Segment Reporting

12 Months Ended

Dec. 31, 2016

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 $133.0 million, $154.1 million and $284.6 million and asset optimization cost of revenues of $133.6 million, $152.6 million and $282.3 millionfor the years endedDecember 31, 2016, 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.

The acquisitions of CenStar, Oasis in 2015 and acquisitions of Major Energy Companies and Provider Energy Companies in 2016 had no impact on our reportable business segments as the portions of those acquisitions related to retail natural gas and retail electricity have been included in those existing business segments.

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).

	Years Ended December 31,
(in thousands)	2016			2015			2014
Reconciliation of Retail Gross Margin to Income before taxes
Income before income tax expense	$	76,099		$	27,949		$	(5,156	)
Interest and other income	(957		)	(324		)	(263		)
Interest expense	8,859			2,280			1,578
Operating Income	84,001			29,905			(3,841		)
Depreciation and amortization	32,788			25,378			22,221
General and administrative	84,964			61,682			45,880
Less:
Net asset optimization (expenses) revenue	(586		)	1,494			2,318
Net, Gain (losses) on non-trading derivative instruments	22,254			(18,423		)	(8,713		)
Net, Cash settlements on non-trading derivative instruments	(2,284		)	20,279			(6,289		)
Retail Gross Margin	$	182,369		$	113,615		$	76,944

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):

Year Ended December 31, 2016	Retail Electricity			Retail Natural Gas			Corporate and Other		Eliminations			Spark Retail
Total Revenues	$	417,229		$	129,468		$	—	$	—		$	546,697
Retail cost of revenues	286,795			58,149			—		—			344,944
Less:
Net asset optimization revenues	—			(586		)	—		—			(586		)
Net, Gains (losses) on non-trading derivative instruments	17,187			5,067			—		—			22,254
Current period settlements on non-trading derivatives	(4,889		)	2,605			—		—			(2,284		)
Retail gross margin	$	118,136		$	64,233		$	—	$	—		$	182,369
Total Assets	$	577,695		$	242,739		$	169,404	$	(613,670	)	$	376,168
Goodwill	$	76,617		$	2,530		$	—	$	—		$	79,147

Year Ended December 31, 2015	Retail Electricity			Retail Natural Gas			Corporate and Other		Eliminations			Spark Retail
Total Revenues	$	229,490		$	128,663		$	—	$	—		$	358,153
Retail cost of revenues	170,684			70,504			—		—			241,188
Less:
Net asset optimization revenues	—			1,494			—		—			1,494
Net, Gains (losses) on non-trading derivative instruments	(13,348		)	(5,075		)	—		—			(18,423		)
Current period settlements on non-trading derivatives	11,899			8,380			—		—			20,279
Retail gross margin	$	60,255		$	53,360		$	—	$	—		$	113,615
Total Assets	$	150,245		$	113,583		$	88,823	$	(190,417	)	$	162,234
Goodwill	$	16,476		$	1,903		$	—	$	—		$	18,379

Year Ended December 31, 2014	Retail Electricity			Retail Natural Gas			Corporate and Other		Eliminations			Spark Retail
Total Revenues	$	176,406		$	146,470		$	—	$	—		$	322,876
Retail cost of revenues	149,452			109,164			—		—			258,616
Less:
Net asset optimization revenues	—			2,318			—		—			2,318
Net, Gains (losses) on non-trading derivative instruments	(518		)	(8,195		)	—		—			(8,713		)
Current period settlements on non-trading derivatives	(5,145		)	(1,144		)	—		—			(6,289		)
Retail gross margin	$	32,617		$	44,327		$	—	$	—		$	76,944
Total Assets	$	46,848		$	101,711		$	27,285	$	(37,447	)	$	138,397

Significant Customers

For each of the years ended December 31, 2016, 2015 and 2014, the Company did not have any significant customers that individually accounted for more than 10% of the Company’s combined and consolidated retail revenue.

Significant Suppliers

For the years ended December 31, 2016, 2015 and 2014, the Company had two, one and one significant suppliers, respectively, that individually accounted for more than 10% of the Company’s combined and consolidated retail cost of revenues and net asset optimization.