Retail - s21.q4cdn.com · Vistra Energy Analyst Day Presentation 2018 VISTRA RETAIL OVERVIEW 2 Balanced, diversified ... Best-in-class customer experience companies have outperformed

Retail

Scott HudsonPresident, Retail

Vistra Energy Analyst Day Presentat ion 2018

VISTRA RETAIL OVERVIEW

2

Balanced, diversified portfolio in five states with

strong financial

performance

ATTRACTIVE RETAIL

PORTFOLIO

Differentiated

products and service

offerings

FOCUS ON

THE CUSTOMER

Market-leading

innovation backed

by a scalable

operating platform

CAPABILITIES AND

INNOVATION

Utilize capabilities to grow

organically and through

highly selective, value-

accretive acquisitions

GROWTH STRATEGY


ATTRACTIVE RETAIL PORTFOLIO

FOCUS ON CUSTOMER EXPERIENCE

CAPABILITIES AND INNOVATION

GROWTH STRATEGY

KEY TAKEAWAYS


0

46%54%


48%52%

30%

52%

18%

Texas

Load

Midwest & NE

Load

Total Retail

Load

The Dynegy merger adds a generation platform and Retail load

in attractive markets to Vistra’s core Texas position

VISTRA RETAIL BACKGROUND

Business Markets Residential Markets Muni-Aggregation

Customers Load1

(TWh)

Texas ~1.7 mm ~43

Midwest & NE ~1.2 mm ~28

~43 TWh ~28 TWh ~71 TWh

TEXAS ILLINOIS OHIO

PENNSYLVANIA MASSACHUSETTS

1 2019E.

4

22 TWh 21 TWh 15 TWh 13 TWh

13 TWh

21 TWh

37 TWh


SIGNIFICANT MARKET SHARE

5

We are a large player in our markets and throughout the country

Vistra Total Market Share2

24%

21%

10%

7% 5% 5%

4% 2% 2% 2%

16% 18%

9%

Texas Illinois Ohio

Total US Residential Market Share2

US Competitive Markets

Vistra Business Market Share2

US Competitive Markets

17% 17%

8% 8% 8%

5% 4%3% 3% 2%

21%

14%

8%

6% 6% 5%4% 3% 3% 2%

1 2016 EIA data. Based on customer counts. 2 2016 EIA data. Based on volumes.

ERCOT Residential Market Share1


STRONG FINANCIAL PERFORMANCE

6

$845 $845 $808

$682

$800 $839

$779

2009 -2011

2012 2013 2014 2015 2016 2017

Retail Adjusted EBITDA

($ in millions)

23.3 22.8 21.9 21.9 21.1 20.5

16.3 15.2 16.6 19.3 18.8 18.5

39.6 38.0 38.541.2 39.9 39.0

2012 2013 2014 2015 2016 2017

Residential Markets Business markets

Vistra’s Retail generates stable EBITDA and low attrition without acquisitions

Retail Volumes

(TWh)

Residential Counts and Attrition

$45

$65$80

$87$100

$129

Vistra(Total)

Vistra(ERCOT)

Peer A Peer B Peer C Peer D

Retail Costs1

($ SG&A per RCE)

SG&A Spend Efficiency

3.8 3.8 1.9 1.4 2.3 1.9

(000)

1 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.

1,560 1,516 1,500 1,489 1,478 1,472

(4.0%)

(2.8%)

(1.1%) (0.7%) (0.7%)(0.4%)

2012 2013 2014 2015 2016 2017

Residential customer count (mm) Attrition rate





GROWTH STRATEGY

KEY TAKEAWAYS


CUSTOMER PURCHASING MINDSET

8

Unexpected

high billsMoving

End of

contract

Word of

mouth

Sales

contact

A rational category where motivation for purchase is typically driven by a trigger event


CONSIDERATIONS OF CHOICE

9

PRICESAVINGS

BRANDTRUST

PRODUCT AND SERVICE BENEFITS

INCENTIVES

VALUE FOR

PRICE PAID

BRANDTRUST

PRODUCT AND SERVICE BENEFITS

OVERALL

CUSTOMEREXPERIENCE

Reasons to Choose1

Reasons to Stay1

1 Source: TXU Energy 2016 Brand Choice Importance Study.

Price is one of many considerations


TXU ENERGY’S GO-TO-MARKET APPROACH

10

Month-

to-MonthFixed

Usage

Alerts

Device

Management

Unique

Offer Sets

Individualized

Service Interactions

Mobile First

Technologies

WindIndex

Pay-as-you-goTime of Use

(Free Nights®)

Solar

Chat

TextSocial Media

MyAccount

Natural

Language IVR Live Agent

Email

Our offer and interaction portfolio is built upon:


STRONG BRANDS MAKE A DIFFERENCE

11

Source: BAV Consulting; Across ERCOT general population (2015).

