Electricity retailer has its ‘best year’
While major Houston powergeneration companies struggled to profit in 2016 with rock-bottom natural gas prices, Spark Energy, a Houston-based retail electric company, was celebrating.
Natural gas prices hit a near 20-year low in 2016, a plunge that allowed the retail electric company, which buys electricity contracts, to buy cheap energy and keep supply costs low.
CEO Nathan Kroeker said last year “was the best year we ever had. When commodity prices are low, that’s our opportunity to grow.”
The 18-year-old company went public in 2014, when it posted a loss of around $4.3 million. But since then, the company has completed 10 acquisitions to help manage its debt. By 2015, it reported a profit of nearly $26 million; in 2016, its net income was nearly $65.7 million.
Spark is eighth on the Houston Chronicle’s 2017 list of top-performing Houston companies. Its earnings per share more than doubled and overall. Spark’s revenue grew by nearly 53 percent. Kroeker expects the company’s revenue to grow by a similar magnitude in 2017, driven by at least three more acquisitions.
“We’ll be well over $750 million in revenue by the end of the year,” he said.
Spark serves 19 states and purchases power contracts from 93 utilities. The company also offers customers renewable energy contracts, which are popular. While these contracts won’t guarantee that renewable energy is flowing directly into a home, it allows consumers to subsidize alternative energy sources like wind, solar and hydroelectric power. A customer buys a power plan, and Spark uses the money to purchase renewable energy credits, or the equivalent value of the power produced by renewable sources.
Selling renewable energy plans to Houston customers has not been as popular as plans in Austin and California, but they are starting to catch on, Kroeker said.
“We’re probably three or five years behind (the West Coast) in Houston, but it’s starting to catch on,” he said.