimization revenues	—			1,681			—		—			1,681
Gains (losses) on retail derivative instruments	6,037			(190		)	—		—			5,847
Current period settlements on non-trading derivatives	(7,585		)	(2,374		)	—		—			(9,959		)
Retail gross margin	$	24,519		$	25,675		$	—	$	—		$	50,194
Total Assets	$	47,677		$	92,974		$	20,309	$	(38,886	)	$	122,074

Nine Months Ended September 30, 2013	Retail Electricity			Retail Natural Gas			Corporate and Other		Eliminations			Total Spark Retail
Total Revenues	$	151,366		$	83,310		$	—	$	—		$	234,676
Retail cost of revenues	124,138			58,303			—		—			182,441
Less:
Net asset optimization revenues	—			(2,922		)	—		—			(2,922		)
Gains (losses) on retail derivative instruments	322			(723		)	—		—			(401		)
Current period settlements on non-trading derivatives	(234		)	(1,609		)	—		—			(1,843		)
Retail gross margin	$	27,140		$	30,261		$	—	$	—		$	57,401
Total Assets	$	41,174		$	81,401		$	548	$	(34,629	)	$	88,494

Significant Customers

For the three months ended September 30, 2014, we had four significant customers that individually accounted for more than 10% of the Company’s consolidated net asset optimization revenues. For the nine months ended September 30, 2014, we had one significant customer that individually accounted for more than 10% of the Company’s consolidated net asset optimization revenues.

Significant Suppliers

For the three months ended September 30, 2014, we had two significant suppliers that individually accounted for more than 10% of the Company’s consolidated net asset optimization revenues cost of revenues. For the nine months ended September 30, 2014, we had one significant suppliers that individually accounted for more than 10% of the Company’s consolidated net asset optimization revenues cost of revenues.

For the three and nine months ended September 30, 2014 the Company had one significant supplier that individually accounted for more than 10% of the Company’s consolidated retail electricity retail cost of revenues.