Retail: Full-year 2012 adjusted EBITDA totaled $656 million; $8 million lower than in 2011. Gross margin was favorable by $124 million driven by the acquisition of Energy Plus which added $112 million, with the remaining difference primarily due to additional load resulting from increased customer count and usage. Offsetting the higher margin realized in 2012 was an increase in operating costs, which was primarily the result of the Energy Plus acquisition and increased marketing and selling expense.
Fourth-quarter adjusted EBITDA was $152 million; $8 million lower than the fourth quarter 2011. Gross margin was unfavorable by $10 million primarily driven by the impact of lower margin on acquisitions and renewals in both ERCOT and Northeast markets. Partially offsetting lower margins was a decrease in bad debt from improved customer payment behavior compared to the fourth quarter 2011.
Gulf Coast – Texas: Full year adjusted EBITDA totaled $880 million; $38 million higher compared to 2011. Gross margin increased $126 million, driven by a combination of higher realized energy margin and improved bi-lateral capacity contracts with load serving entities. The year-over-year increase in realized energy margin was largely attributable to the combination of the unprecedented August 2011 hot weather—that resulted in power price spikes—and lower coal transportation costs in 2012. Meanwhile, unplanned outages contributed to a nearly 7.5 million MWh decline in generation combined with an increase in operations and maintenance costs which partially offset the improvement in gross margin.
Fourth-quarter adjusted EBITDA was $190 million; $10 million lower than the fourth quarter 2011. The lower results were attributable to higher operating costs as a result of increased planned outages in the fourth quarter of 2012 as compared to 2011 partially offset by a $24 million increase in gross margin due primarily to higher realized energy margin, largely attributable to higher realized average power prices and lower coal transportation costs.
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