The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the U.S. Securities and Exchange Commission (or SEC).
As used below, unless the context otherwise requires, the terms “the Company,” “Genie,” “we,” “us,” and “our” refer to Genie Energy Ltd., a Delaware corporation, and its subsidiaries, collectively.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed below under Part II, Item IA and under Item 1A to Part I “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the year ended December 31, 2021.
Overview
We are comprised of Genie Retail Energy ("GRE") and Genie Renewables. In the third quarter of 2022, we discontinued the operations of Lumo Finland and Sweden as discussed below. Following these discontinuance of operations, GRE International ceased to be a segment and the remaining assets and liabilities and results of continuing operations of GRE International were combined with corporate.
GRE owns and operates retail energy providers ("REPs"), including IDT Energy, Residents Energy, Town Square Energy ("TSE"), Southern Federal and Mirabito Natural Gas. GRE's REP businesses resell electricity and natural gas primarily to residential and small business customers, with the majority of the customers in the Eastern and Midwestern United States and Texas.
Genie Renewables holds Genie Solar Energy, a rooftop solar system sales and general contracting company, a 93.5% interest in CityCom Solar, a marketer of community solar energy solutions, Diversegy , an energy broker for commercial, and a 60.0% controlling interest in Prism Solar, a solar solutions company that is engaged in U.S. manufacturing of solar panels, solar installation design and solar energy project management.
As part of our ongoing business development efforts, we seek out new opportunities, which may include complementary operations or businesses that reflect horizontal or vertical expansion from our current operations. Some of these potential opportunities are considered briefly and others are examined in further depth. In particular, we seek out acquisitions to expand the geographic scope and size of our REP businesses.
Discontinued Operations in Finland and Sweden
As a result of continued volatility in the energy market in Europe, in the third quarter of 2022, we decided to discontinue the operations of Lumo Energia Oyj ("Lumo Finland") and Lumo Energi AB ("Lumo Sweden"). From July 13, 2022 to July 19, 2022, the Company entered into a series of transactions to sell most of the electricity swap instruments held by Lumo Sweden for a gross aggregate amount of €41.1 million (equivalent to approximately $41.4 million at the dates of the transactions) before fees and other costs. The sale price is expected to be settled monthly based on the monthly commodity volume specified in the instruments from September 2022 to March 2025. The net book value of the instruments sold was €34.2 million (equivalent to $35.8 million).
In July 2022, Lumo Sweden entered into a transaction to transfer, effective August 5, 2022, its customers to a third party for nominal consideration. In August 2022 Lumo Finland entered in a transaction to transfer its variable rate customers to a third party for €$1.9 million (equivalent to $2.0 million), and transferred the fixed rate customers to other utilities with no considerations.
We determined that exiting Finland and Sweden markets represented a strategic shift that would have a major effect on our operations and accordingly, presented the results of operations and related cash flows as discontinued operations for all periods presented. The assets and liabilities of the discontinued operations have been presented separately, and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of September 30, 2022 and December 31, 2021. Lumo Finland and Lumo Sweden will continue to liquidate their remaining receivables and settle any remaining liabilities.
On November 3, 2022, we acquired additional minority interests in Lumo Finland and Lumo Sweden from an employee for 132,302 of our restricted Class B common stock, which will vest ratably from November 2022 to May 2025. We increased our interest in Lumo Finland from 91.6% to 96.6% and increased from 98.8% to 100% in Lumo Sweden.
Net loss from discontinued operations of Lumo Finland and Lumo Sweden, net of taxes was $1.5 million for the three months ended September 30, 2022. Net income from discontinued operations of Lumo Finland and Lumo Sweden, net of taxes was $25.9 million for the nine months ended September 30, 2022, and $5.5 million $3.7 million for the three and nine months ended September 30, 2021, respectively.
Following the discontinuance of operations of Lumo Finland and Lumo Sweden, GRE International ceased to be a segment and the remaining assets and liabilities and results of continuing operations of GRE International were combined with corporate.
Discontinued Operations in United Kingdom
In 2021, the natural gas and energy market in the United Kingdom deteriorated which prompted us to suspend the spin-off and start the process of orderly withdrawal from the United Kingdom market. In October 2021, as part of the orderly exit process from the United Kingdom market, Orbit and Shell U.K. Limited ("Shell") agreed to terminate the exclusive supply contract between them. As part of the termination agreement, Orbit was required to unwind all physical forward hedges with Shell which resulted in net cash proceeds after settlement of all related liabilities with Shell. A portion of the net cash proceeds was transferred to us (see Note 5, Discontinued Operations and Divestiture, to our financial statements included elsewhere in this Quarterly Report on Form 10-Q).
Following the termination of the contract with Shell, we filed a petition with the High Court of Justice Business and Property of England and Wales (the “Court”) to declare Orbit insolvent based on the Insolvency Act of 1986. On November 29, 2021, the Court declared Orbit insolvent based on the Insolvency Act of 1986, revoked Orbit's license to supply electricity and natural gas in the United Kingdom, ordered that Orbit's current customers be transferred to a “supplier of last resort” and transferred the administration of Orbit to Administrators effective December 1, 2021. All of the customers of Orbit were transferred to a third-party supplier effective December 1, 2021 as ordered by the Court. All assets and liabilities of Orbit, including cash and receivables remain with Orbit, the management and control of which was transferred to Administrators.
We determined that exiting the United Kingdom represented a strategic shift that would have a major effect on our operations and accordingly, presented the results of operations and related cash flows as discontinued operations for all periods presented. The assets and liabilities of the discontinued operations have been presented separately, and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of September 30, 2022 and December 31, 2021.
Coronavirus Disease (COVID 19)
Starting in the first quarter 2020, the world and the United States experienced the unprecedented impacts of the coronavirus disease 2019 (COVID-19) pandemic.
For the year ended December 31, 2021, the impacts of COVID-19 are evident in several key aspects of our business operations and the corresponding financial impact has been mixed. Our consolidated income from operations for the three and nine months ended September 30, 2022 increased by $6.1 million and $44.0 million compared to the same periods in 2021.
Our customer base is predominantly residential, so we benefited from the increased demand for electricity when customers are working from their homes. On the other hand, like other retail energy providers, we suspended our face-to-face customer acquisition programs in March 2020 as public health measures were implemented to combat COVID-19, resulting in a decrease in gross meter acquisitions and a decrease in U.S. domestic meters served. The reduction in gross meter acquisitions decreased our customer acquisition expense in the year ended December 31, 2021 and 2020 compared to the period before the pandemic.
We did not experience any significant changes in our workforce composition and were able to implement our business continuity plans with no significant impact to our ability to maintain our operations. We continue to maintain strong physical and cybersecurity measures in order to both serve our operational needs with a remote workforce and to ensure that we continue to provide services to our customers. We face challenges due to the need to operate with a remote workforce and are continuing to address those challenges so as to minimize the impact on our ability to operate.
