Loans Bad Credit Online – SPARK ENERGY : MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the related notes thereto included elsewhere in this Annual
Report. In this Annual Report, the terms "Spark Energy," "Company," "we," "us"
and "our" refer collectively to Spark Energy, Inc. and its subsidiaries.
Overview

We are an independent retail energy services company founded in 1999 that
provides residential and commercial customers in competitive markets across the
United States with an alternative choice for natural gas and electricity. We
purchase our natural gas and electricity supply from a variety of wholesale
providers and bill our customers monthly for the delivery of natural gas and
electricity based on their consumption at either a fixed or variable price.
Natural gas and electricity are then distributed to our customers by local
regulated utility companies through their existing infrastructure. As of
December 31, 2020, we operated in 100 utility service territories across 19
states and the District of Columbia.
Our business consists of two operating segments:

•Retail Electricity Segment. In this segment, we purchase electricity supply
through physical and financial transactions with market counterparties and ISOs
and supply electricity to residential and commercial consumers pursuant to
fixed-price and variable-price contracts. For the years ended December 31, 2020,
2019 and 2018, approximately 83%, 85% and 86%, respectively, of our retail
revenues were derived from the sale of electricity.

•Retail Natural Gas Segment. 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, 2020,
2019 and 2018, approximately 17%, 15% and 14%, respectively, of our retail
revenues were derived from the sale of natural gas.

Recent Developments

Extreme Winter Weather Event

In February 2021, the U.S. experienced winter storm Uri, an unprecedented storm
bringing extreme cold temperatures to the central U.S., including Texas. As a
result of increased power demand for customers across the state of Texas and
power generation disruptions during the weather event, power and ancillary costs
in the Electric Reliability Council of Texas ("ERCOT") service area reached or
exceeded maximum allowed clearing prices. The overall impact of winter storm Uri
is still being assessed by management; however, we expect the impact of the
weather event will result in a significant loss that will be reflected in our
first quarter 2021 results of operations. Uncertainty exists with respect to the
financial impact of the weather event due in part to outstanding pricing and
volume settlement data from ERCOT; the results of formal disputes regarding
pricing and volume settlement data received to date, for which we are exploring
all legal options; and any corrective action by the State of Texas, ERCOT, the
Railroad Commission of Texas, or the Public Utility Commission of Texas.
Possible action may include resettling pricing across the supply chain (i.e.
fuel supply, wholesale pricing of generation, or allocating the financial
impacts of market-wide load shed ratably across all retail market participants).
During the winter storm Uri event, we were required to post a significant amount
of collateral with ERCOT. Despite these posting requirements, we consistently
maintained, and continue to maintain, sufficient liquidity to conduct our
operations in the ordinary course.

Senior Credit Facility

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On October 30, 2020, a new lender was added to the Senior Credit Facility,
bringing total commitments under the Senior Credit Facility to $202.5 million.

On January 19, 2021, we increased the total commitments under our Senior Credit
Facility to $227.5 million.

Appointment of Chief Executive Officer

On November 2, 2020, our Board of Directors appointed W. Keith Maxwell III, who
had served as our interim Chief Executive Officer since March of 2020, as Chief
Executive Officer.

COVID-19

The outbreak of the novel coronavirus ("COVID-19") is a rapidly developing
situation around the globe that has adversely impacted economic activity and
conditions worldwide. In response to the COVID-19 pandemic, we deployed a remote
working strategy in March 2020 that enables certain of our employees to work
from home, provided timely communication to team members, implemented protocols
for team members' safety, and initiated strategies for monitoring and responding
to local COVID-19 impacts. Our preparedness efforts, coupled with quick and
decisive plan implementation, resulted in minimal impacts to our workforce. Our
employees continue to work remotely, but we plan to return to an on-site work
strategy once health and safety conditions permit.

As described further below under "Drivers of our Business", during the year
ended December 31, 2020, compared to the year ended December 31, 2019, we had
fewer organic customer acquisitions, which resulted in reduced customer
acquisition costs. In addition, for the year ended December 31, 2020 compared to
year ended December 31, 2019, we experienced lower customer attrition, slight
increases in residential demand, and slight decreases in C&I demand. The
financial impact of the decrease in C&I demand was offset by higher demand from
residential customers, which have higher margins. Overall, we believe we have
not experienced a material adverse impact to our business, financial condition
or results of operations during the year ended December 31, 2020 as a result of
the COVID-19 pandemic. We are continuing to monitor developments involving our
workforce, customers and suppliers and the impact on our operations, business,
financial condition, liquidity and results of operations for future periods.
Please see "Item 1A-Risk Factors" in this Annual Report.

Drivers of Our Business

The success of our business and our profitability are impacted by a number of
drivers, the most significant of which are discussed below.

Customer Growth

Customer growth is a key driver of our operations. Our ability to acquire
customers organically or by acquisition is important to our success as we
experience ongoing customer attrition. 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"). The following table shows our RCEs by segment as of December 31, 2020,
2019 and 2018:
                       RCEs:
                                                December 31,
                       (In thousands)         2020     2019          2018
                       Retail Electricity     303      533           754
                       Retail Natural Gas      97      139           154
                       Total Retail           400      672           908


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The following table details our count of RCEs by geographical location as of
December 31, 2020:
RCEs by Geographic Location:
(In thousands)                     Electricity         % of Total        Natural Gas         % of Total         Total          % of Total
New England                             96                32%                 19                19%              115              29%
Mid-Atlantic                           115                38%                 33                34%              148              37%
Midwest                                 35                11%                 28                29%               63              16%
Southwest                               57                19%                 17                18%               74              18%
Total                                  303                100%                97                100%             400              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.

Across our market areas, we have operated under a number of different retail
brands. We currently operate under seven retail brands. During 2020 and 2019, we
consolidated certain brands and billing systems in an effort to simplify our
business operations where practical.

Our organic sales strategies are designed to offer competitive pricing, price
certainty, and/or green product offerings to residential and commercial
customers. We manage growth on a market-by-market basis by developing price
curves in each of the markets we serve and comparing the market prices to the
price offered by the local regulated utility. We then determine if there is an
opportunity in a particular market based on our ability to create a competitive
product on economic terms that provides customer value and satisfies our
profitability objectives. We develop marketing campaigns using a combination of
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, 2020, we added approximately 46,000 RCEs
through our various organic sales channels. This amount was significantly lower
than historical periods primarily due to limitation of our door-to-door
marketing as a result of COVID-19 during the majority of 2020 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. Although
we expect to acquire less customers organically in future periods than we have
historically while marketing restrictions are in place, which may cause our
customer book to decrease, we are unable to predict the ultimate effect on our
organic sales, financial results, cash flows, and liquidity at this time.

