http://fasb.org/us-gaap/2021-01-31#UnrealizedGainLossOnDerivatives0001538789--03-312023Q1false00-00000004807863748078637P12Mhttp://fasb.org/us-gaap/2021-01-31#UnrealizedGainLossOnDerivativesP1Y0001538789us-gaap:SwapMember2022-04-012022-06-300001538789us-gaap:ForwardContractsMember2022-04-012022-06-300001538789us-gaap:ForeignExchangeForwardMember2022-04-012022-06-300001538789us-gaap:SwapMember2021-04-012021-06-300001538789us-gaap:OtherContractMember2021-04-012021-06-300001538789us-gaap:ForwardContractsMember2021-04-012021-06-300001538789us-gaap:ForeignExchangeForwardMember2021-04-012021-06-300001538789us-gaap:CreditRiskMember2022-06-300001538789us-gaap:CreditRiskMember2022-03-310001538789je:StalkingHorseTransactionAgreementMember2022-05-122022-05-120001538789je:PlanSupportAgreementMember2022-05-122022-05-120001538789us-gaap:CommonStockMember2022-04-012022-06-300001538789us-gaap:CommonStockMember2021-04-012022-03-310001538789us-gaap:RetainedEarningsMember2022-06-300001538789us-gaap:RetainedEarningsAppropriatedMember2022-06-300001538789us-gaap:NoncontrollingInterestMember2022-06-300001538789us-gaap:AdditionalPaidInCapitalMember2022-06-300001538789us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001538789je:DividendsAndDistributionsMember2022-06-300001538789us-gaap:RetainedEarningsAppropriatedMember2022-03-310001538789us-gaap:NoncontrollingInterestMember2022-03-310001538789us-gaap:AdditionalPaidInCapitalMember2022-03-310001538789us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001538789us-gaap:RetainedEarningsMember2021-06-300001538789us-gaap:RetainedEarningsAppropriatedMember2021-06-300001538789us-gaap:NoncontrollingInterestMember2021-06-300001538789us-gaap:CommonStockMember2021-06-300001538789us-gaap:AdditionalPaidInCapitalMember2021-06-300001538789us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001538789je:DividendsAndDistributionsMember2021-06-300001538789us-gaap:RetainedEarningsAppropriatedMember2021-03-310001538789us-gaap:NoncontrollingInterestMember2021-03-310001538789us-gaap:AdditionalPaidInCapitalMember2021-03-310001538789us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001538789us-gaap:CommonStockMember2022-06-300001538789us-gaap:CommonStockMember2022-03-310001538789us-gaap:CommonStockMember2021-03-310001538789country:US2022-04-012022-06-300001538789country:CA2022-04-012022-06-300001538789country:US2021-04-012021-06-300001538789country:CA2021-04-012021-06-300001538789je:WeatherEventMemberus-gaap:SettledLitigationMember2022-06-012022-06-300001538789us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001538789us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001538789us-gaap:LongTermDebtMember2022-06-300001538789je:TradeAndOtherPayablesMember2022-06-300001538789je:OtherGuaranteesSubjectToCompromiseMember2022-06-300001538789je:NonCommodityTradeAccrualsAndAccountsPayableSubjectToCompromiseMember2022-06-300001538789je:DebtsAndFinancingSubjectToCompromiseMember2022-06-300001538789je:CommoditySuppliersAccrualsAndPayablesSubjectToCompromiseMember2022-06-300001538789us-gaap:NoncontrollingInterestMember2022-04-012022-06-300001538789us-gaap:NoncontrollingInterestMember2021-04-012021-06-300001538789us-gaap:RetainedEarningsAppropriatedMember2022-04-012022-06-300001538789us-gaap:RetainedEarningsAppropriatedMember2021-04-012021-06-300001538789stpr:TX2019-07-230001538789stpr:CA-ON2019-07-230001538789je:PacificInvestmentManagementCompanyDebtorInPossessionFacilityMember2022-06-300001538789je:FilterGroupFinancingMember2022-06-300001538789je:PacificInvestmentManagementCompanyDebtorInPossessionFacilityMember2022-03-310001538789je:FilterGroupFinancingMember2022-03-310001538789srt:MinimumMemberje:CreditFacilityMember2021-03-180001538789srt:MaximumMemberje:CreditFacilityMember2021-03-180001538789je:PacificInvestmentManagementCompanyDebtorInPossessionFacilityMemberje:ProtectionUnderCompaniesCreditorsArrangementActCanadaCcaaMember2021-03-090001538789srt:MaximumMemberus-gaap:LineOfCreditMemberje:StalkingHorseTransactionMember2022-08-040001538789srt:MinimumMember2022-06-300001538789srt:MaximumMember2022-06-300001538789je:SupplierFinanceAndOthersMember2022-04-012022-06-300001538789je:PacificInvestmentManagementCompanyDebtorInPossessionFacilityMember2022-04-012022-06-300001538789je:FilterGroupFinancingMember2022-04-012022-06-300001538789je:CreditFacilityMember2022-04-012022-06-300001538789je:TermLoanMember2021-04-012021-06-300001538789je:SupplierFinanceAndOthersMember2021-04-012021-06-300001538789je:PacificInvestmentManagementCompanyDebtorInPossessionFacilityMember2021-04-012021-06-300001538789je:NoteIndentureMember2021-04-012021-06-300001538789je:FilterGroupFinancingMember2021-04-012021-06-300001538789je:CreditFacilityMember2021-04-012021-06-300001538789us-gaap:EmployeeStockOptionMember2022-04-012022-06-300001538789je:DeferredShareUnitsMember2022-04-012022-06-300001538789us-gaap:EmployeeStockOptionMember2021-04-012021-06-300001538789je:DeferredShareUnitsMember2021-04-012021-06-300001538789us-gaap:OperatingSegmentsMemberje:MassMarketsSegmentMember2022-06-300001538789us-gaap:OperatingSegmentsMemberje:MassMarketsSegmentMember2021-06-300001538789us-gaap:CorporateNonSegmentMemberus-gaap:CorporateAndOtherMember2022-04-012022-06-300001538789us-gaap:CorporateNonSegmentMemberus-gaap:CorporateAndOtherMember2021-04-012021-06-300001538789us-gaap:FairValueInputsLevel3Member2021-03-310001538789us-gaap:FairValueInputsLevel3Member2021-04-012022-03-310001538789us-gaap:FairValueInputsLevel3Member2022-06-300001538789us-gaap:FairValueInputsLevel2Member2022-06-300001538789us-gaap:FairValueInputsLevel3Member2022-03-310001538789us-gaap:FairValueInputsLevel2Member2022-03-310001538789us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel3Member2022-03-310001538789us-gaap:ForeignExchangeForwardMember2022-03-310001538789us-gaap:SwapMemberus-gaap:FairValueInputsLevel3Member2022-06-300001538789us-gaap:SwapMemberus-gaap:FairValueInputsLevel2Member2022-06-300001538789us-gaap:OtherContractMemberus-gaap:FairValueInputsLevel3Member2022-06-300001538789us-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel3Member2022-06-300001538789us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel3Member2022-06-300001538789us-gaap:SwapMemberus-gaap:FairValueInputsLevel3Member2022-03-310001538789us-gaap:SwapMemberus-gaap:FairValueInputsLevel2Member2022-03-310001538789us-gaap:OtherContractMemberus-gaap:FairValueInputsLevel3Member2022-03-310001538789us-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel3Member2022-03-310001538789us-gaap:NaturalGasProductionMemberus-gaap:SwapMember2022-06-300001538789us-gaap:NaturalGasProductionMemberus-gaap:ForwardContractsMember2022-06-300001538789us-gaap:ElectricityMemberus-gaap:SwapMember2022-06-300001538789us-gaap:ElectricityMemberus-gaap:ForwardContractsMember2022-06-300001538789us-gaap:ElectricityGenerationMemberus-gaap:ForwardContractsMember2022-06-300001538789je:RenewableEnergyCertificateMemberus-gaap:ForwardContractsMember2022-06-300001538789je:GreenGasCertificatesMemberus-gaap:ForwardContractsMember2022-06-300001538789je:AncillaryContractsMemberus-gaap:SwapMember2022-06-300001538789je:AncillaryContractsMemberus-gaap:ForwardContractsMember2022-06-300001538789us-gaap:SwapMember2022-06-300001538789us-gaap:OtherContractMember2022-06-300001538789us-gaap:ForwardContractsMember2022-06-300001538789us-gaap:ForeignExchangeForwardMember2022-06-300001538789us-gaap:SwapMember2022-03-310001538789us-gaap:OtherContractMember2022-03-310001538