Note 19 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2025

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 19—Commitments and Contingencies

Legal Proceedings 

On September 29, 2023, the Attorney General of the State of Illinois filed a complaint against Residents Energy in the Circuit Court of Cook County, Illinois, Chancery Division. The Complaint alleges several counts of violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq., and the Illinois Telephone Solicitations Act, 815 ILCS 413/1 et seq., in connection with Residents Energy’s marketing practices, and seeks monetary damages to redress any resulting losses alleged to have been incurred by customers, civil penalties for certain alleged violations in the amount of $50.0 thousand per violation, and other forms of injunctive and equitable relief to prevent future violations.  The Company denies these allegations and intends to vigorously defend itself against any and all claims. As of June 30, 2025, there is insufficient basis to deem any loss probable or to assess the amount of any possible loss. For the three and six months ended June 30, 2025, Resident Energy’s gross revenues from sales in Illinois were $5.5 million and $13.6 million, respectively. For the three and six months ended June 30, 2024, Resident Energy’s gross revenues from sales in Illinois were $8.2 million and $20.7 million, respectively.

The Company may from time to time be subject to legal proceedings that arise in the ordinary course of business. Although there can be no assurance in this regard, the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

See Note 5—Acquisitions and Discontinued Operations, for discussion related to the administration of Lumo Finland. 

Agency and Regulatory Proceedings 

From time to time, the Company receives 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 the Company responds to those inquiries or requests. 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.  

Other Commitments

Purchase Commitments

The Company had future purchase commitments of  $150.0 million at June 30, 2025, of which  $140.0 million was for future purchase of electricity. The purchase commitments outstanding as of June 30, 2025 are expected to be paid as follows: 

(in thousands)
Remainder of 2025	$	85,760
2026		55,324
2027		8,944
2028		—
Thereafter		—
Total payments	$	150,028

In the three months ended June 30, 2025, the Company purchased $30.1 million and $4.2 million of electricity and renewable energy credits, respectively, under purchase commitments that were open during the period. In the six months ended June 30, 2025, the Company purchased $59.8 million and $4.7 million of electricity and renewable energy credits, respectively, under purchase commitments that were open during the period. In the three months ended June 30, 2024, the Company purchased $19.9 million and $8.1 million of electricity and renewable energy credits, respectively, under purchase commitments that were open during the period. In the six months ended June 30, 2024, the Company purchased $44.5 million and $9.9 million of electricity and renewable energy credits, respectively, under purchase commitments that were open during the period.

Renewable Energy Credits 

GRE must obtain a certain percentage or amount of its power supply from renewable energy sources in order to meet the requirements of renewable portfolio standards in the states in which it operates. This requirement may be met by obtaining renewable energy credits that provide evidence that electricity has been generated by a qualifying renewable facility or resource. At  June 30, 2025, GRE had commitments to purchase renewable energy credits of $10.0 million, which are reflected in the table above.

Captive Insurance Subsidiary

In December 2023, the Company established a Captive insurance company with the primary purpose of enhancing the Company's risk financing strategies. The Captive insures against certain risks unique to the operations of the Company and its subsidiaries for which insurance may not be currently available or economically feasible in the current insurance marketplace. The covered risks are both current and related to historical business activities.

The Company, with input from external experts, estimated the expected ultimate cost of: (1) claims defense cost, (2) settlements and penalties resulting from insured risk, and (3) stranded risk which includes economic losses due to regulatory restrictions or unanticipated reduction of demand, as well as the level cost associated with contesting such restrictions. 

In the fourth quarter of 2024, the Company expanded its self-insurance risk management strategy to cover additional risk related to its current and historical business operations. The coverage is being provided on an occurrence basis, with an initial policy that reflects exposure for (1) occurrences in the year prior to implementation, to claims made subsequent to program inception, to the extent recoveries were still possible under relevant statutes of limitation, and (2) annual periods commencing with implementation of the program.

In assessing the loss contingency, the Company estimated the magnitude and frequency of expected loss based on the Company's activities. A range of margins was selected so that the cumulative expenses plus risk of losses over a given number of years equal the expected magnitude. This produced a range of annual premium options for the protective period. The contribution of a priori expected plus risk margin losses from each of these periods is multiplied by a current remaining probability factor, which recognizes the relative likelihood that a claim will still be brought subsequent to program inception. These are added together to obtain estimated required reserves and required premiums (net of expenses) at program inception-related exposure prior to program inception.

The amount of the expected loss liability for each risk is based on an analysis performed by a third-party actuary which assumed historical patterns. The key assumptions used in developing these estimates are subject to variability

In the fourth quarter of 2024, the Company paid a $39.6 million premium to the Captive, which cash is recognized as restricted cash in the condensed consolidated balance sheet. At June 30, 2025, the balance of short-term and long-term restricted cash and cash equivalents of the Captive were $16.8 million and $70.3 million, respectively. At  December 31, 2024, the balance of short-term and long-term restricted cash of the Captive were $18.8 million and $69.6 million, respectively. The Captive must maintain a sufficient level of cash to fund future reserve payments and secure the Captive's liabilities, particularly those related to insured risks. The Captive has restricted alternative investments included in other current assets and other assets in the condensed consolidated balance sheets (see Note 9). The Company also recognized a $0.3 million and $0.9 million provision for captive insurance liability for the three and six months ended June 30, 2025, respectively, and $0.6 million and $1.7 million for the three and six months ended June 30, 2024, respectively, related to the Captive's exposure for the insured risks. 

The table below reconciles the change in the current and noncurrent captive insurance liabilities for six months ended June 30, 2025 (in thousands):

Current and noncurrent captive insurance liabilities, beginning	$	78,700
Changes for the provision of current year claims		6,715
Changes for the provision for prior year claims		(5,810	)
Payment of claims		—
Current and noncurrent captive insurance liabilities, end	$	79,605

The captive insurance liability outstanding at  June 30, 2025 is expected to be paid as follows (in thousands).

Remainder of 2025	$	4,652
2026		10,393
2027		9,588
2028		7,068
2029		6,110
Thereafter		41,794
Total payments	$	79,605

Performance Bonds and Unused Letters of Credit

GRE has performance bonds issued through a third party for certain utility companies and for the benefit of various states in order to comply with the states’ financial requirements for REPs. At June 30, 2025, GRE had aggregate performance bonds of $27.5 million outstanding and $1.0 million of unused letters of credit.  

BP Energy Company Preferred Supplier Agreement

Certain of GRE’s REPs are party to an Amended and Restated Preferred Supplier Agreement with BP, which is to be in effect through  November 30, 2026. 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 REPs’ 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 June 30, 2025, the Company was in compliance with such covenants. At June 30, 2025, restricted cash—short-term of $1.4 million and trade accounts receivable of $67.0 million were pledged to BP as collateral for the payment of trade accounts payable to BP of $24.2 million at  June 30, 2025.