Beginning in 2021, public health restrictions were eased in most of our markets which has allowed us to resume face-to-face sales and marketing. We believe that the impact of public health restrictions on our meter acquisition efforts has dissipated, however, any reversal of the easing of restrictions would impact that situation.
There are many uncertainties regarding the impacts of the COVID-19 pandemic, and we are closely monitoring those impacts of on all aspects of its business, including how it will impact our customers, employees, suppliers, vendors, and business partners. We are currently unable to predict the impact that COVID-19 will have on our financial position and operating results due to the complexities of the impacts and numerous uncertainties that are beyond the Company's control. We expect to continue to assess the evolving impact of COVID-19 on our business and assets and intend to make adjustments accordingly.
Genie Retail Energy
GRE operates REPs that resell electricity and/or natural gas to residential and small business customers in Connecticut, Delaware, Georgia, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Florida, Texas, Rhode Island, and Washington, D.C. GRE’s revenues represented approximately 98.3% and 96.9% of our consolidated revenues in the three and nine months ended September 30, 2022, respectively and 98.4% and 96.9% of our consolidated revenues in the three and nine months ended September 30, 2021, respectively.
Seasonality and Weather; Climate Change
The weather and the seasons, among other things, affect GRE’s REPs' revenues. Weather conditions have a significant impact on the demand for natural gas used for heating and electricity used for heating and cooling. Typically, colder winters increase demand for natural gas and electricity, and hotter summers increase demand for electricity. Milder winters and/or summers have the opposite effects. Unseasonable temperatures in other periods may also impact demand levels. Potential changes in global climate may produce, among other possible conditions, unusual variations in temperature and weather patterns, resulting in unusual weather conditions, more intense, frequent and extreme weather events and other natural disasters. Some climatologists believe that these extreme weather events will become more common and more extreme which will have a greater impact on our operations. Natural gas revenues typically increase in the first quarter due to increased heating demands and electricity revenues typically increase in the third quarter due to increased air conditioning use. Approximately 44.5% and 47.9% of GRE’s natural gas revenues for the relevant years were generated in the first quarter of 2021 and 2020, respectively, when demand for heating was highest. Although the demand for electricity is not as seasonal as natural gas (due, in part, to usage of electricity for both heating and cooling), approximately 30.8% and 31.8% of GRE’s electricity revenues for 2021 and 2020, respectively, were generated in the third quarters of those years. GRE's REP's revenues and operating income are subject to material seasonal variations, and the interim financial results are not necessarily indicative of the estimated financial results for the full year.
In addition to the direct physical impact that climate change may have on our business, financial condition and results of operations because of the effect on pricing, demand for our offerings and/or the energy supple markets, we may also be adversely impacted by other environmental factors, including: (i) technological advances designed to promote energy efficiency and limit environmental impact; (ii) increased competition from alternative energy sources; (iii) regulatory responses aimed at decreasing greenhouse gas emissions; and (iv) litigation or regulatory actions that address the environmental impact of our energy products and services.
Winter Storm in Texas
In February of 2021, the State of Texas experienced unprecedented cold weather and snow, which was named Winter Storm Uri. With the grid overtaxed due to demand and weather-related reduced supply and rolling blackouts being enforced, by order of the Electricity Reliability Council of Texas ("ERCOT"), real-time commodity prices during the crisis escalated significantly. Although GRE's commitment for their customers in Texas was hedged for foreseen winter weather conditions, the market conditions exposed the Company to significant unexpected cost increases. In the year ended December 31, 2021, GRE recognized approximately $13.0 million in additional costs related to the situation, which were included in the cost of revenue in the consolidated statements of operation.
In June 2021, the state legislature of the State of Texas passed House Bill 4492 (“HB 4492”) which includes certain provisions for financing certain costs associated with electric markets caused by Winter Storm Uri. Pursuant to HB 4492, two categories of charges associated with Winter Storm Uri are to be securitized and the proceeds of the securitization will be provided to the load serving entities who originally incurred the charges. Under HB 4492, the Company is entitled to recover a portion of the costs incurred from the effect of Winter Storm Uri with a calculated range of $1.5 million to $2.6 million. In the second quarter of 2021, the Company recorded a reduction in cost of revenues of $1.5 million.
In September 2021, the Public Utility Commission of Texas ("PUC") approved the Debt Obligation Order to grant ERCOT's application for a debt financing mechanism to pay for certain costs associated with Winter Storm Uri. Under the Debt Obligation Order, the amount that the Company is entitled to recover increased to approximately $3.4 million. In the third quarter of 2021, the Company recorded an additional reduction in the cost of revenues of $1.9 million for an aggregate amount of $3.4 million for the year ended December 31, 2021. In June 2022, the Company received a $3.5 million refund related to the cost of Winter Storm Uri.
Purchase of Receivables and Concentration of Credit Risk
Utility companies offer purchase of receivable, or POR, programs in most of the service territories in which GRE operates. GRE’s REPs reduce their customer credit risk by participating in POR programs for a majority of their receivables. In addition to providing billing and collection services, utility companies purchase those REPs’ receivables and assume all credit risk without recourse to those REPs. GRE’s REPs’ primary credit risk is therefore nonpayment by the utility companies. In the three and nine months ended September 30, 2022 the associated cost was approximately 1.2% and approximately 1.0% for the three and nine months ended September 30, 2021. At September 30, 2022, 85.1% of GRE’s net accounts receivables were under a POR program. Certain of the utility companies represent significant portions of our consolidated revenues and consolidated gross trade accounts receivable balance during certain periods, and such concentrations increase our risk associated with nonpayment by those utility companies.
The following table summarizes the percentage of consolidated trade receivable by customers that equal or exceed 10.0% of consolidated net trade receivables at September 30, 2022 and December 31, 2021 (no other single customer accounted for 10.0% or greater of our consolidated net trade receivable as of September 30, 2022 or December 31, 2021).
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
|
Customer A
|
|
|
15.2
|
% |
|
|
12.5 |
% |
| Customer B |
|
|
11.0 |
|
|
|
na |
|
na—less than 10.0% of consolidated net trade receivables
The following table summarizes the percentage of revenues by customers that equal or exceed 10.0% of consolidated revenues for the three and nine months ended September 30, 2022 and 2021 (no other single customer accounted for 10.0% or greater of our consolidated revenues for the three and nine months ended September 30, 2022 or 2021):
|
|
|
Three Months Ended September 30 |
|
|
Nine Months Ended September 30 |
|
|
|
2022
|
|
|
2021
|
|
|
2022 |
|
|
2021 |
|
|
Customer A
|
|
|
11.4 |
% |
|
|
na |
% |
|
|
10.6
|
%
|
|
|
na |
% |
| Customer B |
|
|
11.6 |
|
|
|
na |
|
|
|
na |
|
|
|
na |
|
| Customer C |
|
|
na |
|
|
|
15.8 |
|
|
|
na |
|
|
|
12.5 |
|
na—less than 10.0% of consolidated revenue in the period
Legal Proceedings
Although GRE endeavors to maintain best sales and marketing practices, such practices have been the subject of class action lawsuits.
