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What changed in Via Renewables, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Via Renewables, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+229 added−236 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-29)

Top changes in Via Renewables, Inc.'s 2023 10-K

229 paragraphs added · 236 removed · 192 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

70 edited+11 added−23 removed165 unchanged
Biggest changeThe trading price of the Class A common stock and Series A Preferred Stock may depend on many factors, some of which are beyond our control, including: • prevailing interest rates; • the market for similar securities; • general economic and financial market conditions; • our issuance of debt or other preferred equity securities; and • our financial condition, results of operations and prospects.
Biggest changeThe following factors are beyond our control and could affect our stock price: • the pending merger, and if it is completed; • the impact of our reverse stock split on our common stock; • the announcement of the elimination, suspension, reduction or reinstatement of dividends on Class A common stock and Series A Preferred Stock; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • trading volumes of the Class A common stock and Series A Preferred Stock; • prevailing interest rates; • the market for similar securities; • general economic and financial market conditions; • our issuance of debt or other preferred equity securities; and • our financial condition, results of operations and prospects.
For example, late 2022 PURA and the Connecticut Office of Consumer Counsel issued to our subsidiary, Verde, a Notice of Violation and Assessment of Penalty proposing civil penalties, restitution payments to certain customers and a multi-year suspension from the Connecticut market in connection with violations of Connecticut’s marketing requirements for energy suppliers.
For example, in late 2022 PURA and the Connecticut Office of Consumer Counsel issued to our subsidiary, Verde, a Notice of Violation and Assessment of Penalty proposing civil penalties, restitution payments to certain customers and a multi-year suspension from the Connecticut market in connection with violations of Connecticut’s marketing requirements for energy suppliers.
Pandemics, epidemics, widespread illness or other major health crises, such as COVID-19, may adversely affect the United States' economic growth, demand for natural gas and electricity in our key markets as well as the ability of various employees, customers, contractors, suppliers and other business partners to fulfill their obligations, which could have a material adverse effect on our business, financial condition or results of operations.
Epidemics, widespread illness or other major health crises, such as COVID-19, may adversely affect the United States' economic growth, demand for natural gas and electricity in our key markets as well as the ability of various employees, customers, contractors, suppliers and other business partners to fulfill their obligations, which could have a material adverse effect on our business, financial condition or results of operations.
In addition, affiliates are able to determine the outcome of all matters requiring Class A common stock and Class B common stock shareholder approval, including mergers and other material transactions, and is able to cause or prevent a change in the composition of our board of directors or a change in control of our company that could deprive our stockholders of an opportunity to receive a premium for their Class A common stock as part of a sale of our company.
In addition, affiliates are able to determine the outcome of all matters requiring Class A common stock and Class B common stock shareholder approval, including mergers and other material transactions, and are able to cause or prevent a change in the composition of our board of directors or a change in control of our company that could deprive our stockholders of an opportunity to receive a premium for their Class A common stock as part of a sale of our company.
Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations. 35 Table of Contents Future sales of our Class A common stock and Series A Preferred Stock in the public market could reduce the price of the Class A common stock and Series A Preferred Stock, and may dilute your ownership in us.
Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations. 38 Table of Contents Future sales of our Class A common stock and Series A Preferred Stock in the public market could reduce the price of the Class A common stock and Series A Preferred Stock, and may dilute your ownership in us.
Holders of Class A and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or our certificate of incorporation and bylaws.
Holders of Class A and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or our certificate of incorporation and bylaws. Mr.
When demand is below anticipated levels due to weather patterns, we may be forced to sell excess supply at prices below our acquisition cost, which could result in reduced margins or even losses. 21 Table of Contents Conversely, when winters are colder or summers are warmer, consumption may outpace the volumes of natural gas and electricity against which we have hedged, and we may be unable to meet increased demand with storage or swing supply.
When demand is below anticipated levels due to weather patterns, we may be forced to sell excess supply at prices below our acquisition cost, which could result in reduced margins or even losses. 24 Table of Contents Conversely, when winters are colder or summers are warmer, consumption may outpace the volumes of natural gas and electricity against which we have hedged, and we may be unable to meet increased demand with storage or swing supply.
These sources may not be available, and our ability to grow and maintain our business may be limited. We may have liquidity needs that would prevent us from continuing our historical practice as it relates to the payment of dividends on our Class A common stock and Series A Preferred Stock.
These sources may not be available, and our ability to grow and maintain our business may be limited. We may have liquidity needs that would prevent us from continuing our historical practice as it relates to the payment of dividends on our Series A Preferred Stock.
Inaccurate or untimely information, which may be outside of our direct control, could result in: • inaccurate and/or untimely bills sent to customers; • incorrect tax remittances; • reduced effectiveness and efficiency of our operations; • inability to adequately hedge our portfolio; • increased overhead costs; • inaccurate accounting and reporting of customer revenues, gross margin and accounts receivable activity; • inaccurate measurement of usage rates, throughput and imbalances; • customer complaints; and • increased regulatory scrutiny.
Inaccurate or untimely information, which may be outside of our direct control, could result in: • inaccurate and/or untimely bills sent to customers; 30 Table of Contents • incorrect tax remittances; • reduced effectiveness and efficiency of our operations; • inability to adequately hedge our portfolio; • increased overhead costs; • inaccurate accounting and reporting of customer revenues, gross margin and accounts receivable activity; • inaccurate measurement of usage rates, throughput and imbalances; • customer complaints; and • increased regulatory scrutiny.
Keith Maxwell III no longer beneficially owns in the aggregate more than fifteen percent of the outstanding Class A common stock and Class B common stock. On and after such date, we will be subject to the provisions of Section 203 of the DGCL.
Maxwell no longer beneficially owns in the aggregate more than fifteen percent of the outstanding Class A common stock and Class B common stock. On and after such date, we will be subject to the provisions of Section 203 of the DGCL.
A cyber-attack on our information management systems or those of our vendors could severely disrupt business operations, preventing us from billing and collecting revenues, and could result in significant expenses to investigate and repair security breaches or system damage, lead to litigation, fines, other remedial action, heightened regulatory scrutiny, 27 Table of Contents diminished customer confidence and damage to our reputation.
A cyber-attack on our information management systems or those of our vendors could severely disrupt business operations, preventing us from billing and collecting revenues, and could result in significant expenses to investigate and repair security breaches or system damage, lead to litigation, fines, other remedial action, heightened regulatory scrutiny, diminished customer confidence and damage to our reputation.
In addition, in our amended and restated certificate of incorporation, we have elected not to be subject to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”) regulating corporate takeovers until the date on which W.
In addition, in our amended and restated certificate of incorporation, we have elected not to be subject to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”) regulating corporate takeovers until the date on which Mr.
Through December 31, 2022, we have issued an aggregate of 3,567,543 shares of Series A Preferred Stock. The terms of the preferred stock we offer or sell could adversely impact the voting power or value of our Class A common stock.
Through December 31, 2023, we have issued an aggregate of 3,567,543 shares of Series A Preferred Stock. The terms of the preferred stock we offer or sell could adversely impact the voting power or value of our Class A common stock.
Keith Maxwell III no longer beneficially owns more than fifty percent of the outstanding Class A common stock and Class B common stock, special meetings of our shareholders may only be called by the board of directors, the chief executive officer or the chairman of the board (prior to such time, special meetings may also be called by our Secretary at the 34 Table of Contents request of holders of record of fifty percent of the outstanding Class A common stock and Class B common stock); • provide that our amended and restated certificate of incorporation and amended and restated bylaws may be amended by the affirmative vote of the holders of at least two-thirds of our outstanding stock entitled to vote thereon; • provide that our amended and restated bylaws can be amended by the board of directors; and • establish advance notice procedures with regard to shareholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our shareholders.
Maxwell no longer beneficially owns more than fifty percent of the outstanding Class A common stock and Class B common stock, special meetings of our shareholders may only be called by the board of directors, the chief executive officer or the chairman of the board (prior to such time, special meetings may also be called by our Secretary at the request of holders of record of fifty percent of the outstanding Class A common stock and Class B common stock); • provide that our amended and restated certificate of incorporation and amended and restated bylaws may be amended by the affirmative vote of the holders of at least two-thirds of our outstanding stock entitled to vote thereon; • provide that our amended and restated bylaws can be amended by the board of directors; and • establish advance notice procedures with regard to shareholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our shareholders.
These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company; • provide that at any time after the first date upon which W.
These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company; • provide that at any time after the first date upon which Mr.
Spark HoldCo or its subsidiaries may be restricted from making distributions to us under applicable law or regulation or under the terms of their financing arrangements, or may otherwise be unable to provide such funds. The Class A common stock and Series A Preferred Stock are subordinated to our existing and future debt obligations.
Spark HoldCo or its subsidiaries may be restricted from making distributions to us under applicable law or regulation or under the terms of their financing arrangements, or may otherwise be unable to provide such funds. 34 Table of Contents The Class A common stock and Series A Preferred Stock are subordinated to our existing and future debt obligations.
Keith Maxwell III, or any of their officers, directors, agents, shareholders, members, affiliates and subsidiaries (other than a director or officer who is presented an opportunity solely in his capacity as a director or officer).
Maxwell, or any of their officers, directors, agents, shareholders, members, affiliates and subsidiaries (other than a director or officer who is presented an opportunity solely in his capacity as a director or officer).
Any Class A common stock or preferred stock (whether Series A Preferred Stock or a new series of preferred stock) that may in the future be issued to finance acquisitions, upon exercise of stock options or otherwise, would have a similar effect.
Any preferred stock (whether Series A Preferred Stock or a new series of preferred stock) that may in the future be issued to finance acquisitions, upon exercise of stock options or otherwise, would have a similar effect.
There can be no assurance that we may be subject to significant damages as a result of a class action lawsuit for actions of our vendors that we may not be able to control. 23 Table of Contents We are, and in the future may become, involved in legal and regulatory proceedings and, as a result, may incur substantial costs.
There can be no assurance that we may be subject to significant damages as a result of a class action lawsuit for actions of our vendors that we may not be able to control. We are, and in the future may become, involved in legal and regulatory proceedings and, as a result, may incur substantial costs.
Further, we may have difficulty addressing possible differences in corporate cultures and management philosophies. In many of our acquisition agreements, we are entitled to indemnification from the counterparty for various matters, including breaches of representations, warranties and covenants, tax matters, and litigation proceedings.
Further, we may have difficulty addressing possible differences in corporate cultures and management philosophies. 27 Table of Contents In many of our acquisition agreements, we are entitled to indemnification from the counterparty for various matters, including breaches of representations, warranties and covenants, tax matters, and litigation proceedings.
Accordingly, higher market interest rates could cause the market price of the Class A common stock and Series A Preferred Stock to decrease. 32 Table of Contents In addition, over the last several years, prices of equity securities in the U.S. trading markets have been experiencing extreme price fluctuations.
Accordingly, higher market interest rates could cause the market price of the Class A common stock and Series A Preferred Stock to decrease. In addition, over the last several years, prices of equity securities in the U.S. trading markets have been experiencing extreme price fluctuations.
Active trading markets for the Series A Preferred Stock may not exist at such times, in which case the trading price of your shares of our Series A Preferred Stock could be reduced and your ability to transfer such shares could be limited. Our Founder holds a substantial majority of the voting power of our common stock.
Active trading markets for the Series A Preferred Stock may not exist at such times, in which case the trading price of your shares of our Series A Preferred Stock could be reduced and your ability to transfer such shares could be limited. Mr. Maxwell holds a substantial majority of the voting power of our common stock.
The existence of a significant shareholder, such as our Founder, may also have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our company.
The existence of a significant shareholder, such as Mr. Maxwell, may also have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our company.
Moreover, this concentration of stock ownership may also adversely affect the trading price of our Class A common stock or Series A Preferred Stock to the extent investors perceive a disadvantage in owning stock of a company with a controlling shareholder. Holders of Series A Preferred Stock have extremely limited voting rights.
Moreover, this concentration of stock ownership may also adversely affect the trading price of our Class A common stock or Series A Preferred Stock to the extent investors perceive a disadvantage in owning stock of a company with a controlling shareholder. 36 Table of Contents Holders of Series A Preferred Stock have extremely limited voting rights.
Because of this provision, these persons and entities have no obligation to offer us 36 Table of Contents those investments or opportunities that are offered to them in any capacity other than solely as an officer or director.
Because of this provision, these persons and entities have no obligation to offer us those investments or opportunities that are offered to them in any capacity other than solely as an officer or director.
