Transactions with Affiliates

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Transactions with Affiliates

13. Transactions with Affiliates

Transactions with Affiliates

We enter into transactions with and pay certain costs on behalf of affiliates that are commonly controlled in order to reduce risk, reduce administrative expense, create economies of scale, create strategic alliances and supply goods and services to these related parties. We also sell and purchase natural gas and electricity with affiliates and pay an affiliate to perform telemarketing activities. We present receivables and payables with the same affiliate on a net basis in the condensed consolidated balance sheets as all affiliate activity is with parties under common control. Affiliated transactions include certain services to the affiliated companies associated with employee benefits provided through our benefit plans, insurance plans, leased office space, administrative salaries, due diligence work, recurring management consulting, and accounting, tax, legal, or technology services. Amounts billed are based on the services provided, departmental usage, or headcount, which are considered reasonable by management. As such, the accompanying condensed consolidated financial statements include costs that have been incurred by us and then directly billed or allocated to affiliates, as well as costs that have been incurred by our affiliates and then directly billed or allocated to us, and are recorded net in general and administrative expense on the condensed consolidated statements of operations with a corresponding accounts receivable—affiliates or accounts payable—affiliates, respectively, recorded in the condensed consolidated balance sheets. Transactions with affiliates for sales or purchases of natural gas and electricity are recorded in retail revenues, retail cost of revenues, and net asset optimization revenues in the condensed consolidated statements of operations with a corresponding accounts receivable—affiliate or accounts payable—affiliate are recorded in the condensed consolidated balance sheets.

The following tables presents asset and liability balances with affiliates (in thousands):

	June 30, 2023		December 31, 2022
Assets
Accounts Receivable - affiliates	$	5,227	$	6,455
Total Assets - affiliates	$	5,227	$	6,455

	June 30, 2023		December 31, 2022
Liabilities
Accounts Payable - affiliates	$	833	$	265
Subordinated Debt - affiliates (1)	5,000		20,000
Total Liabilities - affiliates	$	5,833	$	20,265

(1) The Subordinated Debt Facility allows us to draw advances in increments of no less than $1.0 million per advance up to the maximum principal amount of the Subordinated Debt Facility, subject to Retailco’s discretion. Advances thereunder accrue interest at an annual rate

equal to the prime rate as published by the Wall Street Journal plus two percent (2.0%) from the date of the advance. See Note 9 "Debt" for a further description of terms and conditions of the Subordinated Debt Facility.

The following table presents revenues and cost of revenues recorded in net asset optimization revenue associated with affiliates for the periods indicated (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue NAO - affiliates	$	333	$	626	$	2,617	$	1,577
Less: Cost of Revenue NAO - affiliates	—		4		332		33
Net NAO - affiliates	$	333	$	622	$	2,285	$	1,544

Cost Allocations

Where costs incurred on behalf of the affiliate or us cannot be determined by specific identification for direct billing, the costs are allocated to the affiliated entities or us based on estimates of percentage of departmental usage, wages or headcount. The total net amount direct billed and allocated to/(from) affiliates was $0.3 million and $1.5 million for the three months ended June 30, 2023 and 2022, respectively. The total net amount direct billed and allocated to/(from) affiliates was $1.9 million and $1.6 million for the six months ended June 30, 2023 and 2022, respectively. The Company would have incurred incremental costs of $0.4 million and $0.5 million for the three months ended June 30, 2023 and 2022, respectively, operating on a stand-alone basis. The Company would have incurred incremental costs of $0.8 million and $0.8 million for the six months ended June 30, 2023 and 2022, respectively, operating on a stand-alone basis.

Distributions to and Contributions from Affiliates

During three months ended June 30, 2023 and 2022, Spark HoldCo made distributions to affiliates of our Founder of zero and $3.6 million, respectively, for the payments of quarterly distribution on their respective Spark HoldCo units. During the three months ended June 30, 2023 and 2022, Spark HoldCo also made distributions to these affiliates for gross-up distributions of $0.6 million and zero, respectively, in connection with distributions made between Spark HoldCo and Via Renewables, Inc. for payment of income taxes incurred by us.

During the six months ended June 30, 2023 and 2022, Spark HoldCo made distributions to affiliates of our Founder of $3.6 million and $7.2 million, respectively, for the payments of quarterly distribution on their respective Spark HoldCo units. During the six months ended June 30, 2023 and 2022, Spark HoldCo also made distributions to these affiliates for gross-up distributions of $0.6 million and $0.1 million, respectively, in connection with distributions made between Spark HoldCo and Via Renewables, Inc. for payment of income taxes incurred by us.