See Note 18, Commitments and Contingencies, in this Quarterly Report on Form 10-Q, which is incorporated by reference.
Agency and Regulatory Proceedings
From time to time, the Company responds to inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes. The Company cannot predict whether any of those matters will lead to claims or enforcement actions or whether the Company and the regulatory parties will enter into settlements before a formal claim is made. See Notes 18, Commitments and Contingencies, in this Quarterly Report on Form 10-Q, which is incorporated by reference, for further detail on agency and regulatory proceedings.
State of Connecticut Public Utilities Regulatory Authority
Town Square
On September 19, 2018, the State of Connecticut Public Utilities Regulatory Authority (“PURA”) commenced an investigation into Town Square following customer complaints of allegedly misleading and deceptive sales practices on the part of Town Square. The Connecticut Office of Consumer Counsel joined in the investigation. On June 17, 2020, the PURA notified Town Square that it was advancing its investigation by assigning Prosecutorial ("PRO") staff for the purpose of investigating Town Square’s compliance with licensed electric supplier billing, marketing, and licensing requirements, and, if appropriate, facilitating settlement discussions among the parties.
Although Town Square denies any basis for those complaints and any wrongdoing on its part, in May 2021, the parties reached a settlement in principle, subject to finalization of a definitive settlement agreement, pursuant to which Town Square paid $0.4 million. Town Square has also volunteered to refrain, from door-to-door marketing activities in Connecticut for a period of 15 months.
As of September 30, 2022, Town Square’s Connecticut customer base represented 6.9% of GRE’s total meters served and 7.8% of the total RCEs of GRE’s customer base. For three and nine months ended September 30, 2022 and 2021, Town Square’s gross revenues from sales in Connecticut were $6.0 million and $14.1 million, respectively.
An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluating the consumption profile of a given retail customer base.
Residents Energy
In August of 2020, Residents Energy began marketing retail energy services in Connecticut. For the year ended December 31, 2021 Residents Energy's gross revenues from sales in Connecticut was $0.2 million. During the fourth quarter of 2020, the enforcement division of PURA contacted Residents Energy concerning customer complaints received in connection with alleged door-to-door marketing activities in violation of various rules and regulations. On March 12, 2021, the enforcement division filed a motion against Resident Energy with the adjudicating body of PURA, seeking the assessment of $1.5 million in penalties, along with a suspension of license for eighteen months, auditing of marketing practices upon reinstatement and an invitation for settlement discussions.
In May 2021, the parties reached a settlement, pursuant to which Residents will pay $0.3 million. Residents Energy has also volunteered to withdraw from the market in Connecticut for a period of 36 months.
Critical Accounting Policies
Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require the application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to revenue recognition, allowance for doubtful accounts, acquisitions, goodwill, and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021.
Recently Issued Accounting Standards
Information regarding new accounting pronouncements is included in Note 20—Recently Issued Accounting Standards, to the current period’s consolidated financial statements.
Results of Operations
We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations.
Three and Nine Months Ended September 30, 2022 and Compared to Three and Nine Months Ended September 30, 2021
Genie Retail Energy Segment
|
|
|
Three months ended
September 30,
|
|
Change
|
|
|
|
Nine months ended
September 30,
|
|
Change
|
|
|
|
(amounts in thousands)
|
|
2022
|
|
|
2021
|
|
|
$
|
|
|
%
|
|
|
|
2022
|
|
|
2021
|
|
|
$
|
|
|
%
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity
|
|
$
|
73,764
|
|
|
$
|
82,801
|
|
|
$
|
(9,037
|
) |
|
|
(10.9
|
) |
%
|
|
$
|
186,207
|
|
|
$
|
218,082
|
|
|
$
|
(31,875
|
) |
|
|
(14.6
|
) |
%
|
|
Natural gas
|
|
|
6,153
|
|
|
|
3,516
|
|
|
|
2,637
|
|
|
|
75.0
|
|
|
|
|
40,754
|
|
|
|
25,878
|
|
|
|
14,876
|
|
|
|
57.5
|
|
|
|
Total revenues
|
|
|
79,917
|
|
|
|
86,317
|
|
|
|
(6,400
|
) |
|
|
(7.4
|
) |
|
|
|
226,961
|
|
|
|
243,960
|
|
|
|
(16,999
|
) |
|
|
(7.0
|
) |
|
|
Cost of revenues
|
|
|
36,689
|
|
|
|
52,166
|
|
|
|
(15,477
|
)
|
|
|
(29.7
|
)
|
|
|
|
108,148
|
|
|
|
176,523
|
|
|
|
(68,375
|
) |
|
|
(38.7
|
) |
|
|
Gross profit
|
|
|
43,228
|
|
|
|
34,151
|
|
|
|
9,077
|
|
|
|
26.6
|
|
|
|
|
118,813
|
|
|
|
67,437
|
|
|
|
51,376
|
|
|
|
76.2
|
|
|
|
Selling, general and administrative expenses
|
|
|
15,813
|
|
|
|
14,437
|
|
|
|
1,376
|
|
|
|
9.5
|
|
|
|
|
46,809
|
|
|
|
41,010
|
|
|
|
5,799
|
|
|
|
14.1
|
|
|
|
Income from operations
|
|
$
|
27,415
|
|
|
$
|
19,714
|
|
|
$
|
7,701
|
|
|
|
39.1
|
|
%
|
|
$
|
72,004
|
|
|
$
|
26,427
|
|
|
$
|
45,577
|
|
|
|
172.5
|
|
%
|
Revenues. Electricity revenues decreased by 10.9% in the three months ended September 30, 2022 compared to the same period in 2021. The decrease was due to a decline in electricity consumption partially offset by an increase in the average price per kilowatt hour charged to customers in the three months ended September 30, 2022 compared to the same period in 2021. Electricity consumption by GRE’s REPs' customers decreased by 36.1% in the three months ended September 30, 2022, compared to the same period in 2021. The decrease in electricity consumption reflected a 5.9% decrease in average consumption per meter and a 32.1% decrease in the average number of meters served. The reduction in meters served was driven, in part, by our decision to pause certain customer acquisition efforts and allow certain lower margin customers, including those acquired through municipal aggregation deals to move to other suppliers. The average rate per kilowatt hour sold increased 39.4% in the three months ended September 30, 2022 compared to the same period in 2021. The increase is due to the increase in the average wholesale price of electricity in the three months ended September 30, 2022 compared to the same period in 2021.
Electricity revenues decreased by 14.6% in the nine months ended September 30, 2022 compared to the same period in 2021. The decrease was due to a decline in electricity consumption partially offset by an increase in the average price charged per kilowatt hour charged to customers in the nine months ended September 30, 2022 compared to the same period in 2021. Electricity consumption by GRE’s REPs' customers decreased by 35.6% in the nine months ended September 30, 2022, compared to the same period in 2021. The decrease in electricity consumption reflected a 4.1% decrease in average consumption per meter and a 32.8% decrease in the average number of meters served. As discussed above, the reduction in meters served was driven, in part, by the decision to pause certain customer acquisition efforts and allow certain lower margin customers to move to other suppliers. The average rate per kilowatt hour sold increased 32.6% in the nine months ended September 30, 2022 compared to the same period in 2021. The increase is due to the increase in the wholesale price of electricity in the nine months ended September 30, 2022 compared to the same period in 2021.
