Crius Energy announced on December 14 that it had sealed an asset purchase agreement with Austin, Texas-based energy retailer Iron Energy (d/b/a Kona Energy) to acquire customer contracts and associated assets for about 75,000 electricity residential customer equivalents (RCEs) in the states of Illinois, New York, Ohio, and Texas for $7 million.
The acquisition will increase Crius Energy's RCEs by more than 9 percent, the company said – to about 875,000 RCEs. Residential customer equivalent (RCE) stands for the average annual consumption by a single-family residential energy customer – typically 1,000 therms of natural gas, or 10,000 kilowatt hours (kWh) of electricity.
Stamford, Connecticut-based Crius Energy, founded in 2012, describes itself as a retail energy and services provider, currently serving nearly 800,000 residential and commercial customers in 20 states and the District of Columbia.
The acquisition is expected to expand Crius’ geographic footprint across four of the states in which the retailer already operates and add to the company's portfolio of longer-term, fixed rate commercial accounts.
The portfolio comprises about 96 percent commercial customers and 98 percent fixed rate contracts, which is expected to increase the percentage of commercial customers and fixed rate contracts in the company's portfolio to 40 percent and 75 percent, respectively.
"We are very pleased to announce another accretive acquisition in 2015 through the purchase of this portfolio of electricity customers," said Crius CEO Michael Fallquist, adding, "This Acquisition is consistent with our growth strategy to acquire assets that diversify the business by strengthening our geographic footprint, increasing our longer-term commercial customer base, and adding to our proportion of fixed rate contracts. Through both organic growth and acquisitions, we continue to focus on growing the business in an accretive manner in order to provide enhanced unit holder value."
Crius anticipates an annual gross margin of between $70 and $90 per RCE and the acquisition is expected to be accretive to distributable cash per unit in 2016. Additionally, the company expects to enhance the value of the acquisition by cross-selling natural gas products to the customers.
The company promises that “Customers that will be added through this acquisition will not experience any change to their service and will be seamlessly transitioned to an established Crius Energy brand, based on their location and the type of service they receive.”
The transaction is expected to close in January.