789us-gaap:ForwardContractsMember2022-03-310001538789country:USus-gaap:PrimeRateMember2022-06-300001538789country:CAus-gaap:PrimeRateMember2022-06-300001538789je:TermLoanAt10.25PercentMember2022-06-300001538789je:SubordinatedNotesAtSevenPointZeroPercentageForFifteenMillionCanadianDollarsMember2022-06-300001538789je:CreditFacilityMember2022-06-300001538789je:PacificInvestmentManagementCompanyDebtorInPossessionFacilityMember2021-03-090001538789je:SubordinatedNotesAtSevenPointZeroPercentageForFifteenMillionCanadianDollarsMember2020-10-190001538789je:HomeTrustCompanyMember2022-06-300001538789je:CreditFacilityMemberus-gaap:PrimeRateMember2022-04-012022-06-300001538789us-gaap:OperatingSegmentsMemberje:MassMarketsSegmentMember2022-04-012022-06-300001538789us-gaap:OperatingSegmentsMemberje:CommercialSegmentMember2022-04-012022-06-300001538789us-gaap:OperatingSegmentsMemberje:MassMarketsSegmentMember2021-04-012021-06-300001538789us-gaap:OperatingSegmentsMemberje:CommercialSegmentMember2021-04-012021-06-300001538789us-gaap:SuretyBondMember2022-06-300001538789us-gaap:LetterOfCreditMember2022-06-3000015387892021-03-310001538789us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001538789us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-06-300001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-06-300001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancingReceivables30To59DaysPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-06-300001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancingReceivables1To29DaysPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-06-300001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancialAssetNotPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-06-300001538789us-gaap:TradeAccountsReceivableMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-06-300001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-03-310001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-03-310001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancingReceivables30To59DaysPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-03-310001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancingReceivables1To29DaysPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-03-310001538789us-gaap:TradeAccountsReceivableMemberus-gaap:FinancialAssetNotPastDueMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-03-310001538789us-gaap:TradeAccountsReceivableMemberje:MarketsWhereCompanyBearsCustomerCreditRiskMember2022-03-3100015387892022-05-120001538789je:StalkingHorseTransactionAgreementMember2022-08-0400015387892022-08-040001538789je:BackstopCommitmentLetterMember2022-05-122022-05-1200015387892022-05-122022-05-120001538789us-gaap:NaturalGasProductionMemberus-gaap:FairValueInputsLevel3Member2022-06-300001538789je:WeatherEventMemberus-gaap:PendingLitigationMember2021-09-1500015387892021-04-012021-06-300001538789je:PacificInvestmentManagementCompanyDebtorInPossessionFacilityMember2021-03-092021-03-0900015387892021-11-162021-11-160001538789srt:MinimumMember2022-04-012022-06-300001538789srt:MaximumMember2022-04-012022-06-300001538789us-gaap:FairValueInputsLevel3Member2022-04-012022-06-3000015387892022-06-3000015387892022-03-310001538789srt:MinimumMemberus-gaap:FairValueInputsLevel3Member2022-04-012022-06-300001538789srt:MaximumMemberus-gaap:FairValueInputsLevel3Member2022-04-012022-06-3000015387892021-06-300001538789je:WeatherEventMemberus-gaap:PendingLitigationMemberje:StalkingHorseTransactionMember2022-08-0400015387892021-04-012022-03-3100015387892022-08-2900015387892022-04-012022-06-30iso4217:USDje:itemje:segmentxbrli:sharesiso4217:USDxbrli:pureiso4217:USDutr:MWhiso4217:USDutr:MMBTUje:itemiso4217:USDxbrli:sharesiso4217:CADiso4217:USDutr:t