Even if we are permitted to pay such dividends on the Class A common stock and Series A Preferred Stock, our Board of Directors may elect to reduce or eliminate the dividends on the Class A common stock and Series A Preferred Stock to maintain cash balances for operations or for other reasons.
Even if we are permitted to pay such dividends on the Series A Preferred Stock, our Board of Directors may elect to reduce or eliminate the dividends on the Series A Preferred Stock to maintain cash balances for operations or for other reasons.
There can be no 28 Table of Contents assurance that competitive conditions will allow these vendors and their independent contractors to continue to successfully sign up new customers. Further, if our products are not attractive to, or do not generate sufficient revenue for our vendors, we may lose our existing relationships.
There can be no assurance that competitive conditions will allow these vendors and their independent contractors to continue to successfully sign up new customers. Further, if our products are not attractive to, or do not generate sufficient revenue for our vendors, we may lose our existing relationships.
Keith Maxwell III no longer beneficially owns more than fifty percent of the outstanding Class A common stock and Class B common stock, any action required or permitted to be taken by the shareholders must be effected at a duly called annual or special meeting of shareholders and may not be effected by any consent in writing in lieu of a meeting of such shareholders, subject to the rights of the holders of any series of preferred stock with respect to such series (prior to such time, such actions may be taken without a meeting by written consent of holders of the outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting); • provide that at any time after the first date upon which W.
Maxwell no longer beneficially owns more than fifty percent of the outstanding Class A common stock and Class B common stock, any action required or permitted to be taken by the shareholders must be effected at a duly called annual or special meeting of shareholders and may not be effected by any consent in writing in lieu of a meeting of such shareholders, subject to the rights of the holders of any series of preferred stock with respect to such series (prior to such time, such actions may be taken without a meeting by written consent of holders of the outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting); 37 Table of Contents • provide that at any time after the first date upon which Mr.
Finally, our future dividend policy is within the discretion of our Board of Directors, and will depend upon our operations, our financial condition, capital requirements and investment opportunities, the performance of our business, cash flows, RCE counts and the margins we receive, as well as restrictions under our Senior Credit Facility.
Finally, future dividends are within the discretion of our Board of Directors, and will depend upon our operations, our financial condition, capital requirements and investment opportunities, the performance of our business, cash flows, RCE counts and the margins we receive, as well as restrictions under our Senior Credit Facility.
The Board of Directors may be required to reduce or eliminate quarterly cash distributions, including the quarterly dividends to the holders of the Class A common stock and/or Series A Preferred Stock.
The Board of Directors may be required to reduce or eliminate quarterly cash distributions, including the dividends to the holders of the Series A Preferred Stock.
We may be unable to obtain new customers or maintain our existing customers due to competition or otherwise. Increased collateral requirements in connection with our supply activities may restrict our liquidity.
We may be unable to obtain new customers or maintain our existing customers due to competition or otherwise. 29 Table of Contents Increased collateral requirements in connection with our supply activities may restrict our liquidity.
The failure to obtain additional capital from time to time may have a material adverse effect on its business and operations. Our ability to pay dividends in the future will depend on many factors, including the performance of our business, cash flows, RCE counts and the margins we receive, as well as restrictions under our Senior Credit Facility.
The failure to obtain additional capital from time to time may have a material adverse effect on its business and operations. 33 Table of Contents Our ability to pay dividends depends on many factors, including the performance of our business, cash flows, RCE counts and the margins we receive, as well as restrictions under our Senior Credit Facility.
We may be unable to manage our growth and development successfully. Our financial results fluctuate on a seasonal, quarterly and annual basis.
We may be unable to manage our growth and development successfully. 28 Table of Contents Our financial results fluctuate on a seasonal, quarterly and annual basis.
Any reduction or elimination of cash dividends on our 31 Table of Contents Class A common stock or Series A Preferred Stock will likely materially and adversely affect the price of the Class A common stock and Series A Preferred Stock. We are a holding company.
Any reduction or elimination of cash dividends on our Series A Preferred Stock will likely materially and adversely affect the price of the Series A Preferred Stock. We are a holding company.
As a result of these and other factors, we cannot guarantee that we will have sufficient cash generated from operations to pay the dividends on our Series A Preferred Stock or to pay a specific level of cash dividends to holders of our Class A common stock.
As a result of these and other factors, we cannot guarantee that we will have sufficient cash generated from operations to pay the dividends on our Series A Preferred Stock.
In addition, our ability to arrange financing and the costs of such capital, are dependent on numerous factors, including: • general economic and capital market conditions; • credit availability from banks and other financial institutions; • investor confidence; • our financial performance and the financial performance of our subsidiaries; • our level of indebtedness and compliance with covenants in debt agreements; • maintenance of acceptable credit ratings; • cash flow; and • provisions of tax and securities laws that may impact raising capital. 30 Table of Contents We may not be successful in obtaining additional capital for these or other reasons.
In addition, our ability to arrange financing and the costs of such capital, are dependent on numerous factors, including: • general economic and capital market conditions; • credit availability from banks and other financial institutions; • investor confidence; • our financial performance and the financial performance of our subsidiaries; • our level of indebtedness and compliance with covenants in debt agreements; • maintenance of acceptable credit ratings; • cash flow; and • provisions of tax and securities laws that may impact raising capital.
Our Founder beneficially owns approximately 66.0% of the combined voting power (excluding treasury shares) of the Class A and Class B common stock as of December 31, 2022 through his direct and indirect ownership in us.
Maxwell beneficially owns approximately 65.0% of the combined voting power (excluding treasury shares) of the Class A and Class B common stock as of December 31, 2023 through his direct and indirect ownership in us.
We may incur other expenses or liabilities during a period that could significantly reduce or eliminate our cash available for distribution and, in turn, impair our ability to pay dividends to holders of our Class A common stock and Series A Preferred Stock during the period.
We may incur other expenses or liabilities during a period that could significantly reduce or eliminate our cash available for distribution and, in turn, impair our ability to pay dividends to holders of our Series A Preferred Stock during the period. Each new share of Series A Preferred Stock issued increases the cash required to continue to pay cash dividends.
We cannot assure you that we will be able to continue paying our targeted quarterly dividend to the holders of our Class A common stock or dividends to the holders of our Series A Preferred Stock in the future.
We cannot assure you that we will be able to continue paying dividends to the holders of our Series A Preferred Stock in the future.
Liability under the TCPA has increased significantly in recent years, and we face risks if we fail to comply. Our outbound telemarketing efforts and use of mobile messaging to communicate with our customers, which has increased in recent years, subjects us to regulation under the TCPA.
Please see “Regulatory Environment—Other Regulations.” 26 Table of Contents Liability under the TCPA has increased significantly in recent years, and we face risks if we fail to comply. Our outbound telemarketing efforts and use of mobile messaging to communicate with our customers, which has increased in recent years, subjects us to regulation under the TCPA.
A substantial increase in the Three-Month LIBOR Rate or an alternative rate could negatively impact our ability to pay dividends on the Series A Preferred Stock and Class A common stock.
A substantial increase in the Three-Month CME Term SOFR Rate or an alternative rate could negatively impact our ability to pay dividends on the Series A Preferred Stock.
As of December 31, 2022, approximately 58% of our RCEs were located in five states. Specifically, 16%, 14%, 11%, 9% and 8% of our customers on an RCE basis were located in TX, PA, NY, NJ, and MA respectively.
As of December 31, 2023, approximately 59% of our RCEs were located in five states. Specifically, 21%, 11%, 11%, 8% and 7% of our customers on an RCE basis were located in PA, TX, NY, NJ, and MA, respectively.
Our indebtedness could adversely affect our ability to raise additional capital to fund our operations or pay dividends. It could also expose us to the risk of increased interest rates and limit our ability to react to changes in the economy or our industry as well as impact our cash available for distribution.
It could also expose us to the risk of increased interest rates and limit our ability to react to changes in the economy or our industry as well as impact our cash available for distribution.
The Change of Control Conversion Right of the Series A Preferred Stock provided in the Certificate of Designation may have the effect of discouraging a third party from making an acquisition proposal for us or of delaying, deferring or preventing certain of our change of control transactions under circumstances that otherwise could provide the holders of our Series A Preferred Stock with the opportunity to realize a premium over the then-current market price of such equity securities or that stockholders may otherwise believe is in their best interests.
The Change of Control Conversion Right of the Series A Preferred Stock provided in the Certificate of Designation may have the effect of discouraging a third party from making an acquisition proposal for us or of delaying, deferring or preventing certain of our change of control transactions under circumstances that otherwise could provide the holders of our Series A Preferred Stock with the opportunity to realize a premium over the then-current market price of such equity securities or that stockholders may otherwise believe is in their best interests. 40 Table of Contents Changes in the method of determining the Three-Month CME Term SOFR, or the replacement of Three-Month CME Term SOFR with an alternative reference rate, may adversely affect interest rates under the floating dividend rate of our Series A Preferred Stock.
Our amended and restated certificate of incorporation contains provisions that we renounce any interest in existing and future investments in other entities by, or the business opportunities of, NuDevco Partners, LLC, NuDevco Partners Holdings, LLC and W.
Maxwell or certain of our affiliates that might otherwise constitute breaches of fiduciary duty. Our amended and restated certificate of incorporation contains provisions that we renounce any interest in existing and future investments in other entities by, or the business opportunities of, NuDevco Partners, LLC, NuDevco Partners Holdings, LLC and Mr.
Although our Series A Preferred Stock contain LIBOR alternative provisions and the use of alternative reference rates, new methods of calculating LIBOR or other reforms could cause the dividend rate on our Series A Preferred Stock to be materially different than expected, which could have an adverse effect on our business, financial position, and results of operations, and our ability to pay dividends on the Series A Preferred Stock and Class A common stock.
New methods of calculating Three-Month CME Term SOFR or other reforms could cause the dividend rate on our Series A Preferred Stock to be materially different than expected, which could have an adverse effect on our business, financial position, and results of operations, and our ability to pay dividends on the Series A Preferred Stock.
Sometimes we cannot hedge the volumes associated with these assets because they are too small compared to the much larger bulk transaction volumes required for trades in the wholesale market or it is not economically feasible to do so.
We are required to fill our allocated storage capacity with natural gas, which creates commodity supply and price risk. Sometimes we cannot hedge the volumes associated with these assets because they are too small compared to the much larger bulk transaction volumes required for trades in the wholesale market or it is not economically feasible to do so.
For the year ended December 31, 2022, customers in non-POR markets represented approximately 41% of our retail revenues. We generally have the ability to terminate contracts with customers in the event of non-payment, but in most states in which we operate we cannot disconnect their natural gas or electricity service.
We generally have the ability to terminate contracts with customers in the event of non-payment, but in most states in which we operate we cannot disconnect their natural gas or electricity service.
We have $100.0 million of indebtedness outstanding and $34.4 million in issued letters of credit under our Senior Credit Facility, and $20.0 million of indebtedness outstanding under our Subordinated Facility as of December 31, 2022.
We have $97.0 million of indebtedness outstanding and $24.3 million in issued letters of credit under our Senior Credit Facility, and no indebtedness outstanding under our Subordinated Facility as of December 31, 2023.
Our sole material asset is our equity interest in Spark HoldCo, LLC ("Spark HoldCo") and we are accordingly dependent upon distributions from Spark HoldCo to pay dividends on the Class A common stock and Series A Preferred Stock.
Our sole material asset is our equity interest in Spark HoldCo, LLC ("Spark HoldCo") and we are accordingly dependent upon distributions from Spark HoldCo to pay dividends on the Series A Preferred Stock. We are a holding company and have no material assets other than our equity interest in Spark HoldCo, and have no independent means of generating revenue.
Our ability to grow at levels experienced historically may be constrained if the market for acquisition candidates is limited and we are unable to make acquisitions of portfolios of customers and retail energy companies on commercially reasonable terms. 24 Table of Contents Pursuant to our cash dividend policy, we distribute a significant portion of our cash through regular quarterly dividends, and our ability to grow and make acquisitions with cash on hand could be limited.
Our ability to grow at levels experienced historically may be constrained if the market for acquisition candidates is limited and we are unable to make acquisitions of portfolios of customers and retail energy companies on commercially reasonable terms.
These liquidity requirements may be greater than we anticipate or are able to meet. We face risks related to health epidemics, pandemics and other outbreaks, including COVID-19. The COVID-19 pandemic continues to adversely impact economic activity and conditions worldwide.
These liquidity requirements may be greater than we anticipate or are able to meet. We face risks related to health epidemics, pandemics and other outbreaks.
