Retail. Scott Hudson President, Retail

Transcription

1 Retail Scott Hudson President, Retail

2 VISTRA RETAIL OVERVIEW ATTRACTIVE RETAIL PORTFOLIO Balanced, diversified portfolio in five states with strong financial performance FOCUS ON THE CUSTOMER Differentiated products and service offerings CAPABILITIES AND INNOVATION Market-leading innovation backed by a scalable operating platform GROWTH STRATEGY Utilize capabilities to grow organically and through highly selective, valueaccretive acquisitions 2

3 ATTRACTIVE RETAIL PORTFOLIO FOCUS ON CUSTOMER EXPERIENCE CAPABILITIES AND INNOVATION GROWTH STRATEGY KEY TAKEAWAYS

4 ATTRACTIVE RETAIL PORTFOLIO The Dynegy merger adds a generation platform and Retail load in attractive markets to Vistra s core Texas position VISTRA RETAIL BACKGROUND TEXAS ILLINOIS OHIO Customers Load 1 (TWh) Texas ~1.7 mm ~43 Midwest & NE ~1.2 mm ~28 PENNSYLVANIA MASSACHUSETTS Texas Midwest & NE Total Retail Load Load Load ~43 TWh ~28 TWh 0 ~71 TWh 52% 48% 54% 46% 22 TWh 21 TWh 15 TWh 13 TWh 18% 13 TWh 52% 37 TWh 30% 21 TWh Business Markets Residential Markets Muni-Aggregation E. 4

5 SIGNIFICANT MARKET SHARE We are a large player in our markets and throughout the country ERCOT Residential Market Share 1 24% 21% Vistra Total Market Share 2 16% 18% 10% 7% 5% 5% 4% 2% 2% 2% 9% Texas Illinois Ohio Total US Residential Market Share 2 US Competitive Markets Vistra Business Market Share 2 US Competitive Markets 21% 17% 17% 14% 8% 8% 8% 5% 8% 6% 6% 5% 4% 3% 3% 2% 4% 3% 3% 2% EIA data. Based on customer counts EIA data. Based on volumes. 5

6 STRONG FINANCIAL PERFORMANCE Vistra s Retail generates stable EBITDA and low attrition without acquisitions Retail Adjusted EBITDA ($ in millions) Retail Volumes (TWh) $845 $845 $808 $682 $800 $839 $ Residential Markets Business markets Residential Counts and Attrition (000) 1,560 1,516 1,500 1,489 1,478 1,472 Retail Costs 1 ($ SG&A per RCE) $129 (4.0%) (2.8%) $65 $80 $87 $100 (1.1%) (0.7%) (0.7%) (0.4%) $ Residential customer count (mm) Attrition rate Vistra (Total) Vistra (ERCOT) Peer A Peer B Peer C Peer D SG&A Spend Efficiency Vistra $ SG&A per RCE shown prospectively, while peers shown for last fiscal year. SG&A spend efficiency calculated as contribution margin over SG&A. 6

7 ATTRACTIVE RETAIL PORTFOLIO FOCUS ON CUSTOMER EXPERIENCE CAPABILITIES AND INNOVATION GROWTH STRATEGY KEY TAKEAWAYS

8 CUSTOMER PURCHASING MINDSET A rational category where motivation for purchase is typically driven by a trigger event Unexpected high bills Moving End of contract Word of mouth Sales contact 8

9 CONSIDERATIONS OF CHOICE Price is one of many considerations Reasons to Choose 1 Reasons to Stay 1 BRAND TRUST PRODUCT AND SERVICE BENEFITS BRAND TRUST PRODUCT AND SERVICE BENEFITS INCENTIVES PRICE SAVINGS OVERALL CUSTOMER EXPERIENCE VALUE FOR PRICE PAID 1 Source: TXU Energy 2016 Brand Choice Importance Study. 9

10 TXU ENERGY S GO-TO-MARKET APPROACH Our offer and interaction portfolio is built upon: Unique Offer Sets Individualized Service Interactions Mobile First Technologies Monthto-Month Fixed Social Media Text Index Solar Wind Natural Language IVR Live Agent Usage Time of Use (Free Nights ) Pay-as-you-go Chat MyAccount Alerts Device Management 10