GRE’s natural gas revenues increased by 75.0% in the three months ended September 30, 2022 compared to the same period in 2021. The increase in natural gas revenues in the three months ended September 30, 2022 compared to the same period in 2021 was a result of increases in natural gas consumption and in average revenue per therm sold. Natural gas consumption by GRE’s REPs’ customers increased by 32.1% in the three months ended September 30, 2022 compared to the same period in 2021, reflecting a 22.3% increase in average consumption per meter and a 8.0% increase in average meters served in the three months ended September 30, 2022 compared to the same period in 2021. The increase in average consumption per meter in the three months ended September 30, 2022 compared to the same period in 2021 was a result of entering new, natural gas-only markets during the last five quarters and enrolling relatively high average consumption natural gas meters. The average revenue per therm sold increased by 32.5% in the three months ended September 30, 2022, compared to the same period in 2021.
GRE’s natural gas revenues increased by 57.5% in the nine months ended September 30, 2022 compared to the same period in 2021. The increase in natural gas revenues in the nine months ended September 30, 2022 compared to the same period in 2021 was a result of increases in natural gas consumption partially offset by a decrease in average revenue per therm sold. Natural gas consumption by GRE’s REPs’ customers increased by 29.5% in the nine months ended September 30, 2022 compared to the same period in 2021, reflecting a 21.4% increase in average consumption per meter and a 6.7% increase in average meters served in the nine months ended September 30, 2022 compared to the same period in 2021. The average revenue per therm sold increased by 21.6% in the nine months ended September 30, 2022, compared to the same period in 2021.
The customer base for GRE’s REPs as measured by meters served consisted of the following:
|
(in thousands)
|
|
September 30, 2022
|
|
|
June 30, 2022
|
|
|
March 31, 2022
|
|
|
December 31, 2021
|
|
|
September 30, 2021
|
|
|
Meters at end of quarter:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity customers
|
|
193 |
|
|
|
203
|
|
|
|
209
|
|
|
|
210
|
|
|
|
289
|
|
|
Natural gas customers
|
|
77 |
|
|
|
77
|
|
|
|
77
|
|
|
|
75
|
|
|
|
72
|
|
|
Total meters
|
|
270 |
|
|
|
280
|
|
|
|
286
|
|
|
|
285
|
|
|
|
361
|
|
Gross meter acquisitions in the three months ended September 30, 2022, were 33,000 compared to 46,000 for the same period in 2021. Gross meter acquisitions in the nine months ended September 30, 2022, were 112,000 compared to 144,000 for the same period in 2021. The decrease in the gross meter acquisitions for the three and nine months ended September 30, 2022 compared to the same period in 2021 was due to a “strategic pause” on certain customer acquisition channels to protect margins due to unfavorable market conditions that started in the fourth quarter 2021.
Meters served slightly decreased by 10,000 meters or 3.6% from June 30, 2022 to September 30, 2022. Meters served decreased by 15,000 meters or 5.3% from December 31, 2021 to September 30, 2022. The decreases in the number of meters served at September 30, 2022 compared to June 30, 2022 and December 31, 2021 were due to an increase in average churn during the period and the "strategic pause" on certain customer acquisition channels discussed above. GRE's REPs also returned some customers to their underlying utility in certain markets in the fourth quarter of 2021 to minimize the impact of expected higher prices on our margins. In the three months ended September 30, 2022, average monthly churn increased to 4.7% compared to 4.0% for same period in 2021. In the nine months ended September 30, 2022, the average monthly churn slightly increased to 4.5% compared to 4.2% for same period in 2021.
The average rates of annualized energy consumption, as measured by RCEs, are presented in the chart below. An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluating the consumption profile of a given retail customer base.
|
(in thousands)
|
|
September 30, 2022 |
|
|
June 30, 2022
|
|
|
March 31, 2022
|
|
|
December 31, 2021
|
|
|
September 30, 2021
|
|
|
RCEs at end of quarter:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity customers
|
|
174 |
|
|
|
185
|
|
|
|
182
|
|
|
|
189
|
|
|
|
276
|
|
|
Natural gas customers
|
|
77 |
|
|
|
77
|
|
|
|
78
|
|
|
|
71
|
|
|
|
60
|
|
|
Total RCEs
|
|
251 |
|
|
|
262
|
|
|
|
260
|
|
|
|
260
|
|
|
|
336
|
|
RCEs decreased 25.3% at September 30, 2022 compared to September 30, 2021. The decreases are primarily due to the "strategic pause" on customer acquisitions and transfer of some customers to their underlying utilities as discussed above. RCEs slightly increased by 3.5% at September 30, 2022 compared to December 31, 2021, mostly due to the seasonal increase in usage during third quarter due to increased air conditioning use, partially offset by the decrease in number of meters as discussed above.
Cost of Revenues and Gross Margin Percentage. GRE’s cost of revenues and gross margin percentage were as follows:
| |
|
Three Months Ended September 30, |
|
|
Change |
|
|
Nine Months Ended September 30, |
|
|
Change
|
|
|
| (amounts in thousands) |
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
|
2022 |
|
|
2021 |
|
|
$
|
|
|
%
|
|
|
| Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Electricity |
|
$ |
33,997 |
|
|
$ |
52,096 |
|
|
$ |
(18,099 |
) |
|
|
(34.7 |
)% |
|
$ |
83,720 |
|
|
$ |
164,440 |
|
|
$ |
(80,720 |
)
|
|
|
(49.1 |
)% |
|
| Natural gas |
|
|
2,692 |
|
|
|
70 |
|
|
|
2,622 |
|
|
|
nm |
|
|
|
24,428 |
|
|
|
12,083 |
|
|
|
12,345 |
|
|
|
102.2 |
|
|
| Total cost of revenues |
|
$ |
36,689 |
|
|
$ |
52,166 |
|
|
$ |
(15,477 |
) |
|
|
(29.7 |
)% |
|
$ |
108,148 |
|
|
$ |
176,523 |
|
|
$ |
(68,375 |
) |
|
|
(38.7 |
)% |
|
nm—not meaningful
| |
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
| (amounts in thousands) |
|
2022 |
|
|
2021 |
|
|
Change |
|
2022 |
|
|
2021 |
|
|
|
Change |
|
| Gross margin percentage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Electricity |
|
53.9 |
% |
|
|
37.1 |
% |
|
|
16.8 |
% |
|
55.0
|
% |
|
24.6 |
% |
|
|
30.4
|
% |
| Natural gas |
|
56.2 |
|
|
|
98.0 |
|
|
|
(41.8 |
) |
|
40.1 |
|
|
53.3 |
|
|
|
(13.2
|
) |
| Total gross margin percentage |
|
54.1 |
% |
|
|
39.6 |
% |
|
|
14.5 |
% |
|
52.3 |
% |
|
27.6
|
% |
|
|
24.7
|
% |
Cost of revenues for electricity decreased in the three months ended September 30, 2022 compared to the same period in 2021 primarily because of the decrease in electricity consumption by GRE’s REPs’ customers partially offset by an increase in the average unit cost of electricity. The average unit cost of electricity increased 2.1% in the three months ended September 30, 2022 compared to the same period in 2021. Gross margin on electricity sales increased in the three months ended September 30, 2022 compared to the same period in 2021 because the average rate charged to customers increased more than the increase in the average unit cost of electricity.