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the three months ended June 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Transition Period FromTo

Commission file number: 001-35400

Just Energy Group Inc.

(Exact name of registrant as specified in its charter)



Canada	Not Applicable
(State of Other Jurisdiction of incorporation or Organization)	(I.R.S. Employer Identification No.)
100 King Street West, Suite 2630 Toronto, Ontario, M5X 1E1
(Address of principal executive offices)

Registrant's telephone number, including area code: (905) 795-4206

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act:


		Name Of Each Exchange
Title of Each Class	Trading Symbol(s)	On Which Registered
Common Stock, No Par Value per Share	JENGQ	N/A

* Just Energy Group Inc.’s common stock currently trades on the OTC Pink Market under the symbol “JENGQ”.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically; every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

Based on the closing price as reported on the OTC Pink Market, the aggregate market value of the registrant's Common Stock held by non-affiliates on September 30, 2021 (the last business day of the registrant's most recently completed second fiscal quarter) was approximately $38,462,910. Shares of Common Stock held by each executive officer and director and by each shareholder affiliated with a director or an executive officer or the registrant have been excluded from this calculation because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The number of outstanding shares of the registrant's Common Stock as of August 29, 2022 was 48,078,637.

Table of Contents

TABLE OF CONTENTS


Cautionary Note Concerning Forward-Looking Statements		2
Glossary of key terms		3
PART I FINANCIAL INFORMATION		6
Item 1.	Condensed Consolidated Financial Statements and Notes	6
Item 2.	Management's Discussion And Analysis Of Financial Condition And Results Of Operations	7
Item 3.	Quantitative And Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II OTHER INFORMATION		31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosure	31
Item 5.	Other Information	31
Item 6.	Exhibits	32

	Signatures

Table of Contents

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 may contain forward-looking statements, including, without limitation, statements with respect to the CCAA proceedings. These statements are based on current expectations that involve several risks and uncertainties which could cause actual results to differ from those anticipated, which risks are described in Part1A “Risk Factors” of the Company’s Annual Report. These risks include, but are not limited to, risks with respect to the ability of the Company to continue as a going concern; the outcome of proceedings under the CCAA and similar proceedings in the United States, including the SISP; the outcome of any potential litigation with respect to the Weather Event, the outcome of any invoice dispute with ERCOT; the Company’s discussions with key stakeholders regarding the CCAA proceedings; the impact of the evolving COVID-19 pandemic on the Company’s business, operations and sales; uncertainties relating to the ultimate spread, severity and duration of COVID-19 and related adverse effects on the economies and financial markets of countries in which the Company operates; the ability of the Company to successfully implement its business continuity plans with respect to the COVID-19 pandemic; the Company’s ability to access sufficient capital to provide liquidity to manage its cash flow requirements; general economic, business and market conditions; the ability of management to execute its business plan; levels of customer natural gas and electricity consumption; extreme weather conditions; rates of customer additions and renewals; customer credit risk; rates of customer attrition; fluctuations in natural gas and electricity prices; interest and exchange rates; actions taken by governmental authorities including energy marketing regulation; increases in taxes and changes in government regulations and incentive programs; changes in regulatory regimes; results of litigation and decisions by regulatory authorities; competition; and dependence on certain suppliers. Additional information on these and other factors that could affect Just Energy’s operations or financial results are included in Just Energy’s Annual Report and other reports on file with the SEC’s website at www.sec.gov or Canadian securities regulatory authorities which can be accessed through the SEDAR website at www.sedar.com or through Just Energy’s website at investors.justenergy.com.