Due to the COVID-19 pandemic, certain public utility commissions, regulatory
agencies, and other governmental authorities in most of our markets continue to
maintain orders prohibiting energy services companies from door-to-door
marketing and in some cases telemarketing during the pandemic, which has
restricted some of the manners we have historically used to market for organic
sales. In response, we have focused on development of products and channels,
partners for web sales, as well as accelerating its telemarketing sales quality
programs. In November 2020, we began active door-to-door marketing activities in
certain markets where not prohibited by states' COVID-19 restrictions.

We acquire companies and portfolios of customers through both external and
affiliated channels. Our ability to realize returns from acquisitions that are
acceptable to us is dependent on our ability to successfully identify,
negotiate, finance and integrate acquisitions.

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RCE Activity

The following table shows our RCE activity during the years ended December 31,
2020, 2019 and 2018.
                                                                                                              % Net Annual Increase
(In thousands)                                Retail Electricity       Retail Natural Gas         Total            (Decrease)

December 31, 2017                                    868                      174                 1,042
  Additions                                          363                       69                  432
  Attrition                                         (477)                     (89)                (566)
December 31, 2018                                    754                      154                  908                (13)%
  Additions                                          189                       58                  247
  Attrition                                         (410)                     (73)                (483)
December 31, 2019                                    533                      139                  672                (26)%
Additions                                             38                       8                    46
Attrition                                           (268)                     (50)                (318)
December 31, 2020                                    303                       97                  400                (40)%



In 2018 and 2019, our attrition exceeded customer additions due to our
intentional non-renewal of certain larger C&I customer contracts, lower organic
sales spending, and fewer acquisitions and slightly higher attrition impacted by
our brand consolidation activities. In 2020, our attrition exceeded customer
additions primarily due to the non-renewal of certain larger C&I customer
contracts and limitations on our ability to sell through door-to-door and
telemarketing activities as a result of orders by regulatory agencies and
governmental authorities' responses to the COVID-19 pandemic. Average monthly
attrition rates during 2020, 2019 and 2018 were as follows:
                     Year Ended                      Quarter Ended
                    December 31    December 31    September 30   June 30   March 31

             2018       4.7%           6.7%           4.0%        3.7%       4.2%
             2019       5.0%           7.0%           4.0%        3.8%       5.4%
             2020       5.0%           7.7%           3.0%        3.5%       5.7%



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. Customer
attrition during the year ended December 31, 2020 was flat compared to the prior
year due to an active strategy to shrink our C&I customer book in 2019,
resulting in our pro-active non-renewal of some of our lower-margin large
commercial contracts.

Customer Acquisition Costs

Managing customer acquisition costs is a key component of our profitability.
Customer acquisition costs are those costs related to obtaining customers
organically and do not include the cost of acquiring customers through
acquisitions, which are recorded as customer relationships. For each of the
three years ended December 31, 2020, customer acquisition costs were as follows:

                                                 Year Ended December 31,
               (In thousands)                  2020       2019       2018
               Customer Acquisition Costs    $ 1,513$ 18,685$ 13,673

We strive to maintain a disciplined approach to recovery of our customer
acquisition costs within a 12 month period. 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

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acquisition costs in determining which markets we enter and the pricing of our
products in those markets. Accordingly, our results are significantly influenced
by our customer acquisition costs. Changes in customer acquisition costs from
period to period reflect our focus on growing organically versus growth through
acquisitions. We are currently focused on growing through organic sales
channels; however, we continue to evaluate opportunities to acquire customers
through acquisitions and pursue such acquisitions when it makes sense
economically or strategically.

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. Our reduced marketing resulted in significantly reduced customer
acquisition costs during the twelve months ended December 31, 2020 compared to
historical amounts. As long as these orders are in effect and marketing is
reduced, we expect to incur reduced customer acquisition costs in future
periods. However, we may incur increased costs through other manners of
marketing, such as online marketing. We also expect our customer acquisition
costs with respect to door to door marketing to return to historic levels once
door to door marketing restriction orders are lifted from all markets. We are
unable to predict the ultimate impact on our customer acquisition costs at this
time. Please see "Item 1A-Risk Factors" in this Annual Report."

Customer Credit Risk

Approximately 64% 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. Where we have customer credit risk, we record bad debt based on
an estimate of uncollectible amounts. Our bad debt expense on non-POR revenues
was as follows:
                                                          Year Ended December 31,
                                                           2020            2019    2018
  Total Non-POR Bad Debt as Percent of Revenue                     1.6  %  

3.3 % 2.6 %

During the year ended December 31, 2020, we experienced lower bad debt expense
versus 2019 primarily due to an increased focus on collection efforts, timely
billing and credit monitoring for new enrollments in non-POR markets. We have
also been able to collect on debts that were previously written off, which has
further reduced our bad debt expense during the year ended December 31, 2020.

The current COVID-19 pandemic has caused regulatory agencies and other
governmental authorities to take, and potentially continue to take, emergency or
other actions in light of the pandemic that may impact our customer credit risk,
including prohibiting the termination of service for non-payment during the
current COVID-19 pandemic, requiring deferred payment plans for certain
customers unable to pay their bills, and utilities increasing POR fees they
charge us in an effort to recoup their bad debt losses. Although the Company
noted no significant impact as a result of the COVID-19 pandemic related to
customer credit risk for the twelve months ended December 31, 2020, because of
the time lag between the delivery of electricity and natural gas, the issuance
of an invoice, and the customer's payment due date, there may be a substantial
lag in time before we are able to determine specific trends in bad debt expense
as a result of COVID-19. We are also monitoring other events that may have an
impact on our customer credit risk, such as the expiration of unemployment
benefits in many of our service territories. Please see "Item 1A-Risk Factors"
in this Annual Report.

For the years ended December 31, 2020, 2019 and 2018, approximately 64%, 67% and
66%, 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, 2020, 2019 and 2018, all of these local regulated
utility companies had investment grade ratings. During these same periods, we
paid these local regulated utilities a weighted average discount of
approximately 1.2%, 0.8% and 1.0%, respectively, of total revenues for customer
credit risk protection.

Weather Conditions

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Weather conditions directly influence the demand for natural gas and electricity
and affect the prices of energy commodities. Our hedging strategy is based on
forecasted customer energy usage, which can vary substantially as a result of
weather patterns deviating from historical norms. We are particularly sensitive
to this variability in our residential customer segment where energy usage is
highly sensitive to weather conditions that impact heating and cooling demand.

Our risk management policies direct that we hedge substantially all of our
forecasted demand, which is typically hedged to long-term normal weather
patterns. We also attempt to add additional protection through hedging from time
to time to protect us from potential volatility in markets where we have
historically experienced higher exposure to extreme weather conditions. Because
we attempt to match commodity purchases to anticipated demand, unanticipated
changes in weather patterns can have a significant impact on our operating
results and cash flows from period to period.