Cost of revenues for electricity decreased in the nine months ended September 30, 2022 compared to the same period in 2021 primarily because of decreases in electricity consumption by GRE’s REPs’ customers and the average unit cost of electricity. The average unit cost of electricity decreased 21.0% in the nine months ended September 30, 2022 compared to the same period in 2021. A significant portion of the decrease in the average cost of electricity resulted from the favorable results of hedging activities for the nine months ended September 30, 2022 compared to the same period in 2021 and the incremental cost incurred in the nine months ended September 30, 2021 as an effect of a major winter storm in Texas as discussed above. We recognized gains from derivative instruments of $88.3 million in the nine months ended September 30, 2022 compared to $16.3 million recognized in the same period of 2021. Gross margin on electricity sales increased in the nine months ended September 30, 2022 compared to the same period in 2021 because the average rate charged to customers increased while the average unit cost of electricity decreased.
Cost of revenues for natural gas increased in the three months ended September 30, 2022 compared to the same period in 2021 primarily because of increases in natural gas consumption by GRE's REPs' customers and in average unit cost of natural gas. The average unit cost of natural gas increased to $0.380 per therm in the three months ended September 30, 2022 compared to $0.013 for the same period in 2021. The significant increase is due to an increase in the wholesale price of natural gas during three months ended September 30, 2022 compared to the same period in 2021 as well as a more favorable fluctuation of the fair value of the Company's natural gas hedges in the three months ended September 30, 2021 compared to the same period in 2022. Gross margin on natural gas sales decreased in the three months ended September 30, 2022 compared to the same period in 2021 because the average rate charged to customers increased less than the increase in the average unit cost of natural gas.
Cost of revenues for natural gas increased in the nine months ended September 30, 2022 compared to the same period in 2021 primarily because of increases in natural gas consumption by GRE's REPs' customers and in average unit cost of natural gas. The average unit cost of natural gas increased 56.1% in the nine months ended September 30, 2022 compared to the same period in 2021. The significant increase is due to an increase in the wholesale price of natural gas during nine months ended September 30, 2022 compared to the same period in 2021. Gross margin on natural gas sales decreased in the nine months ended September 30, 2022 compared to the same period in 2021 because the average rate charged to customers increased less than the increase in the average unit cost of natural gas.
Selling, General and Administrative. The increase in selling, general and administrative expenses in the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to increases in marketing and customer acquisition costs, employee-related costs and provision for bad debt expenses. Employee-related expenses increased by $0.4 million in the three months ended September 30, 2022 compared to the same period in 2021 primarily due to an increase in accrued bonuses as a result of improved results of operations during the period. Marketing and customer acquisition expenses increased by $0.4 million in the three months ended September 30, 2022 compared to the same period in 2021 as a result of an increase in spending in our commercial business of expansion and to offset the effect of COVID-19 related to public health restrictions to traditional customer acquisition methods, partially offset by the decrease in residential customer acquisition. Provision for bad debt expenses increased by $0.5 million in the three months ended September 30, 2022 compared to the same period in 2021 as a result of expansion of activities in non-POR markets. As a percentage of GRE’s total revenues, selling, general and administrative expense increased from 16.7% in the three months ended September 30, 2021 to 19.8% in the three months ended September 30, 2022.
The increase in selling, general and administrative expenses in the nine months ended September 30, 2022 compared to the same period in 2021 was primarily due to increases in marketing and customer acquisition costs, employee-related costs and provision for bad debt partially offset by a decrease in legal settlement costs. Employee-related expenses increased by $2.3 million in the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to an increase in accrued bonuses as a result of improved results of operations during the period. Marketing and customer acquisition expenses increased by $3.5 million in the nine months ended September 30, 2022 compared to the same period in 2021 as a result of an increase in spending in our commercial business and to offset the effect of COVID-19 related to public health restrictions to traditional customer acquisition methods partially offset by the decrease in residential customer meter acquisition. Provision for bad debt expenses increased by $0.7 million in the three months ended September 30, 2022 compared to the same period in 2021 as a result of expansion of activities in non-POR markets. As discussed above, Residents Energy and Town Square paid $0.8 million in a legal settlement in Connecticut in the nine months ended September 30, 2021. No legal settlement paid in nine months ended September 30, 2022. As a percentage of GRE’s total revenues, selling, general and administrative expense increased from 16.8% in the nine months ended September 30, 2021 to 20.6% in the nine months ended September 30, 2022.
Genie Renewables Segment
The Genie Renewables (formerly GES) segment is composed of Genie Solar, CityCom Solar, Diversegy and Prism, in which we hold a 60.0% controlling interest.
|
|
|
Three Months Ended September 30, |
|
|
Change |
|
|
Nine Months Ended September 30, |
|
|
Change |
|
| (amounts in thousands) |
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
|
Revenues
|
|
$ |
1,368 |
|
|
$ |
1,338 |
|
|
$ |
30 |
|
|
|
2.2 |
|
|
$ |
7,189 |
|
|
$ |
6,170 |
|
|
$ |
1,019 |
|
|
|
16.5 |
% |
|
Cost of revenue
|
|
|
1,453 |
|
|
|
883 |
|
|
|
570 |
|
|
|
64.6 |
|
|
|
5,934 |
|
|
|
3,675 |
|
|
|
2,259 |
|
|
|
61.5 |
|
|
Gross profit
|
|
|
(85 |
) |
|
|
455 |
|
|
|
(540 |
) |
|
|
(118.7 |
) |
|
|
1,255 |
|
|
|
2,495 |
|
|
|
(1,240 |
) |
|
|
(49.7 |
) |
| Selling, general and administrative expenses |
|
|
1,418 |
|
|
|
658 |
|
|
|
760 |
|
|
|
115.5 |
|
|
|
3,755 |
|
|
|
1,805 |
|
|
|
1,950 |
|
|
|
108.0 |
|
|
(Loss) income from operations
|
|
$ |
(1,503 |
) |
|
$ |
(203 |
) |
|
$ |
1,300 |
|
|
|
640.4 |
% |
|
$ |
(997 |
) |
|
$ |
690 |
|
|
$ |
(3,190 |
) |
|
|
(462.3 |
)% |
Revenue. Genie Renewables' revenues increased in the three and nine months ended September 30, 2022 compared to the same periods in 2021. The increases in revenues were the result of increases in the activities of Genie Solar projects and commissions from selling third-party products to customers by CityCom Solar. Revenues from Diversegy include commissions, entry fees and other fees from our energy brokerage and marketing services businesses.