11 Brand Strength (Differentiation/Relevance) Future Growth Value STRONG BRANDS MAKE A DIFFERENCE BAV Consulting ranked TXU Energy as the strongest brand in the ERCOT market Niche, or Unrealized Potential Leadership Competitor 1 TXU Energy New, Unfocused, or Unknown Competitor 2 Competitor 3 Competitor 4 Competitor 5 Competitor 6 Competitor 8 Competitor 7 Commodity or Eroded Source: BAV Consulting; Across ERCOT general population (2015). Brand Stature (Esteem/Knowledge) Current Operating Value 11

12 MULTI-BRAND STRATEGY Our multi-brand strategy attracts customers from diverse segments, all with unique preferences, needs, and goals Powering Positive Energy Experiences Smart with Heart No Frills. Low Bills. 12

13 CUSTOMER-OBSESSED CULTURE Best-in-class customer experience companies have outperformed the S&P 500 by 14 times over 15 years 1 The X - Factor The X - Factor is the center of the TXU Energy brand and represents our commitment to every customer experience. ` ` 1 Source: Watermark Consulting Customer Experience ROI Study. 13

14 BUSINESS MARKETS EXPERTISE We differentiate through our market expertise, industry experience, and by consulting customers on their energy needs Products - Simple to complex Market Fundamentals - Insight - Dynamics Sales Executive Account Manager CUSTOMER Innovation - Greenbacks - Solar / Wind Sales / Service - Commercial Insights - Challenger Account Service Team $16mm in Energy Efficiency Projects TXU Greenbacks Program 14

15 VALUE ADDED SOLUTIONS We lead with commodity, but will expand our Solutions business through partnerships Protection Services Offer a suite of home warranty products that protect customer s HVAC systems, plumbing, appliances, water heaters and more. Home Automation Enable customers to control their thermostat anytime from anywhere and save up to $180 a year. Cable, Internet and Telecom Enable customers to shop for and set up major home services like TV, Internet and home phone with one call. 15

16 RECOGNIZED AS BEST IN CLASS By keeping customers at the center of everything we do, we ve consistently earned their approval, along with customer advocacy and consumer research firms TOP OVERALL RANKING 90% 16

17 ATTRACTIVE RETAIL PORTFOLIO FOCUS ON CUSTOMER EXPERIENCE CAPABILITIES AND INNOVATION GROWTH STRATEGY KEY TAKEAWAYS

18 1. CREATE DIFFERENTIATED PLANS We use consumer research to create products and services that emotionally connect with customers CASH BACK REWARD PAYOUTS ($ in millions) $50 $25 $0 18

19 THE EVOLUTION OF FREE NIGHTS Our Right Time Pricing suite includes our most popular plan, Free Nights Free Nights Free Nights, Free Weekends, Business Power Hours Free Nights with more free hours Free Mornings and Evenings Free Nights: Choose when Free Nights begin Free Nights & Solar Days 19

20 INTEGRATED SOLAR SOLUTIONS A company-owned asset that offers significant, long-term, and economically viable renewable options to commercial, industrial, and residential customers TXU Energy Free Nights & Solar Days TXU Solar Counts vs. ERCOT Rooftop Solar Homes 40,000 30,000 20,000 10, ERCOT Rooftop PV TXU Solar Customers Upton 2 Solar Power Plant West Texas 20

21 2. DESIGN TAILORED EXPERIENCES Customer segments allow us to deliver experiences and solutions that meet unique needs 21

22 3. APPLIED ANALYTICS ACROSS THE CUSTOMER LIFECYCLE Embedding analytics in every stage of the customer lifecycle maximizes experience and value PROSPECTING ACQUISITION A/B Testing and Trend Analysis Customer Survival Models CREDIT CRITERIA DATA INSIGHTS RETENTION Term Expiration Optimization Strategy Optimization Personalized Comfort Credits Switch-Save Targeting Credit Risk Modeling FRAUD DETECTION CONTRACT EXPIRATION 22