During the second half of 2020, we experienced milder than normal weather across
many of our markets as well as a slight decrease in C&I demand as a result of
the COVID-19 pandemic, both of which negatively impacted overall customer usage.
This was partially offset by slight increases in residential demand as a result
of the COVID-19 pandemic. The financial impact of overall demand reductions was
offset by increased margins as a result of our strategy to shift away from C&I
customers to a primarily residential customer base, resulting in an overall
positive impact on our electricity and natural gas unit margin in 2020.
See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Recent Development for additional discussion about the
expected impacts of winter storm Uri.

Asset Optimization

Our asset optimization opportunities primarily arise during the winter heating
season when demand for natural gas is typically at its highest. Given the
opportunistic nature of these activities and because we account for these
activities using the mark to market method of accounting, we experience
variability in our earnings from our asset optimization activities from year to
year.

Net asset optimization resulted in a loss of $0.7 million, a gain of
$2.8 million and a gain of $4.5 million for the years ended December 31, 2020,
2019 and 2018, respectively.

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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. These measures for the
three years ended December 31, 2020 were as follows:
                               Year Ended December 31,
(in thousands)           2020           2019           2018
Adjusted EBITDA       $ 106,634$  92,404$  70,716
Retail Gross Margin   $ 196,473$ 220,740$ 185,109



Adjusted EBITDA. We define "Adjusted EBITDA" as EBITDA less (i) customer
acquisition costs incurred in the current period, plus or minus (ii) net (loss)
gain on derivative instruments, and (iii) net current period cash settlements on
derivative instruments, plus (iv) non-cash compensation expense, and (v) other
non-cash and non-recurring operating items. EBITDA is defined as net income
(loss) before the provision for income taxes, interest expense and depreciation
and amortization.

We deduct all current period customer acquisition costs (representing spending
for organic customer acquisitions) in the Adjusted EBITDA calculation because
such costs reflect a cash outlay in the period in which they are incurred, even
though we capitalize and amortize such costs over two years. We do not deduct
the cost of customer acquisitions through acquisitions of businesses or
portfolios of customers in calculating Adjusted EBITDA.

We deduct our net gains (losses) on derivative instruments, excluding current
period cash settlements, from the Adjusted EBITDA calculation in order to remove
the non-cash impact of net gains and losses on these instruments. We also deduct
non-cash compensation expense that results from the issuance of restricted stock
units under our long-term incentive plan due to the non-cash nature of the
expense. Finally, we also adjust from time to time other non-cash or unusual
and/or infrequent charges due to either their non-cash nature or their
infrequency.

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. Adjusted EBITDA is a supplemental financial measure that
management and external users of our consolidated financial statements, such as
industry analysts, investors, commercial banks and rating agencies, use to
assess the following:

•our operating performance as compared to other publicly traded companies in the
retail energy industry, without regard to financing methods, capital structure
or historical cost basis;
•the ability of our assets to generate earnings sufficient to support our
proposed cash dividends;
•our ability to fund capital expenditures (including customer acquisition costs)
and incur and service debt; and
•our compliance with financial debt covenants. (Refer to Note 10 "Debt" in the
Company's audited consolidated financial statements for discussion of the
material terms of our Senior Credit Facility, including the covenant
requirements for our Minimum Fixed Charge Coverage Ratio, Maximum Total Leverage
Ratio, and Maximum Senior Secured Leverage Ratio.)

The GAAP measures most directly comparable to Adjusted EBITDA are net income
(loss) and net cash provided by (used in) operating activities. The following
table presents a reconciliation of Adjusted EBITDA to these GAAP measures for
each of the periods indicated.
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                                                                            Year Ended December 31,
(in thousands)                                                   2020                2019                2018

Reconciliation of Adjusted EBITDA to Net Income (Loss):
Net income (loss)

                                            $   68,218$   14,213$  (14,392)
Depreciation and amortization                                    30,767              40,987              52,658
Interest expense                                                  5,266               8,621               9,410
Income tax expense                                               15,736               7,257               2,077
EBITDA                                                          119,987              71,078              49,753
Less:
Net, losses on derivative instruments                           (23,386)            (67,749)            (18,170)
Net, cash settlements on derivative instruments                  37,729              42,820             (10,587)
Customer acquisition costs                                        1,513              18,685              13,673
    Plus:
    Non-cash compensation expense                                 2,503               5,487               5,879
    Non-recurring legal and regulatory settlements                    -              14,457                   -
   Gain on disposal of eRex                                           -              (4,862)                  -

Adjusted EBITDA                                              $  106,634$   92,404$   70,716

The following table presents a reconciliation of Adjusted EBITDA to net cash
provided by operating activities for each of the periods indicated.

                                                                         Year Ended December 31,
(in thousands)                                                2020                2019                2018

Reconciliation of Adjusted EBITDA to net cash provided by
operating activities:
Net cash provided by operating activities

                 $   91,831$   91,735$   59,763
Amortization of deferred financing costs                      (1,210)             (1,275)             (1,291)
Bad debt expense                                              (4,692)            (13,532)            (10,135)
Interest expense                                               5,266               8,621               9,410
Income tax expense                                            15,736               7,257               2,077

Changes in operating working capital
Accounts receivable, prepaids, current assets                (32,820)            (33,475)             10,482
Inventory                                                     (1,458)               (924)               (674)
Accounts payable and accrued liabilities                      36,301              11,534              (5,093)
Other                                                         (2,320)             22,463               6,177
Adjusted EBITDA                                           $  106,634$   92,404$   70,716
Cash Flow Data:
Cash flows provided by operating activities               $   91,831$   91,735$   59,763
Cash flows (used in) provided by investing activities     $   (2,154)$    1,398$  (18,981)
Cash flows used in financing activities                   $  (75,661)

$ (85,103)$ (20,563)

Retail Gross Margin. We define retail gross margin as operating income (loss)
plus (i) depreciation and amortization expenses and (ii) general and
administrative expenses, less (iii) net asset optimization revenues (expenses),
(iv) net gains (losses) on non-trading derivative instruments, and (v) net
current period cash settlements on non-trading derivative instruments. Retail
gross margin is included as a supplemental disclosure because it is a primary
performance measure used by our management to determine the performance of our
retail natural gas and electricity segments. As an indicator of our retail
energy business's operating performance, retail gross margin
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should not be considered an alternative to, or more meaningful than, operating
income (loss), its most directly comparable financial measure calculated and
presented in accordance with GAAP.

We believe retail gross margin provides information useful to investors as an
indicator of our retail energy business’s operating performance.

