Segment Reporting

6 Months Ended

Jun. 30, 2015

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 $23.0 million and $46.7 million and asset optimization cost of revenues of $23.1 million and $46.5 million for the three months ended June 30, 2015 and 2014, respectively, which are presented on a net basis in asset optimization revenues. The Company recorded asset optimization revenues of $93.0 million and $179.6 million and asset optimization cost of revenues of $91.1 million and $177.8 million for the six months ended June 30, 2015 and 2014, 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 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Reconciliation of Retail Gross Margin to Income before taxes
Income before income tax expense	$	5,084		$	333		$	18,573		$	6,873
Interest and other income	(187		)	(1		)	(322		)	(71		)
Interest expense	207			222			588			535
Operating Income	5,104			554			18,839			7,337
Depreciation and amortization	5,231			3,252			9,508			6,211
General and administrative	12,978			9,747			27,683			17,860
Less:
Net asset optimization revenue	(67		)	197			1,862			1,821
Net, Gains (losses) on non-trading derivative instruments	(4,041		)	(4,438		)	(5,241		)	7,010
Net, Cash settlements on non-trading derivative instruments	4,328			(97		)	8,442			(12,998		)
Retail Gross Margin	$	23,093		$	17,891		$	50,967		$	35,575

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 June 30, 2015	Retail Electricity			Retail Natural Gas			Corporate and Other		Eliminations			Spark Retail
Total Revenues	$	44,072		$	21,361		$	—	$	—		$	65,433
Retail cost of revenues	32,745			9,375			—		—			42,120
Less:
Net asset optimization revenues	—			(67		)	—		—			(67		)
Gains (losses) on non-trading derivatives	(4,692		)	651			—		—			(4,041		)
Current period settlements on non-trading derivatives	2,357			1,971			—		—			4,328
Retail gross margin	$	13,662		$	9,431		$	—	$	—		$	23,093
Total Assets	$	62,457		$	93,852		$	33,724	$	(81,493	)	$	108,540

Three Months Ended June 30, 2014	Retail Electricity			Retail Natural Gas			Corporate and Other		Eliminations			Spark Retail
Total revenues	$	42,771		$	23,169		$	—	$	—		$	65,940
Retail cost of revenues	35,753			16,634			—		—			52,387
Less:
Net asset optimization revenues	—			197			—		—			197
Gains (losses) on non-trading derivatives	(4,297		)	(141		)	—		—			(4,438		)
Current period settlements on non-trading derivatives	542			(639		)	—		—			(97		)
Retail gross margin	$	10,773		$	7,118		$	—	$	—		$	17,891
Total Assets	$	38,606		$	79,570		$	1,623	$	(33,341	)	$	86,458

Six Months Ended June 30, 2015	Retail Electricity			Retail Natural Gas		Corporate and Other		Eliminations			Spark Retail
Total revenues	$	88,521		$	78,716	$	—	$	—		$	167,237
Retail cost of revenues	68,365			42,842		—		—			111,207
Less:
Net asset optimization revenues	—			1,862		—		—			1,862
Gains (losses) on non-trading derivatives	(5,324		)	83		—		—			(5,241		)
Current period settlements on non-trading derivatives	2,258			6,184		—		—			8,442
Retail gross margin	$	23,222		$	27,745	$	—	$	—		$	50,967
Total Assets	$	62,457		$	93,852	$	33,724	$	(81,493	)	$	108,540

Six Months Ended June 30, 2014	Retail Electricity			Retail Natural Gas			Corporate and Other		Eliminations			Spark Retail
Total revenues	$	86,219		$	85,697		$	—	$	—		$	171,916
Retail cost of revenues	73,370			67,138			—		—			140,508
Less:
Net asset optimization revenues	—			1,821			—		—			1,821
Gains (losses) on non-trading derivatives	5,596			1,414			—		—			7,010
Current period settlements on non-trading derivatives	(10,496		)	(2,502		)	—		—			(12,998		)
Retail gross margin	$	17,749		$	17,826		$	—	$	—		$	35,575
Total Assets	$	38,606		$	79,570		$	1,623	$	(33,341	)	$	86,458

Significant Customers

For the three and six months ended June 30, 2015, we had one significant customer that individually accounted for more than 10% of the Company’s consolidated net asset optimization revenues. For the three and six months ended June 30, 2014, we had four and one significant customers, respectively, that individually accounted for more than 10% of the Company’s combined net asset optimization revenues.

For the three and six months ended June 30, 2015 and 2014, no individual customer accounted for more than 10% of the Company's combined and consolidated retail electricity or retail natural gas total revenues.

Significant Suppliers

For the three and six months ended June 30, 2015, we had three and one individual suppliers, respectively, that individually accounted for more than 10% of the Company’s consolidated net asset optimization revenues cost of revenues. For the three and six months ended June 30, 2014, we had three and two significant suppliers, respectively, that individually accounted for more than 10% of the Company’s combined net asset optimization revenues cost of revenues.

For the three and six months ended June 30, 2015, the Company had two and three significant suppliers, respectively, that individually accounted for more than 10% of the Company’s consolidated retail electricity retail cost of revenues. For the three and six months ended June 30, 2014, the Company had one significant supplier that individually accounted for more than 10% of the Company's combined retail electricity retail cost of revenues.

For the three and six months ended June 30, 2015 and 2014, no individual supplier accounted for more than 10% of the Company's combined and consolidated retail natural gas retail cost of revenues.