We cannot assure that our affiliates will reimburse us for the costs we have incurred on their behalf or perform their obligations under any of these contracts.
We will also continue to pay certain expenses on behalf of several of our affiliates for which we will seek reimbursement. We will also continue to share our corporate headquarters with certain affiliates. We cannot assure that our affiliates will reimburse us for the costs we have incurred on their behalf or perform their obligations under any of these contracts.
Actions taken by governmental authorities and third parties to contain and mitigate the risk of spread of any major public health 26 Table of Contents crisis, including COVID-19, may negatively impact our business, including a disruption of or change to our operating plans.
Actions taken by governmental authorities and third parties to contain and mitigate the risk of spread of any major public health crisis, including COVID-19, may negatively impact our business, including a disruption of or change to our operating plans. We are subject to direct credit risk for certain customers who may fail to pay their bills as they become due.
The terms of such transactions and the resolution of any conflicts that may arise may not always be in our or our stockholders’ best interests. We have engaged in transactions and expect to continue to engage in transactions with affiliated companies. We have acquired companies and books of customers from our affiliates and may do so in the future.
As of April 15, 2022, we have the option to redeem our Series A Preferred Stock. We have engaged in transactions with our affiliates in the past and expect to do so in the future. The terms of such transactions and the resolution of any conflicts that may arise may not always be in our or our stockholders’ best interests.
LIBOR is a basic rate of interest widely used as a global reference for setting interest rates on loans and payment rates on other financial instruments. Dividends on the Series A Preferred Stock accrue at a floating rate equal to the sum of: (a) Three-Month LIBOR Rate as calculated on each applicable determination date, plus (b) 6.578%.
Under the Certificate of Designation of the Series A Preferred Stock, dividends on the Series A Preferred Stock accrue at a floating rate equal to the sum of: (a) Three-Month LIBOR Rate as calculated on each applicable determination date, plus (b) 6.578%.
If we are unable to repurchase or redeem the Series A Preferred Stock and our ability to pay dividends on the Series A Preferred Stock and Class A common stock is negatively impacted, the market value of the Series A Preferred Stock and Class A common stock could be materially adversely impacted.
A substantial increase in the Three-Month CME Term SOFR Rate, or a substantial increase in the alternative reference rate, could negatively impact our ability to pay dividends on the Series A Preferred Stock. If we are unable to pay dividends on the Series A Preferred Stock, the market value of the Series A Preferred Stock could be materially adversely impacted.
We may be unable to fully pass the higher cost of ancillary reserves and reliability services through to our customers, and increases in the cost of these ancillary reserves and reliability services could negatively impact our results of operations.
We may be unable to fully pass the higher cost of ancillary reserves and reliability services through to our customers, and increases in the cost of these ancillary reserves and reliability services could negatively impact our results of operations. 25 Table of Contents Many of the natural gas utilities we serve allocate a share of transportation and storage capacity to us as a part of their competitive market operations.
If you are a non-U.S. holder, any deemed dividend may be subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty, which may be set off against subsequent payments on the Series A Preferred Stock.
If you are a non-U.S. holder, any deemed dividend may be subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty, which may be set off against subsequent payments on the Series A Preferred Stock. 41 Table of Contents We are a “controlled company” under NASDAQ Global Select Market rules, and as such we are entitled to an exemption from certain corporate governance standards of the NASDAQ Global Select Market, and you may not have the same protections afforded to shareholders of companies that are subject to all of the NASDAQ Global Market corporate governance requirements.
We are subject to direct credit risk for certain customers who may fail to pay their bills as they become due. We bear direct credit risk related to customers located in markets that have not implemented POR programs as well as indirect credit risk in those POR markets that pass collection efforts along to us after a specified non-payment period.
We bear direct credit risk related to customers located in markets that have not implemented POR programs as well as indirect credit risk in those POR markets that pass collection efforts along to us after a specified non-payment period. For the year ended December 31, 2023, customers in non-POR markets represented approximately 45% of our retail revenues.
We are a holding company and have no material assets other than our equity interest in Spark HoldCo, and have no independent means of generating revenue. Therefore, we depend on distributions from Spark HoldCo to meet our debt service and other payment obligations, and to pay dividends on our Class A common stock and Series A Preferred Stock.
Therefore, we depend on distributions from Spark HoldCo to meet our debt service and other payment obligations, and to pay dividends on our Series A Preferred Stock.
Additionally, we enter into a variety of financial derivative and physical contracts to manage commodity price risk, and we use mark-to-market accounting to account for this hedging activity.
Additionally, we enter into a variety of financial derivative and physical contracts to manage commodity price risk, and we use mark-to-market accounting to account for this hedging activity. Under the mark-to-market accounting method, changes in the fair value of our hedging instruments that are not qualifying or not designated as hedges under accounting rules are recognized immediately in earnings.
The states that contain a large percentage of our customers could reverse regulatory restructuring or change the regulatory environment in a manner that causes us to be unable to operate economically in that state.
The states that contain a large percentage of our customers could reverse regulatory restructuring or change the regulatory environment in a manner that causes us to be unable to operate economically in that state. 31 Table of Contents Increases in state renewable portfolio standards or an increase in the cost of renewable energy credit and carbon offsets may adversely impact the price, availability and marketability of our products.
Our vendors may fail to operate in accordance with the terms of the outsourcing agreement or a bankruptcy or other event may prevent them from performing under our outsourcing agreement.
Our vendors may fail to operate in accordance with the terms of the outsourcing agreement or a bankruptcy or other event may prevent them from performing under our outsourcing agreement. 32 Table of Contents Risks Related to Our Capital Structure and Capital Stock Our indebtedness could adversely affect our ability to raise additional capital to fund our operations or pay dividends.
Although our board of directors has established a nominating and corporate governance committee and a compensation committee of independent directors, it may determine to eliminate these committees at any time.
Although our board of directors has established a nominating and corporate governance committee and a compensation committee of independent directors, it may determine to eliminate these committees at any time. If these committees were eliminated, you may not have the same protections afforded to shareholders of companies that are subject to all of NASDAQ Global Select Market corporate governance requirements.
One of the factors that will influence the price of the Class A common stock and Series A Preferred Stock will be the distribution yield of the securities (as a percentage of the then market price of the securities) relative to market interest rates.
Trading prices and corresponding market value of Class A common stock and Series A Preferred Stock may also impact our ability to satisfy continued listing standards of The Nasdaq Global Select Market, or a particular tier of The Nasdaq exchanges. 35 Table of Contents One of the factors that will influence the price of the Class A common stock and Series A Preferred Stock will be the distribution yield of the securities (as a percentage of the then market price of the securities) relative to market interest rates.
Increases in state renewable portfolio standards or an increase in the cost of renewable energy credit and carbon offsets may adversely impact the price, availability and marketability of our products. Pursuant to state renewable portfolio standards, we must purchase a specified amount of RECs based on the amount of electricity we sell in a state in a year.
Pursuant to state renewable portfolio standards, we must purchase a specified amount of RECs based on the amount of electricity we sell in a state in a year.
Pursuant to our cash dividend policy, we have historically distributed and intend in the future to distribute, a significant portion of our cash through regular quarterly dividends to holders of our Class A common stock and dividends on our Series A Preferred Stock.
We have historically distributed a significant portion of our cash through dividends, and our ability to grow and make acquisitions with cash on hand could be limited. We have historically distributed a significant portion of our cash through dividends to holders of our Class A common stock and dividends on our Series A Preferred Stock.
Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock, such as the Series A Preferred Stock, could affect the residual value of the Class A common stock.
Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock, such as the Series A Preferred Stock, could affect the residual value of the Class A common stock. 39 Table of Contents Our amended and restated certificate of incorporation limits the fiduciary duties of one of our directors and certain of our affiliates and restricts the remedies available to our stockholders for actions taken by Mr.
We will continue to enter into back-to-back transactions for purchases of commodities and derivatives on behalf of our affiliate. We will also continue to pay certain expenses on behalf of several of our affiliates for which we will seek reimbursement. We will also continue to share our corporate headquarters with certain affiliates.
We have engaged in transactions and expect to continue to engage in transactions with affiliated companies. We have acquired companies and books of customers from our affiliates and may do so in the future. We will continue to enter into back-to-back transactions for purchases of commodities and derivatives on behalf of our affiliate.
Removed
Many of the natural gas utilities we serve allocate a share of transportation and storage capacity to us as a part of their competitive market operations. We are required to fill our allocated storage capacity with natural gas, which 22 Table of Contents creates commodity supply and price risk.
Added
Additionally, regulations that do not directly relate to ESCOs could impact us. For example, we have historically used third-party lead generators to identify potential customers for our telemarketing sales channel. In December 2023, the FCC adopted rules that could limit the ability of third-party lead generators to identify large numbers of potential customers.
Removed
Under the mark-to-market accounting method, changes in the fair value of our hedging instruments that are not qualifying or not designated as hedges 25 Table of Contents under accounting rules are recognized immediately in earnings.
Added
If the number of potential customers is reduced, or if it becomes more difficult or costly to identify potential telemarketing targets, our ability to maintain our RCE count based on our telemarketing sales could be impacted.
Removed
Risks Related to Our Capital Structure and Capital Stock We have identified a material weakness in our internal control over financial reporting which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, decrease investor confidence in us, and reduce the value of our Class A common stock and Series A Preferred Stock.
Added
In the future, we may also distribute a significant amount of cash through dividends.
Removed
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act and based upon the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission’s Internal Control - Integrated Framework (2013).
Added
We may not be successful in obtaining additional capital for these or other reasons.
Removed
Management is also responsible for reporting on the effectiveness of internal control over financial reporting. In connection with the audit of our financial statements for the year ended December 31, 2022, we identified a material weakness in the design and operation of the controls over our calculation of income tax expense, deferred tax assets and liabilities.
Added
The trading price of the Class A common stock and Series A Preferred Stock may depend on many factors, some of which are beyond our control. Additionally, the market price of our Class A common stock and Series A Preferred Stock may be highly volatile and may fluctuate substantially as a result of a number of factors.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed2 unchanged
Biggest changeOn March 20, 2023, we had one holder of record of our Class A common stock and two holders of record of our Class B common stock, excluding stockholders for whom shares are held in “nominee” or “street name.” Dividends We typically pay a cash dividend each quarter to holders of our Class A common stock to the extent we have cash available for distribution and are permitted to do so under the terms of our Senior Credit Facility.
Biggest changeDividends We have historically paid a cash dividend each quarter to holders of our Class A common stock to the extent we have cash available for distribution and are permitted to do so under the terms of our Senior Credit Facility, as well as paid dividends to the holders of our Series A Preferred Stock.
The chart assumes that the value of the investment in our Class A common stock and each index was $100 at December 31, 2017 and that all dividends were reinvested.
The chart assumes that the value of the investment in our Class A common stock and each index was $100 at December 31, 2018 and that all dividends were reinvested.
The stock performance shown on the graph below is not indicative of future price performance. 40 Table of Contents The performance graph above and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference. 41 Table of Contents
The stock performance shown on the graph below is not indicative of future price performance. 45 Table of Contents The performance graph above and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference. 46 Table of Contents
Recent Sales of Unregistered Equity Securities We have not sold any unregistered equity securities other than as previously reported. Issuer Purchases of Equity Securities We did not repurchase any equity securities between October 1, 2022 and December 31, 2022.
Please see “Item 1A – Risk Factors” in this Annual Report for risks related to our ability to pay dividends. Recent Sales of Unregistered Equity Securities We have not sold any unregistered equity securities other than as previously reported. Issuer Purchases of Equity Securities We did not repurchase any equity securities between October 1, 2023 and December 31, 2023.
Further, our ability to pay dividends will depend on certain factors including the performance of our business, cash flows, RCE counts and the margins we receive. Please see “Item 1A – Risk Factors” in this Annual Report for risks related to our ability to pay dividends.
In April 2023, we announced a suspension of the dividend on the Class A common stock. Our ability to pay dividends depends on certain factors, including the terms of our Senior Credit Facility, the performance of our business, cash flows, RCE counts and the margins we receive.