The GAAP measure most directly comparable to Retail Gross Margin is operating
income (loss). The following table presents a reconciliation of Retail Gross
Margin to operating income (loss) for each of the periods indicated.
                                                                         Year Ended December 31,
(in thousands)                                                2020                2019                2018

Reconciliation of Retail Gross Margin to Operating Income
(Loss):
Operating income (loss)

                                   $   88,797$   23,979$   (3,654)
Plus:
Depreciation and amortization                                 30,767              40,987              52,658
General and administrative expense                            90,734             133,534             111,431

Less:

Net asset optimization (expense) revenue                        (657)              2,771               4,511
Losses on non-trading derivative instruments                 (23,439)            (67,955)            (19,571)

Cash settlements on non-trading derivative instruments 37,921

       42,944              (9,614)
Retail Gross Margin                                       $  196,473$  220,740$  185,109
Retail Gross Margin - Retail Electricity Segment          $  143,233$  160,540$  124,668
Retail Gross Margin - Retail Natural Gas Segment          $   53,240

$ 60,200$ 60,441

Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin
should not be considered as alternatives to net income (loss), net cash provided
by operating activities, or operating income (loss). Adjusted EBITDA and Retail
Gross Margin are not presentations made in accordance with GAAP and have
limitations as analytical tools. You should not consider Adjusted EBITDA or
Retail Gross Margin in isolation or as a substitute for analysis of our results
as reported under GAAP. Because Adjusted EBITDA and Retail Gross Margin exclude
some, but not all, items that affect net income (loss), net cash provided by
operating activities, and operating income (loss), and are defined differently
by different companies in our industry, our definition of Adjusted EBITDA and
Retail Gross Margin may not be comparable to similarly titled measures of other
companies.
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.

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Consolidated Results of Operations
(In Thousands)                                                       Year Ended December 31,
                                                          2020                2019                 2018
Revenues:
Retail revenues                                       $  555,547$  810,954$ 1,001,417
Net asset optimization (expense) revenues                   (657)              2,771                4,511
Total Revenues                                           554,890             813,725            1,005,928
Operating Expenses:
Retail cost of revenues                                  344,592             615,225              845,493
General and administrative expense                        90,734             133,534              111,431
Depreciation and amortization                             30,767              40,987               52,658
Total Operating Expenses                                 466,093             789,746            1,009,582
Operating income (loss)                                   88,797              23,979               (3,654)
Other (expense)/income:
Interest expense                                          (5,266)             (8,621)              (9,410)

Gain on disposal of eRex                                       -               4,862                    -
Interest and other income                                    423               1,250                  749
Total Other (Expenses)/Income                             (4,843)             (2,509)              (8,661)
Income (loss) before income tax expense                   83,954              21,470              (12,315)
Income tax expense                                        15,736               7,257                2,077
Net income (loss)                                     $   68,218$   14,213$   (14,392)
Other Performance Metrics:
  Adjusted EBITDA (1)                                 $  106,634          $ 

92,404 $ 70,716

  Retail Gross Margin (1)                             $  196,473          $ 

220,740 $ 185,109

  Customer Acquisition Costs                          $    1,513          $ 

18,685 $ 14

  RCE Attrition                                              5.0  %              5.0  %               4.7  %

Distributions paid to Class B non-controlling unit
holders and dividends paid to Class A common $ (40,019) $

 (45,176)         $   (45,261)
shareholders



(1) Adjusted EBITDA and Retail Gross Margin are Non-GAAP financial measures. See
"-Non-GAAP Performance Measures" for a reconciliation of Adjusted EBITDA and
Retail Gross Margin to their most directly comparable GAAP financial measures.

Total Revenues. Total revenues for the year ended December 31, 2020 were
approximately $554.9 million, a decrease of approximately $258.8 million, or
32%, from approximately $813.7 million for the year ended December 31, 2019.
This decrease was primarily due to a decrease in electricity and natural gas
volumes as a result of a smaller customer book in 2020 as compared to 2019 and
milder weather, partially offset by an increase in electricity unit revenue per
MWh. Total revenues for the year ended December 31, 2019 decreased approximately
$192.2 million, or 19%, from approximately $1,005.9 million for the year ended
December 31, 2018. This decrease was primarily due to a decrease in electricity
and natural gas volumes as a result of a smaller C&I customer book in 2019 as
compared to 2018, partially offset by an increase in electricity unit revenue
per MWh.

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Analysis of the impact of changes in prices and volumes between the years ended
December 31, 2020, 2019 and 2018 are as follows:
                                                       2020 vs. 2019       

2019 vs. 2018

 Change in electricity volumes sold                   $       (254.0)     $ 

(221.5)

 Change in natural gas volumes sold                            (29.0)       

(18.4)

 Change in electricity unit revenue per MWh                     26.9        

46.5

 Change in natural gas unit revenue per MMBtu                    0.7        

2.9

 Change in net asset optimization (expense) revenue             (3.4)               (1.7)
 Change in total revenues                             $       (258.8)$       (192.2)



Retail Cost of Revenues. Total retail cost of revenues for the year ended
December 31, 2020 was approximately $344.6 million, a decrease of approximately
$270.6 million, or 44%, from approximately $615.2 million for the year ended
December 31, 2019. This decrease was primarily due to a decrease in electricity
and natural gas volumes as a result of a smaller customer book in 2020 as
compared to 2019, a decrease in electricity and natural gas unit cost, and a
change in fair value of our retail derivative portfolio. Total retail cost of
revenues for the year ended December 31, 2019 decreased approximately $230.3
million, or 27%, from approximately $845.5 million for the year ended
December 31, 2018. This decrease was primarily due to a decrease in electricity
and natural gas volumes as a result of a smaller C&I customer book in 2019, a
decrease in electricity and natural gas unit cost, and a change in fair value of
our retail derivative portfolio.

Analysis of the impact of changes in prices and volumes between the years ended
December 31, 2020, 2019, and 2018 are as follows:

                                                     2020 vs. 2019       

2019 vs. 2018

  Change in electricity volumes sold                $       (194.7)$       (189.5)
  Change in natural gas volumes sold                         (14.7)              (10.3)
  Change in electricity unit cost per MWh                    (15.1)              (21.4)
  Change in natural gas unit cost per MMBtu                   (6.6)               (4.9)
  Change in value of retail derivative portfolio             (39.5)               (4.2)
  Change in retail cost of revenues                 $       (270.6)$       (230.3)



General and Administrative Expense. General and administrative expense for the
year ended December 31, 2020 was approximately $90.7 million, a decrease of
approximately $42.8 million, or 32%, as compared to $133.5 million for the year
ended December 31, 2019. This decrease was primarily attributable to legal and
regulatory settlements and increased litigation expense in 2019 that did not
reoccur in 2020, a decrease in sales and marketing costs in 2020 due to
limitation on our door-to-door marketing as a result of COVID-19 and lower bad
debt expense in 2020 due to improved collections efforts. General and
administrative expense for the year ended December 31, 2019 increased
approximately $22.1 million or 20%, as compared to $111.4 million for the year
ended December 31, 2018. This increase was primarily attributable to
non-recurring legal and regulatory settlements and increased litigation expense
in 2019.

