Vistra gets Ambit in latest retail power deal
Vistra Energy, the Irving power company best known for its TXU brand, said Tuesday that it reached a deal to buy the Dallas electricity retailer Ambit Energy in a $475 million deal that will further consolidate the retail electricity market in Texas and add to concerns of higher prices as competition dwindles.
The all-cash sale is the latest retail electricity acquisition in Texas as the state’s two biggest players — Vistra and NRG Energy — jockey for position as the biggest electricity sellers in Texas. The two companies, now control nearly two-thirds of the deregulated Texas power market, according to market share information from both companies. Direct Energy is in third place, controlling another 10 percent of the Texas market.
Vistra’s deal to buy Ambit means that Vistra will add another 1.1 million customers in 17 states and will control about 32 percent of the Texas retail electricity market, up from 25 percent before the sale. Ambit, which sells electricity through multi-level marketing channels in which customers are paid to recruit other customers, will be another new selling channel for Vistra.
“Ambit is a very attractive standalone retail company and a great match for Vistra’s retail business,” said Vistra’s president and chief executive officer Curt Morgan.
But Vistra’s deal to buy Ambit raises questions about market power in Texas, according to the a senior citizen advocacy group that intervenes in electricity rate cases on behalf of its members.
“While having more players hasn’t automatically delivered lower electricity rates in Texas, there should be a real fear that fewer players can lead to market distortions and manipulation, ultimately hitting consumers in the pocketbook,”
said Tim Morstad, associate state director for AARP Texas.
Checkbooks open
Vistra’s deal for Ambit comes just six months after Vistra bought the Connecticut company Crius, owner of several well-known Texas brand names including TriEagle Energy, Energy Rewards and Viridian Energy. Vistra initially offered $328 million for Crius, but upped the offer to $378 million when an unidentified suitor made a play for the company.
NRG, which owns several brands including Reliant Energy and Green Mountain Energy, has also been on a buying spree, snapping up the Dallas company Stream Energy in May for $300 million that added 600,000 residential customers. NRG also bought the fast-growing low-price leader Discount Power from Volterra Energy Holdings last year for an undisclosed price that added another 225,000 customers and paid $219 million for Xoom Energy that added 300,000 customers to NRG.
Once the Ambit sale is closed, Vistra will have nearly 5 million customers. NRG has 3.7 million customers, according to its most recent financial filing.
The state’s leading power sellers say that the retail market remains robustly competitive and concerns about rising prices are ill-founded. “Texas customers have the ability to change providers at any time, and we compete for our customers every single day,” said Vistra spokeswoman Meranda Cohn.
Pat Hammond, spokeswoman for NRG, noted that more than 50 companies are competing for customers. “Recent mergers and acquisitions in the market will not change that,” she said.
The Public Utility Commission has a commitment to protect customers, foster competition and promote high quality infrastructure, said spokesman Andrew Barlow. In a market economy, mature competitive industries tend toward consolidation, so the impact of competition in the state’s energy-only marketplace should continue to benefit Texas consumers, he said.
The Vistra purchase of Ambit is subject to regulatory approval, including by the Federal Energy Regulatory Commission. It is expected to close by the end of the year.