Segment Reporting

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

14. Segment Reporting

Our determination of reportable business segments considers the strategic operating units under which we make financial decisions, allocate resources and assess performance of our business. Our reportable business segments are retail electricity and retail natural gas. The retail electricity segment consists of electricity sales and transmission to residential and commercial customers. The retail natural gas segment consists of natural gas sales to, and natural gas transportation and distribution for, residential and commercial customers. Corporate and other consists of expenses and assets of the retail electricity and natural gas segments that are managed at a consolidated level such as general and administrative expenses. Asset optimization activities are also included in Corporate and other.

For the three months ended June 30, 2020 and 2019, we recorded asset optimization revenues of $3.9 million and $12.7 million and asset optimization cost of revenues of $4.0 million and $12.8 million, respectively, and for the six months ended June 30, 2020 and 2019, we recorded asset optimization revenues of $10.3 million and $36.1 million and asset optimization cost of revenues of $10.1 million and $33.6 million, respectively, which are presented on a net basis in asset optimization revenues.

We use retail gross margin to assess the performance of our operating segments. Retail gross margin is defined as operating (loss) income plus (i) depreciation and amortization expenses and (ii) general and administrative expenses, less (i) net asset optimization (expenses) revenues, (ii) net (losses) gains on non-trading derivative instruments, and (iii) net current period cash settlements on non-trading derivative instruments. We deduct net (losses) gains 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 these derivative instruments. 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,
	2020		2019		2020		2019
Reconciliation of Retail Gross Margin to Income before taxes
Income before income tax expense	$	32,450	$	(30,070)	$	44,443	$	(26,284)
Interest and other income	(53)		(494)		(213)		(683)
Interest expense	1,193		1,995		2,746		4,218
Operating income	33,590		(28,569)		46,976		(22,749)
Depreciation and amortization	8,010		10,312		16,806		22,467
General and administrative	21,331		37,247		47,007		66,723
Less:
Net asset optimization revenues	(82)		(56)		239		2,496
Net, gain (loss) on non-trading derivative instruments	7,964		(35,466)		(16,569)		(55,269)
Net, Cash settlements on non-trading derivative instruments	10,055		12,788		26,664		20,913
Retail Gross Margin	$	44,994	$	41,724	$	100,455	$	98,301

Financial data for business segments are as follows (in thousands):

Three Months Ended June 30, 2020
	Retail Electricity		Retail Natural Gas		Corporate and Other		Eliminations		Consolidated
Total Revenues	$	112,255	$	16,363	$	(82)	$	—	$	128,536
Retail cost of revenues	59,268		6,337		—		—		65,605
Less:
Net asset optimization expenses	—		—		(82)		—		(82)
Net, gain (loss) on non-trading derivative instruments	8,047		(83)		—		—		7,964
Current period settlements on non-trading derivatives	9,367		688		—		—		10,055
Retail Gross Margin	$	35,573	$	9,421	$	—	$	—	$	44,994
Total Assets at June 30, 2020	$	2,732,318	$	882,142	$	326,636	$	(3,569,084)	$	372,012
Goodwill at June 30, 2020	$	117,813	$	2,530	$	—	$	—	$	120,343

Three Months Ended June 30, 2019
	Retail Electricity		Retail Natural Gas		Corporate and Other		Eliminations		Consolidated
Total revenues	$	160,776	$	17,029	$	(56)	$	—	$	177,749
Retail cost of revenues	148,187		10,572		—		—		158,759
Less:
Net asset optimization revenues	—		—		(56)		—		(56)
Net loss on non-trading derivative instruments	(33,694)		(1,772)		—		—		(35,466)
Current period settlements on non-trading derivatives	12,669		119		—		—		12,788
Retail Gross Margin	$	33,614	$	8,110	$	—	$	—	$	41,724
Total Assets at December 31, 2019	$	2,524,884	$	820,601	$	341,411	$	(3,263,928)	$	422,968
Goodwill at December 31, 2019	$	117,813	$	2,530	$	—	$	—	$	120,343

Six Months Ended June 30, 2020
	Retail Electricity		Retail Natural Gas		Corporate and Other		Eliminations		Consolidated
Total revenues	$	234,023	$	60,955	$	239	$	—	$	295,217
Retail cost of revenues	159,651		24,777		—		—		184,428
Less:
Net asset optimization revenues	—		—		239		—		239
Net loss on non-trading derivatives	(16,339)		(230)		—		—		(16,569)
Current period settlements on non-trading derivatives	24,332		2,332		—		—		26,664
Retail Gross Margin	$	66,379	$	34,076	$	—	$	—	$	100,455
Total Assets at June 30, 2020	$	2,732,318	$	882,142	$	326,636	$	(3,569,084)	$	372,012
Goodwill at June 30, 2020	$	117,813	$	2,530	$	—	$	—	$	120,343

Six Months Ended June 30, 2019
	Retail Electricity		Retail Natural Gas		Corporate and Other		Eliminations		Consolidated
Total revenues	$	342,868	$	75,091	$	2,496	$	—	$	420,455
Retail cost of revenues	314,074		39,940		—		—		354,014
Less:
Net asset optimization revenues	—		—		2,496		—		2,496
Net, (loss) gain on non-trading derivatives	(55,636)		367		—		—		(55,269)
Current period settlements on non-trading derivatives	20,842		71		—		—		20,913
Retail Gross Margin	$	63,588	$	34,713	$	—	$	—	98,301
Total Assets at December 31, 2019	$	2,524,884	$	820,601	$	341,411	$	(3,263,928)	$	422,968
Goodwill at December 31, 2019	$	117,813	$	2,530	$	—	$	—	$	120,343