Added
On February 27, 2024, we had we had three holders of record of our Class A common stock and two holders of record of our Class B common stock, excluding the Company, and stockholders for whom shares are held in “nominee” or “street name.” Shareholders of record, excluding Cede & Co. and the Company, held an aggregate of 94 shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

103 edited+24 added−21 removed78 unchanged
Biggest changeYear Ended December 31, (in thousands) 2022 2021 2020 Reconciliation of Adjusted EBITDA to Net Income (Loss): Net income (loss) $ 11,203 $ (5,413) $ 66,074 Depreciation and amortization 16,703 21,578 30,767 Interest expense 7,204 4,926 5,266 Income tax expense 6,483 5,266 17,880 EBITDA 41,593 26,357 119,987 Less: Net, gain (loss) on derivative instruments 17,821 21,200 (23,386) Net, cash settlements on derivative instruments (35,801) (15,692) 37,729 Customer acquisition costs 5,870 1,415 1,513 Plus: Non-cash compensation expense 3,252 3,448 2,503 Non-recurring event - winter storm Uri (5,162) 60,000 — Non-recurring legal and regulatory settlements — (2,225) — Adjusted EBITDA $ 51,793 $ 80,657 $ 106,634 The following table presents a reconciliation of Adjusted EBITDA to net cash provided by operating activities for each of the periods indicated. 49 Table of Contents Year Ended December 31, (in thousands) 2022 2021 2020 Reconciliation of Adjusted EBITDA to net cash provided by operating activities: Net cash provided by operating activities $ 16,207 $ 12,702 $ 91,831 Amortization of deferred financing costs (1,125) (997) (1,210) Bad debt expense (6,865) (445) (4,692) Interest expense 7,204 4,926 5,266 Income tax expense 6,483 5,266 17,880 Non-recurring event - winter storm Uri (5,162) 60,000 — Non-recurring legal settlement — (2,225) — Changes in operating working capital Accounts receivable, prepaids, current assets 34,731 (5,117) (32,820) Inventory 2,423 486 (1,458) Accounts payable, accrued liabilities, current liabilities (884) 11,253 36,301 Other (1,219) (5,192) (4,464) Adjusted EBITDA $ 51,793 $ 80,657 $ 106,634 Cash Flow Data: Cash flows provided by operating activities $ 16,207 $ 12,702 $ 91,831 Cash flows used in investing activities $ (6,871) $ (6,510) $ (2,154) Cash flows used in financing activities $ (49,305) $ (2,556) $ (75,661) Retail Gross Margin.
Biggest changeYear Ended December 31, (in thousands) 2023 2022 2021 Reconciliation of Adjusted EBITDA to net cash provided by operating activities: Net cash provided by operating activities $ 49,315 $ 16,207 $ 12,702 Amortization of deferred financing costs (825) (1,125) (997) Bad debt expense (3,442) (6,865) (445) Interest expense 9,334 7,204 4,926 Income tax expense 11,142 6,483 5,266 Non-recurring event - winter storm Uri — (5,162) 60,000 Non-recurring legal settlement — — (2,225) Merger agreement expense 752 — — Changes in operating working capital Accounts receivable, prepaids, current assets (17,159) 34,731 (5,117) Inventory (1,281) 2,423 486 Accounts payable, accrued liabilities, current liabilities 15,206 (884) 11,253 Other (6,187) (1,219) (5,192) Adjusted EBITDA $ 56,855 $ 51,793 $ 80,657 Cash Flow Data: Cash flows provided by operating activities $ 49,315 $ 16,207 $ 12,702 Cash flows used in investing activities $ (1,435) $ (6,871) $ (6,510) Cash flows used in financing activities $ (40,636) $ (49,305) $ (2,556) Retail Gross Margin.
This increase was primarily due to an increase in electricity and natural gas supply costs due to a higher commodity price environment in 2022, and a change in the value of our retail derivative portfolio, offset by electricity supply costs related to winter storm Uri in 2021 that did not re-occur in 2022 and a winter storm Uri credit received from ERCOT in 2022.
This increase was primarily due to an increase in electricity and natural gas supply costs due to higher commodity price environment in 2022, and a change in the value of our retail derivative portfolio, offset by electricity supply costs related to winter storm Uri in 2021 that did not re-occur in 2022 and a winter storm Uri credit received from ERCOT in 2022.
Expected credit loss exposure is evaluated for each of our accounts receivables pools. Expected credits losses are established using a model that considers historical collections experience, current information, and reasonable and supportable forecasts. The Company writes off accounts receivable balances against the allowance for doubtful accounts when the accounts receivable is deemed to be uncollectible.
Expected credit loss exposure is evaluated for each of our accounts receivables pools. Expected credits losses are established using a model that considers historical collections experience, current information, and reasonable and supportable forecasts. The Company writes off accounts receivable balances against the allowance for credit losses when the accounts receivable is deemed to be uncollectible.
In markets that do not offer POR programs or when the Company chooses to directly bill its customers, certain receivables are billed and collected by the Company. The Company bears the credit risk on these accounts and records an appropriate allowance for doubtful accounts to reflect any losses due to non-payment by customers.
In markets that do not offer POR programs or when the Company chooses to directly bill its customers, certain receivables are billed and collected by the Company. The Company bears the credit risk on these accounts and records an appropriate allowance for credit losses to reflect any losses due to non-payment by customers.
Our lenders under our Senior Credit Facility allowed $60.0 million of the $64.9 million pre-tax storm loss incurred in the first quarter of 2021 to be added back as a non-recurring item in the calculation of Adjusted EBITDA for our Debt Covenant Calculations.
Our lenders under our Senior Credit Facility also allowed $60.0 million of the $64.9 million pre-tax storm loss incurred in the first quarter of 2021 to be added back as a non-recurring item in the calculation of Adjusted EBITDA for our Debt Covenant Calculations.
See Note 9 "Debt" for further information regarding the extension of the Subordinated Debt Facility. Uses of Liquidity and Capital Resources Repayment of Current Portion of Senior Credit Facility Our Senior Credit Facility, matures in June 2025, and thus, no amounts are due currently.
See Note 9 "Debt" for further information regarding the extension of the Subordinated Debt Facility. Uses of Liquidity and Capital Resources Repayment of Current Portion of Senior Credit Facility Our Senior Credit Facility matures in June 2025, and no amounts are due currently.
(3) Retail Gross Margin for the year ended December 31, 2021 includes a $0.5 million reduction related to the winter storm Uri credit settlements received and year ended December 31, 2021 includes a $64.4 million add back related to winter storm Uri. See discussion below.
(4) Retail Gross Margin for the year ended December 31, 2021 includes a $0.5 million reduction related to the winter storm Uri credit settlements received and year ended December 31, 2021 includes a $64.4 million add back related to winter storm Uri. See discussion below.
(4) Retail Gross Margin for year ended December 31, 2022 includes a deduction of $9.6 million related to proceeds received under an ERCOT (winter storm Uri) securitization mechanism in June 2022. See further discussion below. Adjusted EBITDA .
(5) Retail Gross Margin for year ended December 31, 2022 includes a deduction of $9.6 million related to proceeds received under an ERCOT (winter storm Uri) securitization mechanism in June 2022. See further discussion below. Adjusted EBITDA .
On October 31, 2022, we performed a quantitative assessment of goodwill in accordance with guidance from ASC 350, in which we compared our estimate of the fair value of our reporting units with their carrying values, including goodwill.
On October 31, 2023, we performed a quantitative assessment of goodwill in accordance with guidance from ASC 350, in which we compared our estimate of the fair value of our reporting units with their carrying values, including goodwill.
For a discussion of the status of current legal and regulatory matters, see Note 13 "Commitments and Contingencies" in the Company’s audited consolidated financial statements. 64 Table of Contents
For a discussion of the status of current legal and regulatory matters, see Note 13 "Commitments and Contingencies" in the Company’s audited consolidated financial statements. 71 Table of Contents
In this segment, we purchase natural gas supply through physical and financial transactions with market counterparties and supply natural gas to residential and commercial consumers pursuant to fixed-price and variable-price contracts. For the years ended December 31, 2022, 2021 and 2020, approximately 24%, 19% and 17%, respectively, of our retail revenues were derived from the sale of natural gas.
In this segment, we purchase natural gas supply through physical and financial transactions with market counterparties and supply natural gas to residential and commercial consumers pursuant to fixed-price and variable-price contracts. For the years ended December 31, 2023, 2022 and 2021, approximately 25%, 24% and 19%, respectively, of our retail revenues were derived from the sale of natural gas.
In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Financing, resulting in a positive impact on our electricity unit margin in 2022. Asset Optimization Our asset optimization opportunities primarily arise during the winter heating season when demand for natural gas is typically at its highest.
In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Financing, resulting in a positive impact on our electricity unit margin in 2022. 52 Table of Contents Asset Optimization Our asset optimization opportunities primarily arise during the winter heating season when demand for natural gas is typically at its highest.
We capitalize and amortize our customer acquisition costs over a two year period, which is based on our estimate of the expected average length of a customer relationship. We factor in the recovery of customer acquisition costs in determining which markets we enter and the pricing of our products in those markets.
We capitalize and amortize our customer acquisition costs over a one to two year period, which is based on our estimate of the expected average length of a customer relationship. We factor in the recovery of customer acquisition costs in determining what markets we enter and the pricing of our products in those markets.
The goodwill on our consolidated balance sheet as of December 31, 2022 is associated with both our Retail Natural Gas and Retail Electricity reporting units.
The goodwill on our consolidated balance sheet as of December 31, 2023 is associated with both our Retail Natural Gas and Retail Electricity reporting units.
The Company writes off customer balances when it believes that amounts are no longer collectible and when it has exhausted all means to collect these receivables. 62 Table of Contents For trade accounts receivables, the Company accrues an allowance for doubtful accounts by business segment by pooling customer accounts receivables based on similar risk characteristics, such as customer type, geography, aging analysis, payment terms, and related macroeconomic factors.
The Company writes off customer balances when it believes that amounts are no longer collectible and when it has exhausted all means to collect these receivables. 69 Table of Contents For trade accounts receivables, the Company accrues an allowance for credit losses by business segment by pooling customer accounts receivables based on similar risk characteristics, such as customer type, geography, aging analysis, payment terms, and related macroeconomic factors.
During these same periods, we paid these local regulated utilities a weighted average discount of approximately 0.9%, 0.9% and 1.2%, respectively, of total revenues for customer credit risk protection. Weather Conditions 46 Table of Contents Weather conditions directly influence the demand for natural gas and electricity and affect the prices of energy commodities.
During these same periods, we paid these local regulated utilities a weighted average discount of approximately 1.0%, 0.9% and 0.9%, respectively, of total revenues for customer credit risk protection. Weather Conditions Weather conditions directly influence the demand for natural gas and electricity and affect the prices of energy commodities.
For the years ended December 31, 2022, 2021 and 2020, approximately 59%, 59% and 64%, respectively, of our retail revenues were collected through POR programs where substantially all of our credit risk was with local regulated utility companies. As of December 31, 2022, 2021 and 2020, all of these local regulated utility companies had investment grade ratings.
For the years ended December 31, 2023, 2022 and 2021, approximately 55%, 59% and 59%, respectively, of our retail revenues were collected through POR programs where substantially all of our credit risk was with local regulated utility companies. As of December 31, 2023, 2022 and 2021, all of these local regulated utility companies had investment grade ratings.
The increase was primarily the result of higher net income in 2022 coupled with other changes in working capital, non-recurring winter storm Uri related costs of $64.4 million for the year ended December 31, 2021, which did not re-occur in 2022, and a $9.6 million credit received in the year ended December 31, 2022 from ERCOT related to winter storm Uri.
The increase was primarily the result of higher net income in 2022 coupled with other changes in working capital, non-recurring winter storm Uri related costs of $64.4 million for the year ended December 31, 2021, which did not re-occur in 2022, and a $9.6 million credit received in the year ended December 31, 2022 from ERCOT related to winter storm Uri Cash Flows Used in Investing Activities .
Our marketing team continuously evaluates the effectiveness of each customer acquisition channel and makes adjustments in order to achieve desired targets. During the year ended December 31, 2022, we added approximately 67,000 RCEs through our various organic sales channels.
Our marketing team continuously evaluates the effectiveness of each customer acquisition channel and makes adjustments in order to achieve desired targets. During the year ended December 31, 2023, we added approximately 140,000 RCEs through our various organic sales channels.
Our customer growth strategy includes 43 Table of Contents growing organically through traditional sales channels complemented by customer portfolio and business acquisitions. We measure our number of customers using residential customer equivalents ("RCEs").
Our customer growth strategy includes growing organically through traditional sales channels complemented by customer portfolio and business acquisitions. We measure our number of customers using residential customer equivalents ("RCEs").
Net asset optimization resulted in a loss of $2.3 million, a loss of $4.2 million and a loss of $0.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. 47 Table of Contents Non-GAAP Performance Measures We use the Non-GAAP performance measures of Adjusted EBITDA and Retail Gross Margin to evaluate and measure our operating results.
