| Note 3 - Revenue | NOTE
3 - REVENUE The
table below represents the Company’s reportable revenues for the three and six month periods ended June 30, 2020 and 2019,
respectively, from customers, net of respective provisions for refund:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2019 2020 2019
Electricity Revenues from Contracts with Customers
ERCOT Market $ 38,599,697 $ 36,294,807 $ 73,860,940 $ 67,097,505
ERCOT Pre-paid Market 1,843,514 1,387,147 3,290,291 2,600,937
ISO New England Market 861,350 1,906,856 1,968,628 3,831,267
PJM Market 298,328 - 487,763 -
Total Electricity Revenues from Contracts with Customers 41,602,889 39,588,810 79,607,622 73,529,709
Other Revenues:
Fees Revenue 919,547 909,777 1,781,804 1,794,747
Total Revenues: $ 42,522,436 $ 40,498,587 $ 81,389,426 $ 75,324,456
Presented in the following
table are the components of accounts receivable and accrued revenue:
June 30, 2020 December 31, 2019
Accounts receivable from customers
ERCOT Market $ 10,874,702 $ 9,041,871
ISO New England Market 148,453 257,942
PJM Market 104,312 11,244
Total accounts receivable from customers 11,127,467 9,311,057
Accrued revenue from customers
ERCOT Market 36,850,685 32,916,970
ISO New England Market 626,461 788,395
PJM Market 85,307 15,088
Total accrued revenue with customers 37,562,453 33,720,453
Allowance for credit losses (894,945) (1,183,561)
Total accounts receivable and accrued revenue $ 47,794,975 $ 41,847,949 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, ISO New England and PJM 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 Accounts receivable 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, 2020 and December 31, 2019
were estimated at $36,850,685 and $32,916,970, 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 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, 2020 and December 31, 2019 were estimated
at $626,461 and $788,395, respectively. The Company began service in the
PJM market during the third quarter of 2019. In the PJM market, electricity services not billed by month end are accrued based
upon estimated deliveries to customers as tracked and recorded by PJM multiplied by our average billing rate per kWh in effect
at the time. The customer billing in the PJM market is performed by the local utility company. Unbilled accounts in the PJM market
as of June 30, 2020 and December 31, 2019 were estimated at $85,307 and $15,088, respectively. Prior to January 1, 2020, accounts
receivables were recorded at cost less an allowance for doubtful accounts. The Company, in the Texas market, maintained an allowance
for uncollectible accounts receivable for estimated losses resulting from the failure or inability of our customers to make required
payments. Within the ISO New England and the PJM markets, the local utility companies within the state of operation, purchase the
Company’s billed receivables at a statutory published discount rate without recourse; therefore, no allowance for doubtful
accounts was recorded for these markets. The allowance for doubtful accounts was $1,183,561 at December 31, 2019. Subsequent to January 1, 2020, the
Company’s accounts receivables are recorded at cost less an allowance for credit losses. We estimate losses on receivables
at the reporting date based on expected losses resulting from the inability of our customers to make required payments, including
our historical experience of actual losses and the aging of such receivables. These receivables have been pooled by market including
the Texas market, the ISO New England market, and PJM market, because the receivables from each market share risk characteristics.
Based on known information we may also establish specific reserves for customers in an adverse financial condition or adjust our
expectations of changes in conditions that may impact the collectability of outstanding receivables. Receivables past due over
90 days are considered delinquent and are reviewed individually for collectability. After all means of collection have been exhausted,
delinquent receivables are written-off. The allowance for credit losses at June 30, 2020 was $894,945. |