Depreciation and Amortization Expense. Depreciation and amortization expense for
the year ended December 31, 2020 was approximately $30.8 million, a decrease of
approximately $10.2 million, or 25%, from approximately $41.0 million for the
year ended December 31, 2019. 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, 2019
decreased approximately $11.7 million, or 22%, from approximately $52.7 million
for the year ended December 31, 2018. This decrease was primarily due to the
decreased amortization expense associated with customer relationship
intangibles.

Customer Acquisition Cost. Customer acquisition cost for the year ended
December 31, 2020 was approximately $1.5 million, a decrease of approximately
$17.2 million, or 92% from approximately $18.7 million for the year

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ended December 31, 2019. This decrease was primarily due to limitation on our
door-to-door marketing as a result of COVID-19 during the majority of 2020 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. Customer acquisition cost for the year ended December 31, 2019
increased approximately $5.0 million, or 37% from approximately $13.7 million
for the year ended December 31, 2018. This increase was primarily due to an
increase in the number of organic sales in 2019 as compared to 2018, as we
slowed our organic sales in 2018 to concentrate on acquisitions of companies and
portfolios of customers.










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Operating Segment Results
                                                                              Year Ended December 31,
                                                                 2020                   2019                   2018
                                                             (in thousands, except volume and per unit operating data)
Retail Electricity Segment
Total Revenues                                             $     461,393$     688,451$     863,451
Retail Cost of Revenues                                          306,012                552,250                762,771

Less: Net Gains (Losses) on non-trading derivatives, net
of cash settlements

                                               12,148                (24,339)               (23,988)
Retail Gross Margin (1) -Electricity                       $     143,233$     160,540$     124,668
Volumes-Electricity (MWhs)                                     4,049,543              6,416,568              8,630,653
Retail Gross Margin (2) -Electricity per MWh               $       35.37

$ 25.02$ 14.44

Retail Natural Gas Segment
Total Revenues                                             $      94,154$     122,503$     137,966
Retail Cost of Revenues                                           38,580                 62,975                 82,722

Less: Net Gains (Losses) on non-trading derivatives, net
of cash settlements

                                                2,334                   (672)                (5,197)
Retail Gross Margin (1) -Gas                               $      53,240$      60,200$      60,441
Volumes-Gas (MMBtus)                                          11,100,446             14,543,563             16,778,393
Retail Gross Margin (2) -Gas per MMBtu                     $        4.80

$ 4.14$ 3.60

(1) Reflects the Retail Gross Margin attributable to our Retail Electricity
Segment or Retail Natural Gas Segment, as applicable. Retail Gross Margin is a
non-GAAP financial measure. See "-Non-GAAP Performance Measures" for a
reconciliation of Retail Gross Margin to most directly comparable financial
measures presented in accordance with GAAP.
(2) Reflects the Retail Gross Margin for the Retail Electricity Segment or
Retail Natural Gas Segment, as applicable, divided by the total volumes in MWh
or MMBtu, respectively.
Retail Electricity Segment
Total revenues for the Retail Electricity Segment for the year ended
December 31, 2020 were approximately $461.4 million, a decrease of approximately
$227.1 million, or 33%, from approximately $688.5 million for the year ended
December 31, 2019. This decrease was largely due to lower volumes sold,
resulting in a decrease of $254.0 million as a result of a smaller customer book
in 2020. This decrease was partially offset by higher weighted average
electricity rates due to our customer mix shifting away from large commercial
customers, which resulted in an increase of $26.9 million. Total revenues for
the Retail Electricity Segment for the year ended December 31, 2019 decreased
approximately $175.0 million, or 20%, from approximately $863.5 million for the
year ended December 31, 2018. This decrease was largely due to lower volumes
sold, resulting in a decrease of $221.5 million as a result of a smaller
commercial book in 2019. This decrease was partially offset by higher weighted
average electricity rates, due to our customer mix shifting away from large
commercial customers, which resulted in an increase of $46.5 million.
Retail cost of revenues for the Retail Electricity Segment for the year ended
December 31, 2020 was approximately $306.0 million, a decrease of approximately
$246.3 million, or 45%, from approximately $552.3 million for the year ended
December 31, 2019. This decrease was primarily due to a decrease in volumes,
resulting in a decrease of $194.7 million. This decrease was further impacted by
decreased electricity supply costs, which resulted in a decrease in retail cost
of revenues of $15.1 million. Additionally, there was a decrease of $36.5
million due to a change in the value of our retail derivative portfolio used in
hedging. Retail cost of revenues for the Retail Electricity Segment for the year
ended December 31, 2019 decreased approximately $210.5 million, or 28%, from
approximately $762.8 million for the year ended December 31, 2018. This decrease
was primarily due to a decrease in volumes, resulting in a decrease of
$189.5 million. This decrease was further impacted by decreased electricity
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supply costs, which resulted in a decrease in retail cost of revenues of
$21.4 million. Additionally, there was an increase of $0.4 million due to a
change in the value of our retail derivative portfolio used in hedging.
Retail gross margin for the Retail Electricity Segment for the year ended
December 31, 2020 was approximately $143.2 million, a decrease of approximately
$17.4 million, or 11%, as compared to the year ended December 31, 2019, and 2019
increased approximately $35.8 million or 29% as compared to December 31, 2018 as
indicated in the table below (in millions).
                                                           2020 vs. 2019                2019 vs. 2018
Change in volumes sold                                   $        (59.2)$        (32.0)
Change in unit margin per MWh                                      41.8                         67.8

Change in retail electricity segment retail gross margin $ (17.4)