Net asset optimization resulted in a loss of $7.3 million, $2.3 million of $4.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. 53 Table of Contents Non-GAAP Performance Measures We use the Non-GAAP performance measures of Adjusted EBITDA and Retail Gross Margin to evaluate and measure our operating results.
The Series A Preferred Stock will accrue dividends at an annual rate equal to the sum of (a) Three-Month LIBOR (if it then exists), or an alternative reference rate as of the applicable determination date and (b) 6.578%, based on the $25.00 liquidation preference per share of the Series A Preferred Stock.
The Series A Preferred Stock will accrue dividends at an annual rate equal to the sum of (a) Three-Month LIBOR (if it then exists), or an alternative reference rate as of the applicable determination date and (b) 6.578%, based on the $25.00 liquidation preference per share of the Series A Preferred Stock. Following the cessation of the publication of U.S.
As of December 31, 2022, we had no material "off-balance sheet arrangements." 61 Table of Contents Related Party Transactions For a discussion of related party transactions, see Note 14 "Transactions with Affiliates" in the Company’s audited consolidated financial statements.
As of December 31, 2023, we had no material "off-balance sheet arrangements." 68 Table of Contents Related Party Transactions For a discussion of related party transactions, see Note 14 "Transactions with Affiliates" in the Company’s audited consolidated financial statements.
We completed our annual assessment of goodwill impairment at October 31, 2022, and the test indicated no impairment. 63 Table of Contents Deferred tax assets and liabilities The Company recognizes the amount of taxes payable or refundable for each tax year.
We completed our annual assessment of goodwill impairment at October 31, 2023, and the test indicated no impairment. 70 Table of Contents Deferred tax assets and liabilities The Company recognizes the amount of taxes payable or refundable for each tax year.
For each of the three years ended December 31, 2022, customer acquisition costs were as follows: Year Ended December 31, (In thousands) 2022 2021 2020 Customer Acquisition Costs $ 5,870 $ 1,415 $ 1,513 We strive to maintain a disciplined approach to recovery of our customer acquisition costs within a 12 month period.
For each of the three years ended December 31, 2023, customer acquisition costs were as follows: Year Ended December 31, (In thousands) 2023 2022 2021 Customer Acquisition Costs $ 6,736 $ 5,870 $ 1,415 We strive to maintain a disciplined approach to recovery of our customer acquisition costs within a 12 month period.
We assess the adequacy of the allowance for doubtful accounts through review of an aging of customer accounts receivable and general economic conditions in the markets that we serve.
We assess the adequacy of the allowance for credit losses through review of an aging of customer accounts receivable and general economic conditions in the markets that we serve.
Our future dividend policy is within the discretion of our Board of Directors, and will depend upon our operations, our financial condition, capital requirements and investment opportunities, the performance of our business, cash flows, RCE counts and the margins we receive, as well as restrictions under our Senior Credit Facility.
Future dividends are within the discretion of our Board of Directors, and will depend upon our operations, our financial condition, capital requirements and investment opportunities, the performance of our business, cash flows, RCE counts and the margins we receive, as well as restrictions under our Senior Credit Facility.
For the years ended December 31, 2022, 2021 and 2020, approximately 76%, 81% and 83%, respectively, of our retail revenues were derived from the sale of electricity. • Retail Natural Gas Segment .
For the years ended December 31, 2023, 2022 and 2021, approximately 75%, 76% and 81%, respectively, of our retail revenues were derived from the sale of electricity. • Retail Natural Gas Segment .
Although we may use the Subordinated Debt Facility from time to time to enhance short term liquidity, we do not view the Subordinated Debt Facility as a material source of liquidity. As of December 31, 2022, there was $20 million outstanding borrowings under the Subordinated Debt Facility, and availability to borrow up to $5.0 million under the Subordinated Debt Facility.
Although we may use the Subordinated Debt Facility from time to time to enhance short term liquidity, we do not view the Subordinated Debt Facility as a material source of liquidity. As of December 31, 2023, there was zero outstanding borrowings under the Subordinated Debt Facility, and availability to borrow up to $25.0 million under the Subordinated Debt Facility.
Customer acquisition costs with respect to door to door marketing returned back to pre-Covid-19 historic levels in 2022. Customer Credit Risk Approximately 59% of our revenues are derived from customers in utilities where customer credit risk is borne by the utility in exchange for a discount on amounts billed.
Customer acquisition costs with respect to door to door marketing returned back to pre-Covid-19 historic levels in 2022 and 2023. 51 Table of Contents Customer Credit Risk Approximately 55% of our revenues are derived from customers in utilities where customer credit risk is borne by the utility in exchange for a discount on amounts billed.
Analysis of the impact of changes in prices and volumes between the years ended December 31, 2022, 2021, and 2020 are as follows: 2022 vs. 2021 2021 vs. 2020 Change in electricity volumes sold $ (21.4) $ (107.8) Change in natural gas volumes sold 13.2 (9.2) Change in electricity unit cost per MWh 65.6 15.4 Change in electricity unit cost per MWh - winter storm Uri (74.8) 65.3 Change in natural gas unit cost per MMBtu 26.2 6.8 Change in value of retail derivative portfolio 25.1 8.1 Change in retail cost of revenues $ 33.9 $ (21.4) General and Administrative Expense .
Analysis of the impact of changes in prices and volumes between the years ended December 31, 2023, 2022, and 2021 are as follows: 2023 vs. 2022 2022 vs. 2021 Change in electricity volumes sold $ (46.4) $ (21.4) Change in natural gas volumes sold (2.1) 13.2 Change in electricity unit cost per MWh 17.3 65.6 Change in electricity unit cost per MWh - winter storm Uri 9.6 (74.8) Change in natural gas unit cost per MMBtu (12.5) 26.2 Change in value of retail derivative portfolio (13.8) 25.1 Change in other costs 1.5 — Change in retail cost of revenues $ (46.4) $ 33.9 General and Administrative Expense .
Depreciation and amortization expense for the year ended December 31, 2022 was approximately $16.7 million, a decrease of approximately $4.9 million, or 23%, from approximately $21.6 million for the year ended December 31, 2021. This decrease was primarily due to the decreased amortization expense associated with customer relationship intangibles.
Depreciation and amortization expense for the year ended December 31, 2022 decreased approximately $4.9 million, or 23%, from approximately $21.6 million for the year ended December 31, 2021. This decrease was primarily due to the decreased amortization expense associated with customer relationship intangibles. Customer Acquisition Cost .
These measures for the three years ended December 31, 2022 were as follows: Year Ended December 31, (in thousands) 2022 2021 2020 Adjusted EBITDA (1)(2) $ 51,793 $ 80,657 $ 106,634 Retail Gross Margin (3)(4) $ 114,815 $ 132,534 $ 196,473 (1) Adjusted EBITDA for the year ended December 31, 2021 includes a $60.0 million add back related to winter storm Uri and also includes a deduction of $2.2 million non-recurring legal settlement related to an add back in 2019.
These measures for the three years ended December 31, 2023 were as follows: Year Ended December 31, (in thousands) 2023 2022 2021 Adjusted EBITDA (1)(2)(3) $ 56,855 $ 51,793 $ 80,657 Retail Gross Margin (4)(5) $ 136,650 $ 114,815 $ 132,534 (1) Adjusted EBITDA for the year ended December 31, 2021 includes a $60.0 million add back related to winter storm Uri and also includes a deduction of $2.2 million non-recurring legal settlement related to an add back in 2019.
Retail cost of revenues for the Retail Natural Gas Segment for the year ended December 31, 2022 were approximately $81.4 million, an increase of approximately $43.0 million, or 112%, from approximately $38.4 million for the year ended December 31, 2021.
Retail cost of revenues for the Retail Natural Gas Segment for the year ended December 31, 2022 increased approximately $43.0 million, or 112%, from approximately $38.4 million for the year ended December 31, 2021.
This increase was primarily attributable to higher employee costs and higher bad debt expense in 2022 and lower employee costs in 2021 due to employee retention credits related to CARES Act that did not re-occur in 2022.
This increase was primarily attributable to higher employee costs and higher bad debt expense in 2022 and lower employee costs in 2021 due to employee retention credits related to CARES Act that did not re-occur in 2022. 60 Table of Contents Depreciation and Amortization Expense .
Even if we are permitted to pay such dividends on the Class A common stock and Series A Preferred Stock, our Board of Directors may elect to reduce or eliminate the dividends on the Class A common stock and Series A Preferred Stock to maintain cash balances for operations or for other reasons.
Even if we are permitted to pay dividends on the Series A Preferred Stock, our Board of Directors may elect to reduce, eliminate or suspend the dividends on the Series A Preferred Stock, in order to maintain cash balances for operations or for other reasons.
As of December 31, 2022, we operated in 102 utility service territories across 19 states and the District of Columbia. Our business consists of two operating segments: • Retail Electricity Segment .
As of December 31, 2023, we operated in 104 utility service territories across 20 states and the District of Columbia. Our business consists of two operating segments: • Retail Electricity Segment .
See discussion below. (2) Adjusted EBITDA for the year ended December 31, 2022 includes a deduction of $5.2 million related to proceeds received under an ERCOT (winter storm Uri) securitization mechanism in June 2022. See further discussion below.
See discussion below. (2) Adjusted EBITDA for the year ended December 31, 2022 includes a deduction of $5.2 million related to proceeds received under an ERCOT (winter storm Uri) securitization mechanism in June 2022. See further discussion below. (3) Adjusted EBITDA for the year ended December 31, 2023 includes a $0.8 million add back related to merger agreement expense.
Total retail cost of revenues for the year ended December 31, 2022 was approximately $357.1 million, an increase of approximately $33.9 million, or 10%, from approximately $323.2 million for the year ended December 31, 2021.
Total retail cost of revenues for the year ended December 31, 2022 increased approximately $33.9 million, or 10%, from approximately $323.2 million for the year ended December 31, 2021.
During the year ended December 31, 2022, we paid $7.6 million of dividends to holders of our Series A Preferred Stock, and as of December 31, 2022, we had accrued $2.4 million related to dividends to holders of our Series A Preferred Stock, which we paid on January 17, 2023.
During the year ended December 31, 2023, we paid $10.3 million of dividends to holders of our Series A Preferred Stock, and as of December 31, 2023, we had accrued $2.7 million related to dividends to holders of our Series A Preferred Stock, which we paid on January 16, 2024.
(4) Retail Gross Margin for the year ended December 31, 2022 includes a deduction of $9.6 million non-recurring credit related to winter storm Uri add back in 2021. Total Revenues.
(4) Retail Gross Margin for the year ended December 31, 2022 includes a deduction of $9.6 million non-recurring credit related to winter storm Uri add back in 2021. (5) Adjusted EBITDA for the year ended December 31, 2023 includes a $0.8 million add back related to merger agreement expense. Total Revenues.
(In thousands) Retail Electricity Retail Natural Gas Total % Net Annual Increase (Decrease) December 31, 2019 533 139 672 Additions 38 8 46 Attrition (268) (50) (318) December 31, 2020 303 97 400 (40)% Additions 110 47 157 Attrition (115) (34) (149) December 31, 2021 298 110 408 2% Additions 40 46 86 Attrition (137) (26) (163) December 31, 2022 201 130 331 (19)% Customer attrition occurs primarily as a result of: (i) customer initiated switches; (ii) residential moves (iii) disconnection resulting from customer payment defaults and (iv) pro-active non-renewal of contracts.
(In thousands) Retail Electricity Retail Natural Gas Total % Net Annual Increase (Decrease) December 31, 2020 303 97 400 Additions 110 47 157 Attrition (115) (34) (149) December 31, 2021 298 110 408 2% Additions 40 46 86 Attrition (137) (26) (163) December 31, 2022 201 130 331 (19)% Additions 118 22 140 Attrition (102) (34) (136) December 31, 2023 217 118 335 1% 50 Table of Contents Customer attrition occurs primarily as a result of: (i) customer initiated switches; (ii) residential moves (iii) disconnection resulting from customer payment defaults and (iv) pro-active non-renewal of contracts.
This decrease was primarily due to a decrease in electricity and natural gas volumes as a result of a smaller customer book in 2021 as compared to 2020, partially offset by an increase in electricity unit revenue per MWh. 52 Table of Contents Analysis of the impact of changes in prices and volumes between the years ended December 31, 2022, 2021 and 2020 are as follows: 2022 vs. 2021 2021 vs. 2020 Change in electricity volumes sold $ (30.5) $ (156.3) Change in natural gas volumes sold 25.6 (21.1) Change in electricity unit revenue per MWh 61.4 16.6 Change in electricity unit revenue per MWh - winter storm Uri (0.9) 0.9 Change in natural gas unit revenue per MMBtu 9.5 2.0 Change in net asset optimization (expense) revenue 1.9 (3.5) Change in total revenues $ 67.0 $ (161.4) Retail Cost of Revenues .