Cost of Revenues. Cost of revenue increased in the three and nine months ended September 30, 2022 compared to the same periods in 2021. The increases in cost revenues reflects the increase in revenues of Genie Solar and CityCom Solar.
Selling, General and Administrative. Selling, general and administrative expenses increased in the three and nine months ended September 30, 2022 compared to the same period in 2021 primarily due to increases in headcount in Genie Solar and Diversegy and consulting fees at Genie Solar.
Corporate
As discussed above, the remaining accounts of GREI International were transferred to the corporate starting in the third quarter of 2022, which includes accounts of Genie Japan before we sold our stake in May 2021. Other entities under corporate do not generate any revenues, nor does it incur any cost of revenues. Corporate costs include unallocated compensation, consulting fees, legal fees, business development expense and other corporate-related general and administrative expenses.
|
|
|
Three Months Ended September 30, |
|
|
Change |
|
|
Nine Months Ended September 30, |
|
|
Change |
|
| (amounts in thousands) |
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
|
Revenues
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
nm |
|
|
$ |
— |
|
|
$ |
3,930 |
|
|
$ |
(3,930 |
) |
|
|
nm |
% |
|
Cost of revenue
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
nm |
|
|
|
— |
|
|
|
5,954 |
|
|
|
(5,954 |
) |
|
|
nm |
|
|
Gross loss
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
nm |
|
|
|
— |
|
|
|
(2,024 |
) |
|
|
(2,024 |
) |
|
|
nm |
|
| Selling, general and administrative expenses |
|
|
2,374 |
|
|
|
2,048 |
|
|
|
326 |
|
|
|
15.9 |
|
|
|
7,232 |
|
|
|
6,813 |
|
|
|
419 |
|
|
|
6.2 |
|
|
(Loss) income from operations
|
|
$ |
(2,374 |
) |
|
$ |
(2,048 |
) |
|
$ |
(326 |
) |
|
|
15.9 |
% |
|
$ |
(7,232 |
) |
|
$ |
(8,837 |
) |
|
$ |
(2,443 |
) |
|
|
(27.6 |
)% |
In January 2021, weather volatility and the lack of adequate gas reserves drove the prices on the Japan Electric Power Exchange to $2,390 per megawatt hour for an extended period of time. Although our supply commitment for our customers in Japan was hedged reasonably for expected winter weather conditions, the extreme price spike exposed us to further unexpected cost increases. The impact on our 2021 consolidated result of operations was approximately $2.5 million.
On April 26, 2021, we entered into an Equity Purchase Agreement ("Purchase Agreement") with Hanhwa Q Cells Japan Co., Ltd. ("Hanhwa"), pursuant to which, we agreed to sell our interest in Genie Japan for ¥570.0 million (equivalent to approximately $5.3 million at April 26, 2021) subject to certain terms and conditions set forth in the Purchase Agreement. On May 11, 2021, upon the terms and subject to the conditions of Purchase Agreement, we completed the divestiture of Genie Japan for an aggregate cash consideration of ¥570.0 million (equivalent to approximately $5.2 million at May 11, 2021). Hanhwa also assumed the outstanding loans payable of Genie Japan. We paid $0.6 million of commission to certain former employees of Genie Japan and recognized a pre-tax gain of $4.2 million from the divestiture. For the period from January 1, 2021 to May 11, 2021, Genie Japan had revenues and cost of revenues of $3.9 million and $5.9 million, respectively.
Corporate general and administrative expenses increased in the three and nine months ended September 30, 2022 compared to the same period in 2021 primarily because of increases in employee related cost and in stock-based compensation expense. As a percentage of our consolidated revenues, Corporate general and administrative expense increased to 2.9% in the three months ended September 30, 2022 from 2.3% in the three months ended September 30, 2021 and decreased to 3.1% in the nine months ended September 30, 2022 from 2.7% in the nine months ended September 30, 2021.
Consolidated
Selling, general and administrative expenses. Stock-based compensation expense included in consolidated selling, general and administrative expense was $0.7 million and $0.5 million in the three months ended September 30, 2022 and 2021, respectively and $2.2 million and $1.6 million in the nine months ended September 30, 2022 and 2021, respectively. At September 30, 2022, aggregate unrecognized compensation cost related to non-vested stock-based compensation was $4.1 million. The unrecognized compensation cost is recognized over the expected service period.
The following is a discussion of our consolidated income and expense line items below income from operations:
| |
|
Three Months ended
September 30,
|
|
|
Change |
|
|
Nine Months ended
September 30,
|
|
|
Change |
|
| (amounts in thousands) |
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
| Income from operations |
|
$ |
23,538 |
|
|
$ |
17,463 |
|
|
$ |
6,075 |
|
|
|
(34.8 |
)% |
|
$ |
62,272 |
|
|
$ |
18,280 |
|
|
$ |
43,992 |
|
|
|
240.7 |
|
| Interest income |
|
|
194 |
|
|
|
8 |
|
|
|
186 |
|
|
|
nm |
|
|
|
259 |
|
|
|
28
|
|
|
|
231
|
|
|
|
nm
|
|
| Interest expense |
|
|
(33 |
) |
|
|
(99 |
) |
|
|
(66 |
) |
|
|
(66.7 |
) |
|
|
(135 |
) |
|
|
(311 |
) |
|
|
(176 |
) |
|
|
(56.6
|
) |
| Other income (loss), net |
|
|
156 |
|
|
|
35 |
|
|
|
121 |
|
|
|
nm |
|
|
|
(742 |
) |
|
|
1,710 |
|
|
|
(2,452 |
) |
|
|
(143.4 |
) |
| Unrealized gain on marketable equity securities and investments |
|
|
57 |
|
|
|
(5,312 |
) |
|
|
5,369 |
|
|
|
nm |
|
|
|
(712
|
) |
|
|
482 |
|
|
|
(1,194
|
) |
|
|
(247.7 |
) |
| Gain from sale of subsidiary |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
nm |
|
|
|
— |
|
|
|
4,226 |
|
|
|
(4,226 |
) |
|
|
nm
|
|
| Provision for benefit from income taxes |
|
|
(6,482 |
) |
|
|
(3,498 |
) |
|
|
2,984 |
|
|
|
85.3 |
|
|
|
(16,791 |
) |
|
|
(7,149 |
) |
|
|
(9,642
|
) |
|
|
(134.9 |
) |
| Net income from continuing operations |
|
|
17,430 |
|
|
|
8,597 |
|
|
|
14,669 |
|
|
|
170.6 |
|
|
|
44,151
|
|
|
|
17,266 |
|
|
|
26,533 |
|
|
|
153.7
|
|
| (Loss) income from discontinued operations, net of tax |
|
|
(1,459 |
) |
|
|
(10,914 |
) |
|
|
(9,455 |
) |
|
|
(86.6 |
) |
|
|
25,929
|
|
|
|
(16,991 |
) |
|
|
42,920 |
|
|
|
252.6
|
|
| Net income (loss) |
|
|
15,971 |
|
|
|
(2,317 |
) |
|
|
5,214 |
|
|
|
225.0 |
|
|
|
70,080 |
|
|
|
275 |
|
|
|
69,453 |
|
|
|
nm |
|
| Net income (loss) attributable to noncontrolling interests |
|
|
(2,797 |
) |
|
|
(31 |
) |
|
|
(2,766 |
) |
|
|
nm |
|
|
|
(1,056
|
) |
|
|
(821 |
) |
|
|
235
|
|
|
|
28.6 |
|
| Net income (loss) attributable to Genie Energy Ltd. |
|
$ |
18,768 |
|
|
$ |
(2,286 |
) |
|
$ |
21,054 |
|
|
|
921.0 |
% |
|
$ |
71,136
|
|
|
$ |
1,096
|
|
|
$ |
69,218
|
|
|
|
nm |
|
nm—not meaningful
Other Income (loss), net. Other income (loss), net in the three and nine months ended September 30, 2022 and 2021 consisted primarily foreign currency transactions and equity in net loss in equity method investees.