$ 35.8

Unit margins were positively impacted in 2020 and 2019 compared to prior years
primarily as a result of the higher volumes from our residential customers,
which tend to have higher unit margins than our C&I customers.
The volumes of electricity sold decreased from 6,416,568 MWh for the year ended
December 31, 2019 to 4,049,543 MWh for the year ended December 31, 2020. This
decrease was primarily due to a smaller C&I customer book in 2019. The volumes
of electricity sold decreased from 8,630,653 MWh for the year ended December 31,
2018 to 6,416,568 MWh for the year ended December 31, 2019. This decrease was
primarily due to a smaller C&I customer book in 2019.
Retail Natural Gas Segment
Total revenues for the Retail Natural Gas Segment for the year ended
December 31, 2020 were approximately $94.2 million, a decrease of approximately
$28.3 million, or 23%, from approximately $122.5 million for the year ended
December 31, 2019. This decrease was primarily attributable to a decrease in
volumes of $29.0 million, offset by higher rates, which resulted in an increase
in total revenues of $0.7 million. Total revenues for the Retail Natural Gas
Segment for the year ended December 31, 2019 decreased by approximately $15.5
million, or 11%, from approximately $138.0 million for the year ended
December 31, 2018. This decrease was primarily attributable to a decrease in
volumes of $18.4 million, offset by higher rates, which resulted in an increase
in total revenues of $2.9 million.
Retail cost of revenues for the Retail Natural Gas Segment for the year ended
December 31, 2020 were approximately $38.6 million, a decrease of approximately
$24.4 million, or 39%, from approximately $63.0 million for the year ended
December 31, 2019. This decrease was primarily due to lower supply costs of $6.6
million, a decrease of $14.7 million related to decreased volumes, and a
decrease of $3.0 million due to change in the fair value of our retail
derivative portfolio used for hedging. Retail cost of revenues for the Retail
Natural Gas Segment for the year ended December 31, 2019 decreased approximately
$19.7 million, or 24%, from approximately $82.7 million for the year ended
December 31, 2018. This decrease was primarily due to decreased supply costs of
$4.9 million, a decrease of $10.3 million related to decreased volumes, and a
decrease of $4.5 million due to change in the fair value of our retail
derivative portfolio used for hedging.
Retail gross margin for the Retail Natural Gas Segment for the year ended
December 31, 2020 was approximately $53.2 million, a decrease of approximately
$7.0 million, or 12% from approximately $60.2 million for the year ended
December 31, 2019, and 2019 decreased approximately $0.2 million or less than 1%
from approximately $60.4 million for the year ended December 31, 2018 as
indicated in the table below (in millions).
                                                          2020 vs. 2019                2019 vs. 2018
Change in volumes sold                                  $        (14.3)              $         (8.1)
Change in unit margin per MMBtu                                    7.3                          7.9
Change in retail natural gas segment retail gross
margin                                                  $         (7.0)              $         (0.2)


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Unit margins were positively impacted in 2020 and 2019 compared to prior years
as a result of higher volumes from our residential customers, which tend to have
higher unit margins than our commercial customers.
The volumes of natural gas sold decreased from 14,543,563 MMBtu for the year
ended December 31, 2019 to 11,100,446 MMBtu for the year ended December 31,
2020. This decrease was primarily due to milder-than-normal weather in 2020
compared to prior year. The volumes of natural gas sold decreased from
16,778,393 MMBtu for the year ended December 31, 2018 to 14,543,563 MMBtu for
the year ended December 31, 2019. This decrease was primarily due to
warmer-than-normal weather in the second and third quarters of 2019.
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. Our
liquidity requirements fluctuate with our level of customer acquisition costs,
acquisitions, collateral posting requirements on our derivative instruments
portfolio, distributions, the effects of the timing between the settlement of
payables and receivables, including the effect of bad debts, weather conditions,
and our general working capital needs for ongoing operations. We believe that
cash generated from operations and our available liquidity sources will be
sufficient to sustain current operations and to pay required taxes and quarterly
cash distributions, including the quarterly dividends to the holders of the
Class A common stock and the Series A Preferred Stock, for the next twelve
months. Estimating our liquidity requirements is highly dependent on
then-current market conditions, including impacts of the COVID-19 pandemic,
weather events, forward prices for natural gas and electricity, market
volatility and our then existing capital structure and requirements.

Liquidity Position
The following table details our available liquidity as of December 31, 2020:

                                                 December 31,
($ in thousands)                                     2020
Cash and cash equivalents                       $      71,684
Senior Credit Facility Availability (1) (2)            71,467

Subordinated Debt Facility Availability (3)            25,000
Total Liquidity                                 $     168,151


(1) Reflects amount of Letters of Credit that could be issued based on existing
covenants as of December 31, 2020.
(2) On January 19, 2021, we increased the total commitments under our Senior
Credit Facility from $202.5 million to $227.5 million, which will positively
affect liquidity in future quarters.
(3) The availability of the Subordinated Facility is dependent on our Founder's
willingness and ability to lend. See "-Sources of Liquidity-Subordinated Debt
Facility."

Borrowings and related posting of letters of credit under our Senior Credit
Facility are subject to material variations on a seasonal basis due to the
timing of commodity purchases to satisfy natural gas inventory requirements and
to meet customer demands during periods of peak usage. Additionally, borrowings
are subject to borrowing base and covenant restrictions.

During the winter storm Uri event, we were required to post a significant amount
of collateral with ERCOT. Despite these posting requirements, we consistently
maintained, and continue to maintain, sufficient liquidity to conduct our
operations in the ordinary course. As of February 28, 2021, we had
$148.6 million of cash, availability under our Senior Credit Facility and
Subordinated Debt Facility to meet any of our liquidity needs.

Cash Flows

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Our cash flows were as follows for the respective periods (in thousands):
                                                                Year Ended 

December 31,

                                                          2020           2019           2018
 Net cash provided by operating activities             $  91,831      $  

91,735 $ 59,763

Net cash (used in) provided by investing activities $ (2,154)$ 1,398$ (18,981)

 Net cash used in financing activities                 $ (75,661)     $ 

(85,103) $ (20,563)

Cash Flows Provided by Operating Activities. Cash flows provided by operating
activities for the year ended December 31, 2020 increased by $0.1 million
compared to the year ended December 31, 2019. The increase was primarily the
result of a higher net income in 2020 coupled with other changes in working
capital for the year ended December 31, 2020. Cash flows provided by operating
activities for the year ended December 31, 2019 increased by $32.0 million
compared to the year ended December 31, 2018. The increase was primarily the
result of higher net income in 2019 coupled with a decrease in the changes in
working capital for the year ended December 31, 2019.
Cash Flows Used in Investing Activities. Cash flows used in investing activities
increased by $3.6 million for the year ended December 31, 2020. The increase was
primarily the result of the proceeds received from the sale of the Company's
equity method investment in 2019, less payment to acquire the Starion customers,
with no corresponding proceeds or acquisitions in 2020. Cash flows used in
investing activities increased by $20.4 million for the year ended December 31,
2019. The increase was primarily the result of a reduction in the amount of cash
paid for acquisitions during the year ended December 31, 2019 compared to the
year ended December 31, 2018, and proceeds received from the sale of the
Company's equity method investment in 2019.
Cash Flows Used in Financing Activities. Cash flows used in financing activities
decreased by $9.4 million for the year ended December 31, 2020. The decrease in
cash flows used in financing activities was primarily due to an $11.2 million
payment to settle the TRA liability in 2019 and a payment of $2.0 million
related to a Verde Promissory Note made during 2019, both of which did not
reoccur in 2020. Cash flows used in financing activities increased by $64.5
million for the year ended December 31, 2019. The increase in cash flows used in
financing activities was primarily due to increased net paydown of our Senior
Credit Facility and subordinated debt, as well as payments to settle the
Company's Tax Receivable Agreement liability. In addition, for the year ended
December 31, 2018, we received proceeds from the issuance of Series A Preferred
Stock of approximately $48.5 million, which did not reoccur during 2019.
Sources of Liquidity and Capital Resources
Senior Credit Facility

As of December 31, 2020, we had total commitments of $202.5 million under our
Senior Credit Facility, of which $131.0 million was outstanding, including $31.0
million of outstanding letters of credit, with a maturity date of July 31, 2022.