This increase was primarily due to an increase in electricity unit revenue per MWh and higher natural gas volumes sold as a result of a larger natural gas customer book in 2022 as compared to 2021. 59 Table of Contents Analysis of the impact of changes in prices and volumes between the years ended December 31, 2023, 2022 and 2021 are as follows: 2023 vs. 2022 2022 vs. 2021 Change in electricity volumes sold $ (60.6) $ (30.5) Change in natural gas volumes sold (2.9) 25.6 Change in electricity unit revenue per MWh 36.3 61.4 Change in electricity unit revenue per MWh - winter storm Uri — (0.9) Change in natural gas unit revenue per MMBtu 3.7 9.5 Change in net asset optimization (expense) revenue (5.0) 1.9 Change in other revenue 3.2 — Change in total revenues $ (25.3) $ 67.0 Retail Cost of Revenues .
(2) The availability of Subordinated Facility is dependent on our Founder's willingness and ability to lend.
(2) The availability of Subordinated Facility is dependent on Mr. Maxwell's willingness and ability to lend.
Retail Natural Gas Segment Total revenues for the Retail Natural Gas Segment for the year ended December 31, 2022 were approximately $110.1 million, an increase of approximately $35.0 million, or 47%, from approximately $75.1 million for the year ended December 31, 2021.
Retail Natural Gas Segment Total revenues for the Retail Natural Gas Segment for the year ended December 31, 2023 were approximately $110.9 million, an increase of approximately $0.8 million, or 1%, from approximately $110.1 million for the year ended December 31, 2022.
General and administrative expense for the year ended December 31, 2022 was approximately $61.9 million, an increase of approximately $17.6 million, or 40%, as compared to $44.3 million for the year ended December 31, 2021.
General and administrative expense for the year ended December 31, 2022 increased approximately $17.6 million, or 40%, as compared to $44.3 million for the year ended December 31, 2021.
Total revenues for the year ended December 31, 2022 were approximately $460.5 million, an increase of approximately $67.0 million, or 17%, from approximately $393.5 million for the year ended December 31, 2021.
Total revenues for the year ended December 31, 2022 increased approximately $67.0 million, or 17%, from approximately $393.5 million for the year ended December 31, 2021.
This decrease was primarily attributable to a decrease in volumes of $21.1 million, offset by higher rates, which resulted in an increase in total revenues of $2.0 million.
This increase was primarily attributable to higher rates, which resulted in an increase in total revenues of $3.7 million, partially offset by a decrease in volumes of $2.9 million.
The decrease was primarily due to lower volumes of $9.2 million, offset by higher supply costs of $6.8 million, and an increase of $2.2 million due to change in the fair value of our retail derivative portfolio used for hedging.
The decrease was primarily due to lower supply costs of $12.5 million, lower volumes of $2.1 million, offset by an increase of $1.4 million due to change in the fair value of our retail derivative portfolio used for hedging.
This increase was primarily due to a larger customer book in 2022 compared to 2021. The volumes of natural gas sold decreased from 11,100,446 MMBtu for the year ended December 31, 2020 to 8,611,285 MMBtu for the year ended December 31, 2021.
This decrease was primarily due to a smaller customer book in 2023 compared to 2022. The volumes of natural gas sold increased from 8,611,285 MMBtu for the year ended December 31, 2021 to 11,558,952 MMBtu for the year ended December 31, 2022. This increase was primarily due to a larger customer book in 2022 compared to 2021.
Cash Flows Our cash flows were as follows for the respective periods (in thousands): Year Ended December 31, 2022 2021 2020 Net cash provided by operating activities $ 16,207 $ 12,702 $ 91,831 Net cash used in by investing activities $ (6,871) $ (6,510) $ (2,154) Net cash used in financing activities $ (49,305) $ (2,556) $ (75,661) Cash Flows Provided by Operating Activities .
Cash Flows Our cash flows were as follows for the respective periods (in thousands): Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 49,315 $ 16,207 $ 12,702 Net cash used in by investing activities $ (1,435) $ (6,871) $ (6,510) Net cash used in financing activities $ (40,636) $ (49,305) $ (2,556) Cash Flows Provided by Operating Activities .
Customer attrition for the year ended December 31, 2022 was higher than the prior year due to the sharp increase in commodity prices across the industry. 45 Table of Contents Customer Acquisition Costs Managing customer acquisition costs is a key component of our profitability.
Customer attrition for the year ended December 31, 2023 was lower than the year ended ended December 31, 2022 prior year due to a decrease in commodity prices across the industry in 2023, compared to 2022. Customer Acquisition Costs Managing customer acquisition costs is a key component of our profitability.
The following table presents a reconciliation of Retail Gross Margin to gross profit for each of the periods indicated. 50 Table of Contents Year Ended December 31, (in thousands) 2022 2021 2020 Reconciliation of Retail Gross Margin to Gross Profit: Total Revenues $ 460,493 $ 393,485 $ 554,890 Less: Retail cost of revenues 357,096 323,219 344,592 Gross Profit $ 103,397 $ 70,266 $ 210,298 Less: Net asset optimization expense (2,322) (4,243) (657) Net, gain (loss) on non-trading derivative instruments 17,305 22,130 (23,439) Net, cash settlements on non-trading derivative instruments (35,966) (15,752) 37,921 Non-recurring event - winter storm Uri 9,565 (64,403) — Retail Gross Margin $ 114,815 $ 132,534 $ 196,473 Retail Gross Margin - Retail Electricity Segment (1)(2) $ 82,749 $ 96,009 $ 143,233 Retail Gross Margin - Retail Natural Gas Segment $ 32,066 $ 36,525 $ 53,240 (1) Retail Gross Margin for the year ended December 31, 2021 includes a $0.5 million reduction related to the winter storm Uri credit settlements received and includes a $64.4 million add back related to winter storm Uri.
The following table presents a reconciliation of Retail Gross Margin to gross profit for each of the periods indicated. 57 Table of Contents Year Ended December 31, (in thousands) 2023 2022 2021 Reconciliation of Retail Gross Margin to Gross Profit: Total Revenues $ 435,192 $ 460,493 $ 393,485 Less: Retail cost of revenues 310,744 357,096 323,219 Gross Profit $ 124,448 $ 103,397 $ 70,266 Less: Net asset optimization expense (7,326) (2,322) (4,243) Net, (loss) gain on non-trading derivative instruments (70,304) 17,305 22,130 Net, cash settlements on non-trading derivative instruments 65,428 (35,966) (15,752) Non-recurring event - winter storm Uri — 9,565 (64,403) Retail Gross Margin $ 136,650 $ 114,815 $ 132,534 Retail Gross Margin - Retail Electricity Segment (1)(2) $ 87,566 $ 82,749 $ 96,009 Retail Gross Margin - Retail Natural Gas Segment $ 47,489 $ 32,066 $ 36,525 Retail Gross Margin - Other $ 1,595 $ — $ — (1) Retail Gross Margin for the year ended December 31, 2021 includes a $0.5 million reduction related to the winter storm Uri credit settlements received and includes a $64.4 million add back related to winter storm Uri.
Management compensates for the limitations of Adjusted EBITDA and Retail Gross Margin as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management’s decision-making process. 51 Table of Contents Consolidated Results of Operations (In Thousands) Year Ended December 31, 2022 2021 2020 Revenues: Retail revenues $ 462,815 $ 397,728 $ 555,547 Net asset optimization (expense) revenues (2,322) (4,243) (657) Total Revenues 460,493 393,485 554,890 Operating Expenses: Retail cost of revenues 357,096 323,219 344,592 General and administrative expense 61,933 44,279 90,734 Depreciation and amortization 16,703 21,578 30,767 Total Operating Expenses 435,732 389,076 466,093 Operating income 24,761 4,409 88,797 Other (expense)/income: Interest expense (7,204) (4,926) (5,266) Interest and other income 129 370 423 Total Other (Expenses)/Income (7,075) (4,556) (4,843) Income (loss) before income tax expense 17,686 (147) 83,954 Income tax expense 6,483 5,266 17,880 Net income (loss) $ 11,203 $ (5,413) $ 66,074 Other Performance Metrics: Adjusted EBITDA (1) (2) $ 51,793 $ 80,657 $ 106,634 Retail Gross Margin (1) (3)(4) $ 114,815 $ 132,534 $ 196,473 Customer Acquisition Costs $ 5,870 $ 1,415 $ 1,513 RCE Attrition 3.8 % 3.3 % 5.0 % Distributions paid to Class B non-controlling unit holders and dividends paid to Class A common shareholders $ (26,014) $ (28,423) $ (40,019) (1) Adjusted EBITDA and Retail Gross Margin are non-GAAP financial measures.
Management compensates for the limitations of Adjusted EBITDA and Retail Gross Margin as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management’s decision-making process. 58 Table of Contents Consolidated Results of Operations (In Thousands) Year Ended December 31, 2023 2022 2021 Revenues: Retail revenues $ 439,360 $ 462,815 $ 397,728 Net asset optimization expense (7,326) (2,322) (4,243) Other revenue 3,158 — — Total Revenues 435,192 460,493 393,485 Operating Expenses: Retail cost of revenues 310,744 357,096 323,219 General and administrative expense 68,874 61,933 44,279 Depreciation and amortization 9,102 16,703 21,578 Total Operating Expenses 388,720 435,732 389,076 Operating income 46,472 24,761 4,409 Other (expense)/income: Interest expense (9,334) (7,204) (4,926) Interest and other income 109 129 370 Total Other (Expenses)/Income (9,225) (7,075) (4,556) Income (loss) before income tax expense 37,247 17,686 (147) Income tax expense 11,142 6,483 5,266 Net income (loss) $ 26,105 $ 11,203 $ (5,413) Other Performance Metrics: Adjusted EBITDA (1) (2) (5) $ 56,855 $ 51,793 $ 80,657 Retail Gross Margin (1) (3)(4) $ 136,650 $ 114,815 $ 132,534 Customer Acquisition Costs $ 6,736 $ 5,870 $ 1,415 RCE Attrition 3.4 % 3.8 % 3.3 % Distributions paid to Class B non-controlling unit holders and dividends paid to Class A common shareholders $ (7,182) $ (26,014) $ (28,423) (1) Adjusted EBITDA and Retail Gross Margin are non-GAAP financial measures.
Unit margins were flat in 2021 compared to the prior year. The volumes of electricity sold decreased from 2,686,083 MWh for the year ended December 31, 2021 to 2,433,906 MWh for the year ended December 31, 2022. This decrease was primarily due to a smaller customer book in 2022.
This decrease was primarily due to a smaller customer book during 2023. The volumes of electricity sold decreased from 2,677,681 MWh for the year ended December 31, 2021 to 2,433,906 MWh for the year ended December 31, 2022. This decrease was primarily due to a smaller customer book in 2022 as compared to 2021.
Retail gross margin for the Retail Natural Gas Segment for the year ended December 31, 2022 was approximately $32.1 million, a decrease of approximately $4.4 million, or 12% from approximately $36.5 million for the year ended December 31, 2021, and 2021 decreased approximately $16.7 million or 31% from approximately $53.2 million for the year ended December 31, 2020 as indicated in the table below (in millions). 56 Table of Contents 2022 vs. 2021 2021 vs. 2020 Change in volumes sold $ 12.4 $ (12.0) Change in unit margin per MMBtu (16.8) (4.7) Change in retail natural gas segment retail gross margin $ (4.4) $ (16.7) Unit margins were negatively impacted in 2022 compared to prior year primarily as a result of the higher natural cost supply costs due to higher commodity price environment in 2022.
Retail gross margin for the Retail Natural Gas Segment for the year ended December 31, 2023 was approximately $47.5 million, an increase of approximately $15.4 million, or 48% from approximately $32.1 million for the year ended December 31, 2022, and 2022 decreased approximately $4.4 million or 12% from approximately $36.5 million for the year ended December 31, 2021 as indicated in the table below (in millions). 2023 vs. 2022 2022 vs. 2021 Change in volumes sold $ (0.8) $ 12.4 Change in unit margin per MMBtu 16.2 (16.8) Change in retail natural gas segment retail gross margin $ 15.4 $ (4.4) Natural Gas unit margins improved in 2023 compared to prior year primarily as a result of the lower natural cost supply costs in 2023.