Provision for Income Taxes. The change in the reported tax rate for the three and nine months ended September 30, 2022 compared to the same periods in 2021, are the result of favorable results of operations in the U.S. and GRE International and changes in the mix of jurisdiction in which taxable income was earned which was not offset by income tax benefit in some jurisdictions that had losses due to valuation allowances in those jurisdictions.
Net Income (Loss) Attributable to Noncontrolling Interests. The increase in net income attributable to noncontrolling interests in the three and nine months ended September 30, 2022 compared to the same periods in 2021 was primarily due to an increase in the share of noncontrolling interest in the net income of Lumo Sweden and Lumo Finland.
Unrealized (loss) gain on Marketable Equity Securities and Investments. The unrealized (loss) gain on marketable equity securities and investment for the three and nine months ended September 30, 2022 pertains to the change in fair value of the Company's investments in common stock of Rafael Holdings, Inc. ("Rafael") which the Company acquired in December 2020.
(Loss) Income from Discontinued Operations, net of tax. (Loss) income from discontinued operations, net of tax in the three and nine months ended September 30, 2022 is mainly due to results of operations of Lumo Finland and Lumo Sweden. Income (loss) from discontinued operations, net of tax in the three and nine months ended September 30, 2021 is mainly due to results of operations of Lumo Finland and Lumo Sweden as well Orbit which we discontinued in fourth quarter of 2021.
Liquidity and Capital Resources
General
We currently expect that our cash flow from operations and the $81.7 million balance of unrestricted cash and cash equivalents that we held at September 30, 2022 will be sufficient to meet our currently anticipated cash requirements for at least the period to November 9, 2023.
At September 30, 2022, we had working capital (current assets less current liabilities) of $128.5 million.
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Nine Months Ended September 30,
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2022
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2021
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(in thousands)
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Cash flows provided by (used in):
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Operating activities
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$
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44,948
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$
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(928
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) |
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Investing activities
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(3,844
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) |
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2,656
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Financing activities
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(14,717
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) |
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(5,194
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) |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash |
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(15 |
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(221 |
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| Increase in cash, cash equivalents and restricted cash of continuing operations |
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26,372 |
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(3,687 |
) |
| Cash flows used in discontinued operations |
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(35,791 |
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1,014 |
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Net decrease in cash, cash equivalents and restricted cash
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$
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(9,419
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) |
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$
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(2,673
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) |
Operating Activities
Cash, cash equivalents and restricted cash provided by operating activities of continuing operations was $44.9 million in the nine months ended September 30, 2022 compared to net cash used in operating activities of continuing operations of $0.9 million in the nine months ended September 30, 2021. The increase is primarily the result of favorable results of operations in the nine months ended September 30, 2022 compared to the same period in 2021.
Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Changes in assets and liabilities increased cash flows by $15.0 million for the nine months ended September 30, 2022, compared to the same period in 2021.
Certain of GRE's REPs are party to an Amended and Restated Preferred Supplier Agreement with BP Energy Company, or BP, which is to be in effect through November 30, 2023. Under the agreement, the REPs purchase electricity and natural gas at market rate plus a fee. The obligations to BP are secured by a first security interest in deposits or receivables from utilities in connection with their purchase of the REP’s customer’s receivables, and in any cash deposits or letters of credit posted in connection with any collateral accounts with BP. The ability to purchase electricity and natural gas under this agreement is subject to satisfaction of certain conditions including the maintenance of certain covenants. At September 30, 2022, we were in compliance with such covenants. At September 30, 2022, restricted cash—short-term of $0.4 million and trade accounts receivable of $46.8 million were pledged to BP as collateral for the payment of trade accounts payable to BP of $12.5 million at September 30, 2022.
We had purchase commitments of $133.9 million at September 30, 2022, of which $103.7 million was for purchases of electricity.
From time to time, we receive inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes, and we respond to those inquiries or requests. We cannot predict whether any of those matters will lead to claims or enforcement actions.
Investing Activities
Our capital expenditures were minimal in the three months ended September 30, 2022 and 2021. We currently anticipate that our total capital expenditures in the twelve months ending December 31, 2022 will be between $1.5 to $3.0 million.
In December 2020, we invested $5.0 million in Class B common stock of Rafael. Rafael, a publicly-traded company, is also a related party. In connection with the purchase, Rafael issued to us warrants to purchase an additional 43,649 shares of Rafael's Class B common stock with an exercise price of $22.91 per share. The warrants had a term expiring on June 6, 2022. We exercised the warrants in full on March 31, 2021 for a total exercise price of $1.0 million. We do not exercise significant influence over the operating or financial policies of Rafael.
In the nine months ended September 30, 2022, we acquired minimal interests in various ventures for an aggregate amount of investments of $1.3 million.
On February 21, 2022, we entered into a Loan and Security Agreement to extend up to 5.5 million New Israel Shekel, or NIS (equivalent to $1.5 million as at September 30, 2022) with Natan Ohayon (the "Ohayon Loan"). Natan Ohayon holds a minority interest in Petrocycle Ltd ("Petrocycle"), a subsidiary of the Company. Petrocycle is a preoperating entity engaged in the development of a process to recycle used engine oil into usable gasoline. The Ohayon Loan, which is secured by all assets that Mr. Ohayon acquired using the proceeds of the loan bears a minimum interest as set by the Income Tax Regulations of Israel (3.23% in 2022) and is due, together with the principal amount on or before December 31, 2023. As of September 30, 2022, the outstanding balance, including accrued interest, of the Ohayon Loan was NIS5.5 million (equivalent to $1.5 million), included in other assets in the consolidated balance sheets.