23 4. DEPLOY DIGITAL PLATFORMS Our digital platforms help us meet customer needs MY ENERGY DASHBOARD MOBILE APP Touch ID Split Payments Usage Breakdown BEST IN CLASS FIRST IN TEXAS 23

24 CUSTOMER BEHAVIORS ARE CHANGING We re meeting consumers where they shop with tailored offers MOBILE MINDSET ENROLLMENT BY SALES CHANNEL 100% 75% 83% of customers go to a company s website for information Use mobile device while shopping 75% 50% 75% inclined to purchase from a company that uses mobile apps 85% online shoppers start a purchase on one device & finish on another 25% 0% Call Center Online Direct Sales 24

25 A SMARTER SERVICE EXPERIENCE We re matching customers with the right agents to deliver better experiences, manage costs, and mitigate risk SERVICE INTERACTIONS 100% 75% Customer s value tier, credit risk, defection risk, cross-channel interactions 50% 25% 0% Agent IVR Online Mobile 25

26 TXUeLEASE SM A first-of-its-kind digital platform that will help us incrementally capture movers, millennials, and multi-family renters ANNUAL ERCOT TRANSACTIONS 3.1MM Total ERCOT Transactions 1.5MM Renters 1.1MM Millennials 67% of Millennial transactions are also Renters 26

27 OUR CUSTOMER EXPERIENCE JOURNEY Ten years in the making and continuing to evolve every day Migration from Legacy Platforms Customer Listening Program TXU Energy Mobile App Enterprise Data & Analytics Platform Call Center Reconfiguration Shift from Super Agent to Specialized Agent Natural Voice IVR Platform (IVY) Integration with Amazon Alexa New CRM Platform In the Lab New Digital Enrollment Platform (TXUeLease) 27

28 ATTRACTIVE RETAIL PORTFOLIO FOCUS ON CUSTOMER EXPERIENCE CAPABILITIES AND INNOVATION GROWTH STRATEGY KEY TAKEAWAYS

29 INTEGRATION OPPORTUNITY Vistra expects to reduce net length by growing Retail VISTRA ENERGY GENERATION AND LOAD MATCH BENEFITS OF INTEGRATED MODEL Generation 1 Load 1 Integration ERCOT % PJM % NE/NY % MISO % Total % Transaction Efficiency Collateral Efficiency Higher margins Stabilized cash flows Retail growth provides the ability to further match load with generation E. Excludes CAISO. 29

30 GROWTH OPPORTUNITY TEXAS We remain focused on the growth opportunities within our core ERCOT Retail market Total EBITDA Pool (Texas) ($ in millions) South Texas & Value Based Brand Growth (000 s) 500 2, , Residential Non-Residential Total ERCOT load estimated to grow ~2% annually 1 New Markets: Lubbock Garland Austin Denton 1 Source: ERCOT. 30

31 GROWTH OPPORTUNITY MIDWEST & NE Dynegy acquisition provides beachhead for growth in the Midwest and Northeast Total EBITDA Pool (Midwest & NE) ($ in millions) Vistra Retail Capabilities Applicability to Other Competitive Markets 1,900 3,200 Robust Marketing Channels Integrated Risk Management Data Analytics Skillset Service Excellence 1,300 Switched Load Un-Switched Load Total Scalable Operating Platform Digital and Mobile Capabilities Differentiated Products and Services Only ~34% of residential customers have switched from incumbent utility 1 Excludes states with municipal-aggregation. Fragmented competition where residential market leaders average 3 to 5% market share in each state 1 We estimate ~1% market share equals $32mm of EBITDA 31

32 ATTRACTIVE RETAIL PORTFOLIO FOCUS ON CUSTOMER EXPERIENCE CAPABILITIES AND INNOVATION GROWTH STRATEGY KEY TAKEAWAYS

33 KEY TAKEAWAYS Our core position in Texas, focus on the customer, and capabilities and innovation provide an attractive platform to establish leadership in new Retail markets STRONG CORE POSITION FOCUS ON THE CUSTOMER CAPABILITIES / INNOVATION GROWTH STRATEGY Increase Integration DTA INSIGHTS Texas, Midwest, and Northeast Focus on organic growth Highly selective acquisitions 33

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