As our Senior Credit Facility is considered a material agreement and Adjusted EBITDA is a key component of our material covenants, we consider our covenant compliance to be material to the understanding of our financial condition and/or liquidity.
We believe this event is unusual, infrequent, and non-recurring in nature. 54 Table of Contents As our Senior Credit Facility is considered a material agreement and Adjusted EBITDA is a key component of our material covenants, we consider our covenant compliance to be material to the understanding of our financial condition and/or liquidity.
Cash flows used in investing activities increased by $0.4 million for the year ended December 31, 2022. The increase was primarily the result of increases related to customer acquisitions for the year ended December 31, 2022. Cash flows used in investing activities increased by $4.4 million for the year ended December 31, 2021.
The increase was primarily the result of increases related to customer acquisitions for the year ended December 31, 2022. Cash Flows Used in Financing Activities . Cash flows used in financing activities decreased by $8.7 million for the year ended December 31, 2023.
However, due to the revolving nature of the facility, excess cash available is generally used to reduce the balance outstanding, which at December 31, 2022 was $100.0 million. The current variable interest rate on the facility at December 31, 2022 was 7.83%.
However, due to the revolving nature of the facility, excess cash available is generally used to reduce the balance outstanding, which at December 31, 2023 was $97.0 million.
This loss was incurred due to uncharacteristic extended sub-freezing temperatures across Texas combined with the impact of the pricing caps ordered by ERCOT. We believe this event is unusual, infrequent, and non-recurring in nature.
This loss was incurred due to uncharacteristic extended sub-freezing temperatures across Texas combined with the impact of the pricing caps ordered by ERCOT.
Retail Electricity Segment Total revenues for the Retail Electricity Segment for the year ended December 31, 2022 were approximately $352.8 million, an increase of approximately $30.2 million, or 9%, from approximately $322.6 million for the year ended December 31, 2021. This increase was largely due to higher electricity prices, resulting in an increase of $61.4 million.
This decrease was partially offset by higher electricity prices, resulting in an increase of $36.3 million. Total revenues for the Retail Electricity Segment for the year ended December 31, 2022 increased approximately $30.2 million, or 9%, from approximately $322.6 million for the year ended December 31, 2021.
Our bad debt expense on non-POR revenues was as follows: Year Ended December 31, 2022 2021 2020 Total Non-POR Bad Debt as Percent of Revenue 3.0 % 0.2 % 1.6 % During the year ended December 31, 2022, we experienced higher bad debt expense versus 2021 primarily due to the Company increasing sales activities in non-POR markets and the impact of increased defaults on customer billings, in part due to higher natural gas and electricity prices.
During the year ended December 31, 2022, we experienced higher credit loss expense versus 2021 primarily due to the Company increasing sales activities in non-POR markets and the impact of increased defaults on customer billings, in part due to higher natural gas and electricity prices.
For the year ended December 31, 2022, we declared dividends of $8.0 million in the aggregate on our Series A Preferred Stock. On January 18, 2023, our Board of Directors declared a quarterly cash dividend in the amount of $0.90625 per share to holders of our Class A common stock and $0.71298 per share for the Series A Preferred Stock.
For the year ended December 31, 2023, we declared dividends of $10.6 million in the aggregate on our Series A Preferred Stock. On January 17, 2024, our Board of Directors declared a quarterly cash dividend in the amount of $0.75960 per share for the Series A Preferred Stock.
The following table shows our RCEs by segment as of December 31, 2022, 2021 and 2020: RCEs: December 31, (In thousands) 2022 2021 2020 Retail Electricity 201 298 303 Retail Natural Gas 130 110 97 Total Retail 331 408 400 The following table details our count of RCEs by geographical location as of December 31, 2022: RCEs by Geographic Location: (In thousands) Electricity % of Total Natural Gas % of Total Total % of Total New England 60 30% 13 10% 73 22% Mid-Atlantic 69 34% 57 44% 126 38% Midwest 20 10% 21 16% 41 12% Southwest 52 26% 39 30% 91 28% Total 201 100% 130 100% 331 100% The geographical locations noted above include the following states: • New England - Connecticut, Maine, Massachusetts and New Hampshire; • Mid-Atlantic - Delaware, Maryland (including the District of Columbia), New Jersey, New York and Pennsylvania; • Midwest - Illinois, Indiana, Michigan and Ohio; and • Southwest - Arizona, California, Colorado, Florida, Nevada and Texas.
The following table shows our RCEs by segment as of December 31, 2023, 2022 and 2021: RCEs: December 31, (In thousands) 2023 2022 2021 Retail Electricity 217 201 298 Retail Natural Gas 118 130 110 Total Retail 335 331 408 The following table details our count of RCEs by geographical location as of December 31, 2023: RCEs by Geographic Location: (In thousands) Electricity % of Total Natural Gas % of Total Total % of Total New England 64 29% 12 10% 76 23% Mid-Atlantic 95 44% 51 43% 146 44% Midwest 20 9% 20 17% 40 12% Southwest 38 18% 35 30% 73 21% Total 217 100% 118 100% 335 100% The geographical locations noted above include the following states: • New England - Connecticut, Maine, Massachusetts and New Hampshire; 49 Table of Contents • Mid-Atlantic - Delaware, Maryland (including the District of Columbia), New Jersey, New York, Pennsylvania and Virginia; • Midwest - Illinois, Indiana, Michigan and Ohio; and • Southwest - Arizona, California, Colorado, Florida, Nevada and Texas.
This decrease was primarily due to limitation on our door-to-door marketing as a result of COVID-19 during most of 2021. 54 Table of Contents Operating Segment Results Year Ended December 31, 2022 2021 2020 (in thousands, except volume and per unit operating data) Retail Electricity Segment Total Revenues $ 352,750 $ 322,594 $ 461,393 Retail Cost of Revenues 275,701 284,794 306,012 Less: Net (Losses) Gains on non-trading derivatives, net of cash settlements (15,265) 6,194 12,148 Non-recurring event - winter storm Uri 9,565 (64,403) — Retail Gross Margin (1) —Electricity $ 82,749 $ 96,009 $ 143,233 Volumes—Electricity (MWhs) (3) 2,433,906 2,677,681 4,049,543 Retail Gross Margin (2) (4) —Electricity per MWh $ 34.00 $ 35.86 $ 35.37 Retail Natural Gas Segment Total Revenues $ 110,065 $ 75,134 $ 94,154 Retail Cost of Revenues 81,395 38,425 38,580 Less: Net (Losses) Gains on non-trading derivatives, net of cash settlements (3,396) 184 2,334 Retail Gross Margin (1) —Gas $ 32,066 $ 36,525 $ 53,240 Volumes—Gas (MMBtus) 11,558,952 8,611,285 11,100,446 Retail Gross Margin (2) —Gas per MMBtu $ 2.77 $ 4.24 $ 4.80 (1) Reflects the Retail Gross Margin attributable to our Retail Electricity Segment or Retail Natural Gas Segment, as applicable.
The low customer acquisition cost in 2021 was primarily due to a limitation on our ability to use door-to-door marketing as a result of COVID-19 and a reduction in targeted organic customer acquisitions as we focused our efforts to improve our organic sales channels, including vendor selection and sales quality. 61 Table of Contents Operating Segment Results Year Ended December 31, 2023 2022 2021 (in thousands, except volume and per unit operating data) Retail Electricity Segment Total Revenues $ 328,466 $ 352,750 $ 322,594 Retail Cost of Revenues 240,979 275,701 284,794 Less: Net (Losses) Gains on non-trading derivatives, net of cash settlements (79) (15,265) 6,194 Non-recurring event - winter storm Uri — 9,565 (64,403) Retail Gross Margin (1) —Electricity $ 87,566 $ 82,749 $ 96,009 Volumes—Electricity (MWhs) (3) 2,008,947 2,433,906 2,677,681 Retail Gross Margin (2) (4) —Electricity per MWh $ 43.59 $ 34.00 $ 35.86 Retail Natural Gas Segment Total Revenues $ 110,894 $ 110,065 $ 75,134 Retail Cost of Revenues 68,202 81,395 38,425 Less: Net (Losses) Gains on non-trading derivatives, net of cash settlements (4,797) (3,396) 184 Retail Gross Margin (1) —Gas $ 47,489 $ 32,066 $ 36,525 Volumes—Gas (MMBtus) 11,252,862 11,558,952 8,611,285 Retail Gross Margin (2) —Gas per MMBtu $ 4.22 $ 2.77 $ 4.24 (1) Reflects the Retail Gross Margin attributable to our Retail Electricity Segment or Retail Natural Gas Segment, as applicable.
This increase was primarily due to an increase in electricity unit revenue per MWh and higher natural gas volumes sold as a result of a larger natural gas customer book in 2022 as compared to 2021.
This decrease was primarily due to lower electricity volumes sold as a result of a smaller electricity customer book during 2023 as compared to 2022 offset by an increase in electricity unit revenue per MWh.
As of December 31, 2022, we had total commitments of $195.0 million under our Senior Credit Facility, of which $134.4 million was outstanding, including $34.4 million of outstanding letters of credit. 58 Table of Contents For a description of the terms and conditions of our Senior Credit Facility, including descriptions of the interest rate, commitment fee, covenants and terms of default, please see Note 9 "Debt" in the notes to our condensed consolidated financial statements.
For a description of the terms and conditions of our Senior Credit Facility, including descriptions of the interest rate, commitment fee, covenants and terms of default, please see Note 9 "Debt" in the notes to our condensed consolidated financial statements. As of December 31, 2023, we were in compliance with the covenants under our Senior Credit Facility.
Retail gross margin for the Retail Electricity Segment for the year ended December 31, 2022 was approximately $82.7 million, a decrease of approximately $13.3 million, or 14%, as compared to the year ended December 31, 2021, and 2021 decreased approximately $47.2 million or 33% as compared to December 31, 2020 as indicated in the table below (in millions). 2022 vs. 2021 2021 vs. 2020 Change in volumes sold $ (3.0) $ (48.5) Change in gross margin - winter storm Uri (64.4) 64.4 Change in unit margin per MWh 54.1 (63.1) Change in retail electricity segment retail gross margin $ (13.3) $ (47.2) Unit margins were negatively impacted in 2022 compared to prior year primarily as a result of the higher electricity cost due to higher commodity price environment in 2022.
Retail gross margin for the Retail Electricity Segment for the year ended December 31, 2023 was approximately $87.6 million, an increase of approximately $4.8 million, or 6%, as compared to the year ended December 31, 2022, and 2022 decreased approximately $13.3 million or 14% as compared to December 31, 2021 as indicated in the table below (in millions). 2023 vs. 2022 2022 vs. 2021 Change in volumes sold $ (14.2) $ (3.0) Change in gross margin - winter storm Uri — (64.4) Change in unit margin per MWh 19.0 54.1 Change in retail electricity segment retail gross margin $ 4.8 $ (13.3) Electricity unit margin improved in 2023 compared to prior year as a result of higher electricity prices resulting in higher unit margin per MWh sold.
As described above, certain public utility commissions, regulatory agencies, and other governmental authorities in all of our markets have issued orders that impact the way we have historically acquired customers, such as door to door marketing.
As described above, certain public utility commissions, regulatory agencies, and other governmental authorities in all of our markets had issued orders that impacted the way we have historically acquired customers, such as door to door marketing. Our reduced marketing resulted in significantly reduced customer acquisition costs during the twelve months ended December 31, 2021, compared to historical amounts.
This increase was primarily attributable to an increase in volumes of $25.6 million, and higher rates, which resulted in an increase in total revenues of $9.5 million. Total revenues for the Retail Natural Gas Segment for the year ended December 31, 2021 decreased by approximately $19.1 million, or 20%, from approximately $94.2 million for the year ended December 31, 2020.
This increase was primarily attributable to an increase in volumes of $25.6 million, and higher rates, which resulted in an increase in total revenues of $9.5 million. 63 Table of Contents Retail cost of revenues for the Retail Natural Gas Segment for the year ended December 31, 2023 were approximately $68.2 million, a decrease of approximately $13.2 million, or 16%, from approximately $81.4 million for the year ended December 31, 2022.
The increase was primarily the result of increased capital spending and acquisition of customers for the year ended December 31, 2021. Cash Flows Used in Financing Activities . Cash flows used in financing activities increased by $46.7 million for the year ended December 31, 2022.
Cash flows used in financing activities increased by $46.7 million for the year ended December 31, 2022.