In the fourth quarter of 2021, Orbit transferred to GEIC a net amount of $49.7 million from the proceeds of the settlement of the contact with Shell which is included in cash and cash equivalents in the consolidated balance sheet as of December 31, 2021. In January 2022, we transferred $21.5 million to the Administrators of Orbit Energy to fund the settlement of the expected remaining liabilities of Orbit of $30.8 million, which were included in the current liabilities of discontinued operations in the consolidated balance sheet as of December 31, 2021. In February 2022, we deposited $28.3 million into an attorney trust account to hold, preserve, and dispense funds to the extent needed in connection with the administration process. On February 24, 2022, the Administrators filed a petition under Chapter 15 of the U.S. Bankruptcy Code with the Bankruptcy Court of the Southern District of New York seeking (i) recognition of the U.K. administration proceeding as a foreign main proceeding and the U.K. Administrators as its foreign representatives, and (ii) entrusting distribution of the funds the Company deposited into its attorney’s trust fund to the U.K. Administrators. In the second quarter of 2022, the Administrators filed an application to transfer the funds back to the Administrators’ control in the U.K. Subject to certain representations and expectations regarding use and application of the funds to efficiently and expeditiously pay off creditors and bring a timely close to the insolvency administration, we decided not to oppose the application, and the Court transferred the $28.3 million to the Administrator. In August 2022, the Administrator paid the Company a partial return of its interest in Orbit of £4.6 million (equivalent to $5.4 million). We believe that the funds are more than sufficient to pay any remaining creditors of Orbit (with any surplus, which we expect to be significant, to be returned to us).
Financing Activities
In each of the nine months ended September 30, 2022 and 2021, we paid aggregate quarterly Base Dividends of $0.3188 per share, $0.8 million in the aggregate, on our Series 2012-A Preferred Stock, or Preferred Stock. On October 13, 2022, our Board of Directors declared a quarterly Base Dividend of $0.4782 per share of our Preferred Stock. The dividend will be paid on or about November 15, 2022 to stockholders of record as of the close of business on November 8, 2022.
In March 2021, in light of the losses incurred from the effects of the events in Texas and Japan discussed above, the Company suspended the payment of quarterly dividends on its common stock to rebuild cash position.
On February 7, 2022, the Board of Directors reversed its earlier suspension of quarterly dividends and declared a quarterly dividend of $0.075 per share on our Class a common stock and Class B Common Stock. In the nine months ended September 30, 2022, we paid an aggregate quarterly dividends of $0.075 per share to stockholders of our Class A common stock and Class B common stock. The Company paid $3.9 million in aggregate dividends on our common stock for the nine months ended September 30, 2022. On November 2, 2022, our Board of Directors declared a quarterly dividend of $0.075 per share of our Class A common stock and Class B Common Stock. The dividend will be paid on or about November 21, 2022 to stockholders of record as of the close of business on November 14, 2022.
On March 11, 2013, our Board of Directors approved a program for the repurchase of up to an aggregate of 7.0 million shares of our Class B common stock. In nine months ended September 30, 2022, the Company acquired 639,393 Class B common stock under the stock purchase program for an aggregate amount of $1.1 million. In the nine months ended September 30, 2021, the Company acquired 623,000 Class B common stock under the stock purchase program for an aggregate amount of $3.8 million.At September 30, 2022, 4.7 million shares of Class B common stock remained available for repurchase under the stock repurchase program.
On February 7, 2022, our Board of Directors authorized a program to redeem up to $1.0 million per quarter of our Preferred Stock at the liquidation preference of $8.50 per share beginning in the second quarter of 2022. On May 3, 2022, our Board of Directors authorized to redeem $2.0 million of our Preferred Stock during the second quarter of 2022. In the nine months ended September 30, 2022, the Company redeemed 352,941 Preferred Stock under the stock purchase program for an aggregate amount of $3.0 million.
In October 2022, the Company elected to exercise its rights to redeem shares of the outstanding Preferred Stock on November 15, 2022 (the "Redemption Date") at a price, of $8.50 per share (an aggregate of $8.4 million), together with an amount equal to all dividends accrued and unpaid up to, but not including the Redemption Date.
On May 13, 2020, Genie Japan entered into a Loan Agreement with Tokyo Star Bank for a ¥150.0 million (equivalent to $1.4 million) short-term credit facility ("May 2020 Loan") with maturity date of November 13, 2020. On November 13, 2020, Genie Japan and Tokyo Star Bank amended the May 2020 Loan to extend the maturity date to May 13, 2021. Genie Japan provided a letter of credit issued by JPMorgan Chase in the amount of ¥150.0 million (equivalent to $1.4 million) as collateral. The outstanding principal amount incurred interest at 3.0% per annum and was payable monthly. In May 2021, the Company completed the divestiture of Genie Japan including balance of the May 2020 Loan.
On April 4, 2017, GRE, IDT Energy, and other GRE subsidiaries entered into a Credit Agreement with Vantage Commodities Financial Services II, LLC ("Vantage"), for a $20 million revolving loan facility. The borrowers consist of our subsidiaries that operate REP businesses, and those subsidiaries’ obligations are guaranteed by GRE. The borrowers have provided as collateral a security interest in their receivables, bank accounts, customer agreements, certain other material agreements and related commercial and intangible rights. The outstanding principal amount incurred interest at LIBOR plus 4.5% per annum. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest matured on April 3, 2020. In April 2020, the revolving line of credit expired and we paid outstanding balance of $3.5 million.
On December 13, 2018, we entered into a Credit Agreement with JPMorgan Chase Bank (“Credit Agreement”). On December 23, 2021, the Company entered into the third amendment of its existing Credit Agreement to extend the maturity date of December 31, 2022. The Company continues to have an aggregate principal amount of $5.0 million credit line facility (“Credit Line”). The Company pays a commitment fee of 0.1% per annum on unused portion of the Credit Line as specified in the Credit Agreement. The borrowed amounts will be in the form of letters of credit which will bear interest of 1.0% per annum. The Company will also pay a fee for each letter of credit that is issued equal to the greater of $500 or 1.0% of the original maximum available amount of the letter of credit. We agreed to deposit cash in a money market account at JPMorgan Chase Bank as collateral for the line of credit equal to $5.1 million. As of September 30, 2022, there is no issued letter of credit from the Credit Line. At September 30, 2022, the cash collateral of $5.2 million was included in restricted cash—short-term in the consolidated balance sheet.
In the nine months ended September 30, 2022, we paid $0.4 million to repurchase 45,436 shares of our Class B common stock of our Class B common stock tendered by our employees and an officer to satisfy tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. In the nine months ended September 30, 2021, we paid $0.2 million to repurchased 39,523 shares of our Class B common stock of our Class B common stock tendered by our employees and an officer to satisfy tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. Such shares were repurchased by us based on their fair market value on the trading day immediately prior to the vesting date.
Off-Balance Sheet Arrangements
We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources, other than the following. GRE has performance bonds issued through a third party for the benefit of certain utility companies and for various states in order to comply with the states’ financial requirements for retail energy providers. At September 30, 2022, the Company had outstanding aggregate performance bonds of $15.2 million and minimal amount of unused letters of credit.