| Note 3 - Revenue | NOTE 3 - REVENUE The table below represents the
Company’s reportable revenues for the three-month and six-month periods ended June 30, 2019 and 2018, respectively, from
customers, net of respective provisions for refund:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2019 2018 2019 2018
Electricity Revenues from Contracts with Customers
ERCOT Market $ 36,294,807 $ 34,705,118 $ 67,097,505 $ 64,241,951
ERCOT Pre-paid Market 1,387,147 1,189,553 2,600,937 2,006,787
Northeast Market 1,906,856 2,562,885 3,831,267 5,501,904
Total Electricity Revenues from Contracts with Customers 39,588,810 38,457,556 73,529,709 71,750,642
Other Revenues:
Fees Revenue 909,777 761,192 1,794,747 1,518,206
Total Revenues: $ 40,498,587 $ 39,218,748 $ 75,324,456 $ 73,268,848
Presented in the following table are the components
of accounts receivable and accrued revenue:
June 30, 2019 December 31, 2018
Accounts receivable from customers
ERCOT Market $ 10,044,803 $ 7,729,016
ISO New England Market 328,918 544,454
Total accounts receivable from customers 10,373,721 8,273,470
Accrued revenue from customers
ERCOT Market 30,549,254 25,811,607
ISO New England Market 1,104,951 1,006,895
Total accrued revenue with customers 31,654,205 26,818,502
Allowance for doubtful accounts (782,938) (821,424)
Total accounts receivable and accrued revenue $ 41,244,988 $ 34,270,548
The Company recognizes revenue from the sale of electricity
to consumers and is recognized upon the performance obligation to deliver electricity to the customer’s meter. This
method of revenue recognition is commonly referred to as the flow method. The Company’s customer base consists of a mix of
residential and commercial customers in the ERCOT and ISO New England markets. Also, the Company recognizes revenues from
contract cancellation fees, disconnection fees and late fees. The invoice practical expedient within the accounting
guidance allows for the recognition of revenue from performance obligations in the amount of consideration to which there is a
right to invoice the customer and when the amount for which there is a right to invoice corresponds directly to the value transferred
to the customer. The purpose of the invoice practical expedient is to depict an entity’s measure of progress toward completion
of the performance obligation within a contract and can only be applied to performance obligations that are satisfied over time
and when the invoice is representative of services provided to date. The Company elected to apply the invoice practical expedient
to recognize revenue for performance obligations satisfied over time as the invoices from the respective revenue streams are representative
of services or goods provided to date to the customer. Performance Obligations Residential and Commercial – The Company has
performance obligations for the service to deliver electricity to its customers and it satisfies these performance obligations
over time as electricity is provided continuously to the customer who simultaneously receives and consumes the benefits provided.
The Company recognizes revenue at a fixed base amount and a price per kilowatt hour as it provides these services on a fixed term
contract. Contracts generally have fixed terms of 3-month increments not to exceed a 24-month fixed term. For customers whose
fixed contracts have expired, the Company recognizes revenue at the market price per kilowatt hour as the service is provided.
Residential pre-paid – The Company has performance
obligations for the service to deliver electricity to its customers and these performance obligations are satisfied over time as
electricity is provided continuously to the customer who simultaneously receives and consumes the benefits provided. Revenues
in the pre-paid market are variable at the market rate per kilowatt hour as the service is provided. Accounts Receivable and Unbilled Revenue Account receivables are comprised of trade receivables
and unbilled receivables (accrued revenue). Customers are billed monthly in cycles having billing dates that do not generally
coincide with the end of a calendar month. This results in customers having received electricity that they have not been
billed for as of month-end. Therefore, at the end of each calendar month, revenue is accrued to unbilled receivables based
on the estimated amount of power delivered to customers using the flow technique. Unbilled revenue also includes accruals for estimated
TDSP charges and monthly service charges applicable to the estimated electricity usage for the period. All charges that were
physically billed in the calendar month are recorded from the unbilled account to the customer’s receivable account. In the Texas market, electricity revenues not billed by
month-end are accrued based upon estimated deliveries to customers as tracked and recorded by ERCOT multiplied by our average billing
rate per kilowatt hour (“kWh”) in effect at the time. At the end of each calendar month, revenue is accrued to
unbilled receivables based on the estimated amount of power delivered to customers using the flow technique. Unbilled revenue
also includes accruals for estimated TDSP charges and monthly service charges applicable to the estimated electricity usage for
the period. All charges that were physically billed in the calendar month are recorded from the unbilled account to the customer’s
receivable account. Accounts receivable are customer obligations billed at the customer’s monthly meter read date for
that period’s electricity usage and due within 16 days of the date of the invoice. The past due customer balances are subject
to a late fee that is assessed on that billing. Unbilled accounts in the Texas market as of June 30, 2019 and December 31, 2018
were estimated at $30,549,254 and $25,811,607, respectively. In the ISO New England market, electricity services not
billed by month-end are accrued based upon estimated deliveries to customers as tracked and recorded by ISO New England multiplied
by our average billing rate per kilowatt hour (“kWh”) in effect at the time. The customer billing in the ISO
New England market is performed by the local utility company. Unbilled accounts in the ISO New England market as of June 30, 2019
and December 31, 2018 were estimated at $1,104,951 and $1,006,895, respectively. The Company, in the Texas market, determines an allowance
for doubtful accounts based upon a review of outstanding receivables, historical write-off experience and existing economic conditions.
Receivables past due over 90 days are considered delinquent and reviewed individually for collectability. After all means of collection
have been exhausted, delinquent receivables are written off. Billed receivables over 90 days and 2% of unbilled receivables are
reserved by the Company. Management has determined that the allowance for doubtful accounts as of June 30, 2019 and December
31, 2018 was $782,938 and $821,424, respectively. Bad debt expense, write-offs and recoveries were as follows:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2019 2018 2019 2018
Bad Debt Expense $ 155,773 $ 280,841 $ 297,550 $ 381,113
Net Write Offs/Recoveries $ 93,566 $ 137,378 $ 336,036 $ 998,294 Within the ISO New England market, the local utility companies
in the state of Massachusetts purchase the Company’s billed receivables at a statutory published discounted rate without
recourse; therefore, no allowance for doubtful accounts was recorded as of June 30, 2019 or December 31, 2018. |