Unit margins were negatively impacted in 2021 compared to prior year as a result of higher commodity prices and lower volumes sold resulting in higher per unit cost . The volumes of natural gas sold increased from 8,611,285 MMBtu for the year ended December 31, 2021 to 11,558,952 MMBtu for the year ended December 31, 2022.
Unit margins were negatively impacted in 2022 compared to prior year primarily as a result of the higher natural cost supply costs due to higher commodity price environment in 2022. The volumes of natural gas sold decreased from 11,558,952 MMBtu for the year ended December 31, 2022 to 11,252,862 MMBtu for the year ended December 31, 2023.
This was offset by an increase in electricity costs of $65.6 million due to higher commodity price environment in 2022 and by an increase of $21.5 million due to a change in the value of our retail derivative portfolio used in hedging. 55 Table of Contents Retail cost of revenues for the Retail Electricity Segment for the year ended December 31, 2021 decreased approximately $21.2 million, or 7% , from approximately $306.0 million for the year ended December 31, 2020.
This was offset by an increase in electricity costs of $65.6 million due to higher commodity price environment in 2022 and by an increase of $21.5 million due to a change in the value of our retail derivative portfolio used in hedging.
Our principal liquidity requirements are to meet our financial commitments, finance current operations, fund organic growth and/or acquisitions, service debt and pay dividends.
Liquidity and Capital Resources Overview Our primary sources of liquidity are cash generated from operations and borrowings under our Senior Credit Facility. Our principal liquidity requirements are to meet our financial commitments, finance current operations, fund organic growth and/or acquisitions, service debt and pay dividends.
Depreciation and amortization expense for the year ended December 31, 2021 decreased approximately $9.2 million, or 30%, from approximately $30.8 million for the year ended December 31, 2020. This decrease was primarily due to the decreased amortization expense associated with customer relationship intangibles. 53 Table of Contents Customer Acquisition Cost .
Depreciation and amortization expense for the year ended December 31, 2023 was approximately $9.1 million, a decrease of approximately $7.6 million, or 46%, from approximately $16.7 million for the year ended December 31, 2022. This decrease was primarily due to the decreased amortization expense associated with customer relationship intangibles.
Sources of Liquidity and Capital Resources Senior Credit Facility On June 30, 2022, we entered into the Senior Credit Facility with Woodforest National Bank, as administrative agent, swing bank, swap bank, issuing bank, joint-lead arranger, sole bookrunner and syndication agent, BOKF, NA (d/b/a/ Bank of Texas), as joint-lead arranger and issuing bank, and the other financial institutions party thereto, which replaced our prior credit agreement.
The increase in cash flows used in financing activities was primarily due to an increased net paydown of our Senior Credit Facility of $70.0 million, offset by an increase in sub-debt borrowing of $20.0 million for the year ended December 31, 2022. 65 Table of Contents Sources of Liquidity and Capital Resources Senior Credit Facility On June 30, 2022, we entered into the Senior Credit Facility with Woodforest National Bank, as administrative agent, swing bank, swap bank, issuing bank, joint-lead arranger, sole bookrunner and syndication agent, BOKF, NA (d/b/a/ Bank of Texas), as joint-lead arranger and issuing bank, and the other financial institutions party thereto, which replaced our prior credit agreement.
For consistent presentation of the financial impact of winter storm Uri, $5.2 million of the $9.6 million is reflected as non-recurring items reducing Adjusted EBITDA for the year ended December 31, 2022. 48 Table of Contents We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our liquidity and financial condition and results of operations and that Adjusted EBITDA is also useful to investors as a financial indicator of our ability to incur and service debt, pay dividends and fund capital expenditures.
We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our liquidity and financial condition and results of operations and that Adjusted EBITDA is also useful to investors as a financial indicator of our ability to incur and service debt, pay dividends and fund capital expenditures.
This was partially offset by a decrease in volumes, which resulted in a decrease of $30.5 million, and a decrease of $0.9 million related to electricity revenue due to winter storm Uri in 2021 that did not re-occur in 2022.
This was partially offset by a decrease in volumes, which resulted in a decrease of $30.5 million, and a decrease of $0.9 million related to electricity revenue due to winter storm Uri in 2021 that did not re-occur in 2022. 62 Table of Contents Retail cost of revenues for the Retail Electricity Segment for the year ended December 31, 2023 was approximately $241.0 million, a decrease of approximately $34.7 million, or 13%, from approximately $275.7 million for the year ended December 31, 2022.
Customer acquisition cost for the year ended December 31, 2022 was approximately $5.9 million, an increase of approximately $4.5 million, or 321%, from approximately $1.4 million for the year ended December 31, 2021, and reflected a return to more historical levels.
Customer acquisition cost for the year ended December 31, 2022 increased approximately $4.5 million, or 315% from approximately $1.4 million for the year ended December 31, 2021, and reflected a return to more historical levels. This decrease was primarily due to limitation on our door-to-door marketing as a result of COVID-19 during most of 2021.
Retail cost of revenues for the Retail Electricity Segment for the year ended December 31, 2022 was approximately $275.7 million, a decrease of approximately $9.1 million, or 3%, from approximately $284.8 million for the year ended December 31, 2021.
Total retail cost of revenues for the year ended December 31, 2023 was approximately $310.7 million, a decrease of approximately $46.4 million, or 13%, from approximately $357.1 million for the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeEconomic conditions may affect our customers' ability to pay bills in a timely manner, which could increase customer delinquencies and may lead to an increase in bad debt expense. Our bad debt expense for the year ended December 31, 2022, 2021 and 2020 was approximately 3.0%, 0.2% and 1.6% of non-POR market retail revenues, respectively.
Biggest changeEconomic conditions may affect our customers' ability to pay bills in a timely manner, which could increase customer delinquencies and may lead to an increase in bad debt expense. Our bad debt expense for the year ended December 31, 2023, 2022 and 2021 was approximately 1.7%, 3.0% and 0.2% of non-POR market retail revenues, respectively.
During the same period, we paid these local regulated utilities a weighted average discount of approximately 0.9%, 0.9% and 1.2%, respectively, of total revenues for customer credit risk protection.
During the same period, we paid these local regulated utilities a weighted average discount of approximately 1.0%, 0.9% and 0.9%, respectively, of total revenues for customer credit risk protection.
In certain of the POR markets in which we operate, the utilities limit their collections exposure by retaining the ability to transfer a delinquent account back to us for collection when collections are past due for a specified period. 65 Table of Contents If our collection efforts are unsuccessful, we return the account to the local regulated utility for termination of service.
In certain of the POR markets in which we operate, the utilities limit their collections exposure by retaining the ability to transfer a delinquent account back to us for collection when collections are past due for a specified period. 72 Table of Contents If our collection efforts are unsuccessful, we return the account to the local regulated utility for termination of service.
See “Management's Discussion and Analysis of Financial Condition and Results of Operations—Drivers of Our Business—Customer Credit Risk” for an analysis of our bad debt expense related to non-POR markets during 2022. We are exposed to wholesale counterparty credit risk in our retail and asset optimization activities.
See “Management's Discussion and Analysis of Financial Condition and Results of Operations—Drivers of Our Business—Customer Credit Risk” for an analysis of our bad debt expense related to non-POR markets during 2023. We are exposed to wholesale counterparty credit risk in our retail and asset optimization activities.
The credit worthiness of the remaining exposure with other customers was evaluated with no material allowance recorded at December 31, 2022 and 2021. Interest Rate Risk We are exposed to fluctuations in interest rates under our Senior Credit Facility and our Series A Preferred Stock.
The credit worthiness of the remaining exposure with other customers was evaluated with no material allowance recorded at December 31, 2023 and 2022. Interest Rate Risk We are exposed to fluctuations in interest rates under our Senior Credit Facility and our Series A Preferred Stock.
Our net (loss)/gain on our non-trading derivative instruments, net of cash settlements, was $(18.7) million and $6.4 million for the years ended December 31, 2022 and December 31, 2021, respectively. We have adopted risk management policies to measure and limit market risk associated with our fixed-price portfolio and our hedging activities.
Our net (loss)/gain on our non-trading derivative instruments, net of cash settlements, was $(4.9) million and $(18.7) million for the years ended December 31, 2023 and December 31, 2022, respectively. We have adopted risk management policies to measure and limit market risk associated with our fixed-price portfolio and our hedging activities.
At December 31, 2022, we were co-borrowers under the Senior Credit Facility, under which $100.0 million of variable rate indebtedness was outstanding. Based on the average amount of our variable rate indebtedness outstanding during the year ended December 31, 2022, a 1% percent increase in interest rates would have resulted in additional annual interest expense of approximately $1.0 million.
At December 31, 2023, we were co-borrowers under the Senior Credit Facility, under which $97.0 million of variable rate indebtedness was outstanding. Based on the average amount of our variable rate indebtedness outstanding during the year ended December 31, 2023, a 1% percent increase in interest rates would have resulted in additional annual interest expense of approximately $1.0 million.
We manage this risk at a counterparty level and secure our exposure with collateral or guarantees when needed. At December 31, 2022 and 2021, approximately $1.9 million and $6.6 million of our total exposure of $2.8 million and $7.2 million, respectively, was either with a non-investment grade counterparty or otherwise not secured with collateral or a guarantee.
We manage this risk at a counterparty level and secure our exposure with collateral or guarantees when needed. At December 31, 2023 and 2022, approximately $2.1 million and $1.9 million of our total exposure of $2.8 million and $2.8 million, respectively, was either with a non-investment grade counterparty or otherwise not secured with collateral or a guarantee.
Approximately 59%, 59% and 64% of our retail revenues were derived from territories in which substantially all of our credit risk was with local regulated utility companies as of December 31, 2022, 2021 and 2020, respectively, all of which had investment grade ratings as of such date.
Approximately 55%, 59% and 59% of our retail revenues were derived from territories in which substantially all of our credit risk was with local regulated utility companies as of December 31, 2023, 2022 and 2021, respectively, all of which had investment grade ratings as of such date.
As of December 31, 2022, our Gas Non-Trading Fixed Price Open Position (hedges net of retail load) was a short position of 397,632 MMBtu. An increase of 10% in the market prices (NYMEX) from their December 31, 2022 levels would have decreased the fair market value of our net non-trading energy portfolio by $0.1 million.
As of December 31, 2023, our Gas Non-Trading Fixed Price Open Position (hedges net of retail load) was a short position of 295,068 MMBtu. An increase of 10% in the market prices (NYMEX) from their December 31, 2023 levels would have decreased the fair market value of our net non-trading energy portfolio by less than $0.1 million.
During the year ended December 31, 2022, we paid $7.6 million of dividends to holders of our Series A Preferred Stock, and as of December 31, 2022, based on the Series A Preferred Stock outstanding on December 31, 2022, a 1.0% increase in interest rates would have resulted in additional dividends of $0.9 million for the year. 66 Table of Contents
During the year ended December 31, 2023, we paid $10.3 million of dividends to holders of our Series A Preferred Stock, and as of December 31, 2023, based on the Series A Preferred Stock outstanding on December 31, 2023, a 1.0% increase in interest rates would have resulted in additional dividends of $0.9 million for the year. 73 Table of Contents
An increase of 10% in the forward market prices from their December 31, 2022 levels would have increased the fair market value of our net non-trading energy portfolio by $1.2 million.
An increase of 10% in the forward market prices from their December 31, 2023 levels would have decreased the fair market value of our net non-trading energy portfolio by $1.3 million.
Likewise, a decrease of 10% in the forward market prices from their December 31, 2022 levels would have decreased the fair market value of our non-trading energy derivatives by $1.2 million.
Likewise, a decrease of 10% in the forward market prices from their December 31, 2023 levels would have increased the fair market value of our non-trading energy derivatives by $1.3 million.
Likewise, a decrease of 10% in the market prices (NYMEX) from their December 31, 2022 levels would have increased the fair market value of our non-trading energy derivatives by $0.1 million. As of December 31, 2022, our Electricity Non-Trading Fixed Price Open Position (hedges net of retail load) was a long position of 197,319 MWhs.
Likewise, a decrease of 10% in the market prices (NYMEX) from their December 31, 2023 levels would have increased the fair market value of our non-trading energy derivatives by less than $0.1 million. As of December 31, 2023, our Electricity Non-Trading Fixed Price Open Position (hedges net of retail load) was a short position of 280,418 MWhs.
Added
Following the cessation of the publication of U.S. LIBOR on June 30, 2023, we use Three Month CME Term SOFR plus a tenor spread of 0.26161 percent (or 26.161 bps) to calculate the dividend rate on the Series A Preferred Stock pursuant to the rules of the Adjustable Interest Rate (LIBOR) Act.

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