On July 31, 2020, we entered into the Fourth Amendment, which, among other
things, extended the maturity date of the Senior Credit Facility to July 31,
2022, and decreased the maximum borrowing capacity under the Senior Credit
Facility to $187.5 million. The Fourth Amendment also revised the Fixed Charge
Coverage Ratio, Maximum Total Leverage Ratio and Maximum Senior Secured Leverage
Ratio (each as defined in the Senior Credit Facility), eliminated Bridge Loans,
and provided for Share Buyback Loans of up to $80.0 million, which permit the
Company to repurchase up to an aggregate of 8,000,000 shares of Class A common
stock or $80.0 million of Series A Preferred Stock. Under the Senior Credit
Facility, we have various limits on advances for Working Capital Loans, Letters
of Credit and Share Buyback Loans. For a description of the terms and conditions
of our Senior Credit Facility, as amended, including descriptions of the
interest rate, commitment fee, covenants and terms of default, please see Note
10 "Debt" in the notes to our condensed consolidated financial statements.

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On October 30, 2020, a new lender was added to the Senior Credit Facility,
bringing total commitments under the Senior Credit Facility to $202.5 million.

As of December 31, 2020, we were in compliance with the covenants under our
Senior Credit Facility. Based upon existing covenants as of December 31, 2020,
we had availability to borrow up to $71.5 million under the Senior Credit
Facility.

On January 19, 2021, we increased the total commitments under our Senior Credit
Facility to $227.5 million.

Amended and Restated Subordinated Debt Facility

Our Subordinated Debt Facility allows us to draw advances in increments of no
less than $1.0 million per advance up to $25.0 million. 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 primary source of liquidity. See
Note 10 "Debt" for additional details. As of December 31, 2020, there was zero
outstanding borrowings under the Subordinated Debt Facility.

Uses of Liquidity and Capital Resources

Repayment of Current Portion of Senior Credit Facility

Our Senior Credit Facility, as amended by the Fourth Amendment, matures in July
2022, and thus, no amounts are due currently. However, due to the revolving
nature of the facility, excess cash available is generally used to reduce the
balance outstanding, which at December 31, 2020 was $100.0 million. The current
variable interest rate on the facility at December 31, 2020 was 3.75%.

Customer Acquisitions

Our customer acquisition strategy consists of customer growth obtained through
organic customer additions as well as opportunistic acquisitions. During the
years ended December 31, 2020 and 2019, we spent a total of $1.5 million and
$18.7 million, respectively, on organic customer acquisitions. As described
above, the decrease was primarily due to limitation of our door-to-door
marketing as a result of COVID-19 during the majority of 2020 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. Our
ability to grow our customer base organically or by acquisition is important to
our success as we experience ongoing customer attrition each period.

Capital Expenditures

Our capital requirements each year are relatively low and generally consist of
minor purchases of equipment or information system upgrades and improvements.
Capital expenditures for the year ended December 31, 2020 included approximately
$2.2 million related to information systems improvements.

Dividends and Distributions

For the year ended December 31, 2020, we paid dividends to holders of our Class
A common stock of $0.725 per share or $10.6 million in the aggregate. In order
to pay our stated dividends to holders of our Class A common stock, our
subsidiary, Spark HoldCo is required to make corresponding distributions to
holders of Class B common stock (our non-controlling interest holders). As a
result, during the year ended December 31, 2020, Spark HoldCo made distributions
of $15.1 million to our non-controlling interest holders related to the dividend
payments to our Class A shareholders.

For the year ended December 31, 2020, we paid $7.9 million of dividends to
holders of our Series A Preferred Stock, and as of December 31, 2020, we had
accrued $1.9 million related to dividends to holders of our Series A

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Preferred Stock, which we paid on January 15, 2021. For the year ended
December 31, 2020, we declared dividends of $2.1875 per share or $7.9 million in
the aggregate on our Series A Preferred Stock.

On January 21, 2021, our Board of Directors declared a quarterly cash dividend
in the amount of $0.18125 per share to holders of our Class A common stock and
$0.546875 per share for the Series A Preferred Stock. Dividends on Class A
common stock will be paid on March 15, 2021 to holders of record on March 1,
2021 and Series A Preferred Stock dividends will be paid on April 15, 2021 to
holders of record on April 1, 2021.

Our ability to pay dividends in the future will depend on many factors,
including the performance of our business and restrictions under our Senior
Credit Facility. If our business does not generate sufficient cash for Spark
HoldCo to make distributions to us to fund our Class A common stock and Series A
Preferred Stock dividends, we may have to borrow to pay such amounts. Further,
even if our business generates cash in excess of our current annual dividend (of
$0.725 per share on our Class A common stock), we may reinvest such excess cash
flows in our business and not increase the dividends payable to holders of our
Class A common stock. Our future dividend policy is within the discretion of our
Board of Directors and will depend upon the results of our operations, our
financial condition, capital requirements and investment opportunities.

Share Repurchase Program

On August 18, 2020, our Board of Directors authorized a share repurchase program
of up to $20.0 million of Class A common stock through August 18, 2021. During
the year ended December 31, 2020, we repurchased 45,148 shares of our Class A
common stock at a weighted average price of $8.75 per share, for a total cost of
$0.4 million.

Collateral Posting Requirements

Our contractual agreements with certain local regulated utilities and our
supplier counterparties require us to maintain restricted cash balances or
letters of credit as collateral for credit risk or the performance risk
associated with the future delivery of natural gas or electricity. Due to the
COVID-19 pandemic, certain local regulated utilities and our supplier
counterparties have contacted us inquiring about our financial condition and the
impact the pandemic is having on our operations. These inquiries may lead to
additional requests for cash or letters of credit in an effort to mitigate the
risk of default in paying our obligations related to the future delivery of
natural gas or electricity. As of December 31, 2020, we had not been required to
post additional collateral as a result of COVID-19.

As discussed above, during the winter storm Uri event, we were required to post
a significant amount of collateral with ERCOT. Despite these posting
requirements, we consistently maintained, and continue to maintain, sufficient
liquidity to conduct our operations in the ordinary course. As of the date of
this Annual Report, our collateral requirements with ERCOT have been reduced to
pre-storm levels.



