Reliant: Texas retail business will be smaller

In a conference call with analysts this morning Reliant Energy officials said the company’s retail business in Texas will be smaller going forward, with the company most likely shrinking its presence in the commercial and industrial sector.
The reason: the collateral needed to buy power for commercial customers is more than twice as much as needed for retail residential customers.
How much smaller the company wouldn’t say exactly, but in the call they said their annual wholesale power purchases were worth about $7 billion, or equal to about 450 bcf/equivalent of natural gas. The company said it aims to reduce that to about 300 bcf per year.
But based on analyst questions, that’s not small enough. A number of them said the retail business continues to be a distraction they would just assume the company gets rid of so it can focus on its wholesale power business in other states.
As one analyst put it on the call ” … the truth is retail is destroying value for shareholders, no ifs and buts about it.”

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