BAV Consulting ranked TXU Energy as the strongest brand in the ERCOT market

Niche, or

Unrealized

Potential

Leadership

New, Unfocused, or

Unknown

TXU Energy

Competitor 2

Bra

nd S

tre

ngth

(Diffe

rentiation/R

ele

vance)

Futu

re G

row

th V

alu

e

Brand Stature(Esteem/Knowledge)

Current Operating Value

Competitor 8

Competitor 6

Competitor 4

Competitor 7

Competitor 5

Competitor 3

Competitor 1

Commodity or Eroded


MULTI-BRAND STRATEGY

12

Powering Positive Energy Experiences

No Frills. Low Bills.Smart with Heart

Our multi-brand strategy attracts customers from diverse segments,

all with unique preferences, needs, and goals


`

`

‘CUSTOMER-OBSESSED’ CULTURE

13

1 Source: Watermark Consulting Customer Experience ROI Study.

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.


BUSINESS MARKETS EXPERTISE

14

Products

- Simple to complex

Market Fundamentals

- Insight

- Dynamics

Innovation

- Greenbacks

- Solar / Wind

Sales / Service

- Commercial Insights

- Challenger

Account Manager

Account Service Team

Sales Executive

CUSTOMER

We differentiate through our market expertise, industry experience,

and by consulting customers on their energy needs

$16mm in Energy Efficiency Projects

TXU Greenbacks Program


VALUE ADDED SOLUTIONS

15

Home AutomationEnable customers to control their

thermostat anytime from anywhere and

save up to $180 a year.

Cable, Internet and TelecomEnable customers to shop for and set up

major home services like TV, Internet and

home phone with one call.

Protection ServicesOffer a suite of home warranty products

that protect customer’s HVAC systems,

plumbing, appliances, water heaters and

more.

We lead with commodity, but will expand our Solutions business through partnerships


RECOGNIZED AS BEST IN CLASS

16

90%

TOP OVERALL RANKING

By keeping customers at the center of everything we do, we’ve consistently earned

their approval, along with customer advocacy and consumer research firms





GROWTH STRATEGY

KEY TAKEAWAYS


1. CREATE DIFFERENTIATED PLANS

18

$0

$25

$50

We use consumer research to create products and services that emotionally connect with customers

CASH BACK REWARD PAYOUTS

($ in millions)


THE EVOLUTION OF FREE NIGHTS

19

2012 2013 2014 2015 2016 2017

Free Nights Free Nights,

Free Weekends,

Business Power

Hours

Free Nights

with more

free hours

Free Mornings

and EveningsFree Nights:

Choose when

Free Nights

begin

Free Nights

& Solar Days

Our Right Time Pricing® suite includes our most popular plan, Free Nights


INTEGRATED SOLAR SOLUTIONS

20

0

10,000

20,000

30,000

40,000

2018 ERCOT Rooftop PV TXU Solar Customers

A company-owned asset that offers significant, long-term, and economically viable

renewable options to commercial, industrial, and residential customers

TXU Solar Counts vs.

ERCOT Rooftop Solar Homes

Upton 2 Solar Power Plant

West Texas

TXU Energy Free Nights & Solar Days


2. DESIGN TAILORED EXPERIENCES

21

Customer segments allow us to deliver experiences and solutions that meet unique needs


ACQUISITION

RETENTION

CONTRACT EXPIRATION

FRAUD DETECTION

CREDIT CRITERIA

PROSPECTING

3. APPLIED ANALYTICS ACROSS THE

CUSTOMER LIFECYCLE

22

• A/B Testing and Trend Analysis

• Customer Survival Models

• Term Expiration Optimization

• Strategy Optimization

• Personalized Comfort Credits

• Switch-Save Targeting

• Credit Risk Modeling

DATAINSIGHTS

Embedding analytics in every stage of the customer lifecycle maximizes experience and value