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Summary of Contractual Obligations
The following table discloses aggregate information about our contractual
obligations and commercial commitments as of December 31, 2020 (in millions):
                                             Total      2021       2022      2023      2024       2025      > 5 years

Purchase obligations:

Pipeline transportation agreements $ 7.7$ 3.6$ 0.7$ 0.6$ 0.7$ 0.7$ 1.4
Other purchase obligations (1)

                 6.4       4.8        1.5       0.1         -          -             -
Total purchase obligations                 $  14.1$  8.4$   2.2$  0.7$  0.7$   0.7$      1.4
Senior Credit Facility                     $ 100.0    $    -    $ 100.0    $    -    $    -    $     -    $        -

Debt                                       $ 100.0    $    -    $ 100.0    $    -    $    -    $     -    $        -

(1) The amounts presented here include contracts for billing services and
other software agreements to support our operations.

As of December 31, 2020, we had no material “off-balance sheet arrangements.”

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Related Party Transactions

For a discussion of related party transactions, see Note 15 "Transactions with
Affiliates" in the Company's audited consolidated financial statements.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 2 "Basis of
Presentation and Summary of Significant Accounting Policies" to our audited
consolidated financial statements. We prepare our financial statements in
conformity with accounting principles generally accepted in the United States of
America and pursuant to the rules and regulations of the SEC, which require us
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying footnotes. Actual results could differ
from those estimates. We consider the following policies to be the most critical
in understanding the judgments that are involved in preparing our financial
statements and the uncertainties that could impact our financial condition and
results of operations.

Revenue Recognition and Retail Cost of Revenues

Our revenues are derived primarily from the sale of natural gas and electricity
to retail customers. We also record revenues from sales of natural gas and
electricity to wholesale counterparties, including affiliates. Revenues are
recognized when the natural gas or electricity is delivered. Similarly, cost of
revenues is recognized when the commodity is delivered.

In each period, natural gas and electricity that has been delivered but not
billed by period is estimated. Accrued unbilled revenues are based on estimates
of customer usage since the date of the last meter read and are provided by the
utility. Volume estimates are based on forecasted volumes and estimated customer
usage by class. Unbilled revenues are calculated by multiplying these volume
estimates by the applicable rate by customer class. Estimated amounts are
adjusted when actual usage is known and billed.

The cost of natural gas and electricity for sale to retail customers is
similarly based on estimated supply volumes for the applicable reporting period.
In estimating supply volumes, we consider the effects of historical customer
volumes, weather factors and usage by customer class. Transmission and
distribution delivery fees, where applicable, are estimated using the same
method used for sales to retail customers. In addition, other load related
costs, such as ISO fees, ancillary services and renewable energy credits are
estimated based on historical trends, estimated supply volumes and initial
utility data. Volume estimates are then multiplied by the supply rate and
recorded as retail cost of revenues in the applicable reporting period.
Estimated amounts are adjusted when actual usage is known and billed.

Derivative Instruments

We enter into both physical and financial contracts for the purchase and sale of
electricity and natural gas and apply the fair value requirements of ASC Topic
815, Derivatives and Hedging.

Our derivative instruments are subject to mark-to-market accounting requirements
and are recorded on the consolidated balance sheet at fair value. Derivative
instruments representing unrealized gains are reported as derivative assets
while derivative instruments representing unrealized losses are reported as
derivative liabilities. We offset amounts in the consolidated balance sheets for
derivative instruments executed with the same counterparty where we have a
master netting arrangement.

To manage our retail business, we hold derivative instruments that are not for
trading purposes and are not designated as hedges for accounting purposes.
Changes in the fair value of and amounts realized upon settlement of derivative
instruments not held for trading purposes are recognized in retail costs of
revenues.

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As part of our asset optimization activities, we manage a portfolio of commodity
derivative instruments held for trading purposes. Changes in fair value of and
amounts realized upon settlements of derivatives instruments held for trading
purposes are recognized in earnings in net asset optimization revenues.

We have entered into other energy-related contracts that do not meet the
definition of a derivative instrument or for which we made a normal purchase,
normal sale election and are therefore not accounted for at fair value.

Goodwill

As noted above, Goodwill represents the excess of cost over fair value of the
assets of businesses. The goodwill on our consolidated balance sheet as of
December 31, 2020 is associated with both our Retail Natural Gas and Retail
Electricity reporting units. We determine our reporting units by identifying
each unit that is engaged in business activities from which it may earn revenues
and incur expenses, has operating results regularly reviewed by the segment
manager for purposes of resource allocation and performance assessment, and has
discrete financial information.

Goodwill is assessed for impairment whenever events or circumstances indicate
that impairment of the carrying value of goodwill is likely, but no less often
than annually. Our annual assessment, absent a triggering event is as of October
31 of each year. On October 31, 2020, we elected to perform a qualitative
assessment of goodwill in accordance with guidance from ASC 350. This guidance
permits an entity to first assess qualitative factors to determine whether it is
more likely than not that the fair value of a reporting unit is less than its
carrying amount as a basis for determining whether it is necessary to perform
the quantitative goodwill impairment test. If we fail the qualitative test or if
we elect to by-pass the qualitative assessment, then we must compare our
estimate of the fair value of a reporting unit with its carrying value,
including goodwill. If the carrying value of the reporting unit exceeds its fair
value, we would recognize a goodwill impairment loss for the amount by which the
reporting unit's carrying value exceeds its fair value. All of these assessments
and calculations, including the determination of whether a triggering event has
occurred to undertake an assessment of goodwill involve a high degree of
judgment.

We completed our annual assessment of goodwill impairment at October 31, 2020,
and the test indicated no impairment.

Deferred tax assets and liabilities

The Company recognizes the amount of taxes payable or refundable for each tax
year. In addition, the Company follows the asset and liability method of
accounting for income taxes where deferred tax assets and liabilities are
recognized for the expected future tax consequences of events that have been
recognized in the financial statements or tax returns and operating loss
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in those years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in the tax rates is recognized
in income in the period that includes the enactment date. A valuation allowance
is provided for deferred tax assets if it is more likely than not that these
items will not be realized.

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
projected future taxable income and tax planning strategies in making this
assessment. All of these determinations involve estimates and assumptions.

Recent Accounting Pronouncements

Refer to Note 2 “Basis of Presentation and Summary of Significant Accounting
Policies” for a discussion of recent accounting pronouncements.

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Contingencies
In the ordinary course of business, we may become party to lawsuits,
administrative proceedings and governmental investigations, including regulatory
and other matters. Liabilities for loss contingencies arising from claims,
assessments, litigation, fines, penalties and other sources are recorded when it
is probable that a liability has been incurred and the amount can be reasonably
estimated. For a discussion of the status of current legal and regulatory
matters, see Note 14 "Commitments and Contingencies" in the Company's audited
consolidated financial statements.

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