JP Morgan Comments On NRG Energy Following Recent Tour

JP Morgan's recent tour of NRG Energy's NRG Reliant Energy Smart Home and electric vehicle installation leads us to believe that the company's efforts to offer customers better tools to manage energy consumption could help protect market share and EBITDA. In addition, increasing adoption of electric vehicles in Texas could boost the margin at NRG's baseload fleet. It appears NRG is pursuing these initiatives with limited financial exposure, which could drive strong returns on investment if the initiatives work as envisioned; however, both initiatives are also in the startup phase, so meaningful benefits could be several years away. Reliant appears to be trying to offer customers a value proposition for buying electricity from Reliant that goes beyond pure commodity price. The data management and information that Reliant can provide customers about electricity consumption and the ability to manage consumption may help create a value proposition beyond commodity pricing. Reliant indicated that it is seeing a 20% better customer retention rate for its smart grid customers. JP Morgan has a $33 PT and Overweight rating on NRG NRG closed Monday at $21.38