4. DEPLOY DIGITAL PLATFORMS

23

BEST IN CLASS

FIRST IN TEXAS

Our digital platforms help us meet customer needs

MY ENERGY DASHBOARD MOBILE APP

• Touch ID

• Split Payments

• Usage Breakdown


CUSTOMER BEHAVIORS ARE CHANGING

24

83%of customers go to a

company’s website

for information

75%Use mobile device

while shopping

85%online shoppers

start a purchase

on one device &

finish on another

75%inclined to purchase from

a company that uses

mobile apps

MOBILE MINDSET ENROLLMENT BY SALES CHANNEL

0%

25%

50%

75%

100%

2009 2014 2015 2016 2017

Call Center Online Direct Sales

We’re meeting consumers where they shop with tailored offers


A SMARTER SERVICE EXPERIENCE

25

0%

25%

50%

75%

100%

2012 2013 2014 2015 2016 2017

Agent IVR Online Mobile

Customer’s value tier, credit

risk, defection risk,

cross-channel interactions

We’re matching customers with the right agents to deliver better experiences,

manage costs, and mitigate risk

SERVICE INTERACTIONS


TXUeLEASESM

26

ANNUAL ERCOT TRANSACTIONS

3.1MM

Total ERCOT Transactions

1.5MM

Renters

1.1MM

Millennials

67%

of Millennial transactions

are also Renters

A first-of-its-kind digital platform that will help us incrementally capture movers,

millennials, and multi-family renters


OUR CUSTOMER EXPERIENCE JOURNEY

Call Center

Reconfiguration

2011

Customer

Listening Program

Natural

Voice IVR

Platform

(IVY)

Enterprise Data &

Analytics Platform

Integration with

Amazon Alexa

New CRM Platform

2015

2010 2014

New Digital

Enrollment Platform

(TXUeLease)

2018

2017

27

2007

Migration

from

Legacy

Platforms

2019

“In the Lab”Shift from

“Super Agent” to

Specialized Agent

2013

TXU Energy

Mobile App

2012

Ten years in the making and continuing to evolve every day





GROWTH STRATEGY

KEY TAKEAWAYS


INTEGRATION OPPORTUNITY

29

Vistra expects to reduce net length by growing Retail

1 2019E. Excludes CAISO.

• Transaction Efficiency

• Collateral Efficiency

• Higher margins

• Stabilized cash flows

BENEFITS OF

INTEGRATED MODEL

VISTRA ENERGY

GENERATION AND LOAD MATCH

Generation1 Load1 Integration

ERCOT 96 43 45%

PJM 54 19 35%

NE/NY 16 1 6%

MISO 27 8 30%

Total 193 71 37%

Retail growthprovides the ability to

further match load

with generation


GROWTH OPPORTUNITY – TEXAS

30

South Texas & Value Based

Brand Growth

373

409

440

468

499

2013 2014 2015 2016 2017

(000’s)

We remain focused on the growth opportunities within our core ERCOT Retail market

1 Source: ERCOT.

Total EBITDA Pool (Texas)

1,800

2,300500

Residential Non-Residential Total

($ in millions)

ERCOT load estimated to

grow ~2% annually1 New Markets: Lubbock

Garland

Austin

Denton


GROWTH OPPORTUNITY – MIDWEST & NE

31

Dynegy acquisition provides beachhead for growth in the Midwest and Northeast

1,300

3,200

1,900

Switched Load Un-Switched Load Total

Total EBITDA Pool (Midwest & NE)

($ in millions)

Only ~34% of residential

customers have switched

from incumbent utility

We estimate ~1%

market share equals

$32mm of EBITDA

Fragmented competition where residential market

leaders average 3 to 5%

market share in each state1

1 Excludes states with municipal-aggregation.

Vistra Retail CapabilitiesApplicability to Other

Competitive Markets

Robust Marketing Channels

Integrated Risk Management

Data Analytics Skillset

Service Excellence

Scalable Operating Platform

Digital and Mobile Capabilities

Differentiated Products and Services





GROWTH STRATEGY

KEY TAKEAWAYS


KEY TAKEAWAYS

33

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

• Texas, Midwest, and Northeast

• Focus on organic growth

• Highly selective acquisitions

DTAINSIGHTS

END SLIDE

Retail - s21.q4cdn.com · Vistra Energy Analyst Day Presentation 2018 VISTRA RETAIL OVERVIEW 2 Balanced, diversified ... Best-in-class customer experience companies have outperformed

Documents