Table of Contents

GLOSSARY OF KEY TERMS


Annual Report	Annual report on Form 10-K
ASC	Accounting Standards Codification
Base EBITDA	Base Earnings Before Interest, Tax, Depreciation and Amortization adjusted for various items as defined in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
Base Gross Margin	The gross margin adjusted for the effect of various items as defined in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
Base Gross Margin per RCE	Base Gross Margin realized on Just Energy’s RCE customer base, including gains (losses) from the sale of excess commodity supply excluding the impacts of the Weather Event or Reorganization Costs
BP Claim	Certain pre-filing secured claims in the aggregate principal amounts of approximately $229.5 million and CAD 0.2 million, plus accrued and unpaid interest
CAD	Canadian dollars
CCAA	Companies' Creditors Arrangement Act
Chapter 15	Chapter 15 of the U.S. Bankruptcy Code
Claims Procedure Order	Order of Ontario Court dated September 15, 2021 establishing the process to identify and determine claims against the Company under the CCAA proceedings
Commodity RCE attrition	Percentage of energy customers whose contracts were terminated prior to the end of the term either at the option of the customer or by Just Energy
Company	Just Energy Group Inc. and/or its consolidated subsidiaries depending on context
Court Orders	Orders approved by the Ontario Court under CCAA and the Houston Court under Chapter 15 in the U.S. Bankruptcy Code that provide creditor protection
COVID-19	Coronavirus pandemic
Credit Facility	Just Energy’s credit facility as described in Part I, Item 1, “Condensed Consolidated Financial Statements and Notes”, Note 9(c), Long Term Debt and Financing
Customer count	Number of customers with a distinct address rather than RCEs
DIP Facility	$125 million Debtor-in-possession facility entered into March 9, 2021 between PIMCO and the Company
EBITDA	Earnings Before Interest, Tax, Depreciation and Amortization and is non-U.S. GAAP measure that reflects the operational profitability of the business
ECL	Expected credit losses
Embedded Gross Margin	Embedded Gross Margin (“EGM”) represents the gross margin based on management's estimates for the future as defined in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
ERCOT	Electric Reliability Council of Texas, Inc
ERCOT Lawsuit	Litigation initiated against ERCOT and the PUCT in the Houston Bankruptcy Court on November 12, 2021
FASB	Financial Accounting Standards Board
Failed to renew	Customers who did not renew expiring contracts at the end of their term
Filter Group	Filter Group Inc.
Final Order	Financing order issued by the PUCT in October 2021 authorizing the securitization of these costs by ERCOT under HB 4492
Free Cash Flow	Cash flow from operations less maintenance capital expenditures as defined in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
HB 4492	Texas House Bill 4492 which provides a mechanism for recovery of the costs, incurred by various parties, including the Company, during the Weather Event, through certain securitization structures
Houston Court	Bankruptcy Court of the Southern District of Texas, Houston Division
HTC	Home Trust Company
ICFR	Internal Control over Financial Reporting

Table of Contents

Interim Condensed Consolidated Financial Statements	Interim Condensed Consolidated Balance Sheets for the years ended June 30, 2022 and Audited Consolidated Balance Sheets for the years ended March 31, 2021, the related Interim Condensed Consolidated Statements of Operations, Interim Condensed Statements of Comprehensive Loss, Interim Condensed Consolidated Statements of Cash Flows, and Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity, for the three months ended June 30, 2022 and 2021, and related notes
ISO	Independent System Operator
Just Energy	Just Energy Group Inc. and/or its consolidated subsidiaries depending on context
Just Energy Entities	Just Energy and certain subsidiaries that filed under the CCAA
Just Energy Parties	Just Energy Texas LP, Just Energy Texas I, Corp., Fulcrum Retail Energy LLC, and Hudson Energy Services LLC
KERP	Key employee retention plan
LC Facility	Letter of credit facility described in Part I, Item 1, "Condensed Consolidated Financial Statements and Notes", Note 9(c), Long Term Debt and Financing
LDC	A local distribution company; the natural gas or electricity distributor for a regulatory or governmentally defined geographic area
Lender Support Agreement	Accommodation and support agreement entered into with Lenders of the Credit Facility
Liquidity	Cash and cash equivalents
MD&A	Management Discussion and Analysis of Financial Condition and Results of Operations
NEX	Board of the TSX Venture Exchange
Non-U.S. GAAP financial measures	All measures defined in Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Note Indenture	CAD 15.0 million principal amount of 7.0% subordinated notes to holders of the subordinated convertible debentures, which has a six-year maturity
NYMEX	New York Mercantile Exchange
Ontario Court	Ontario Superior Court of Justice (Commercial List)
PIMCO	Pacific Investment Management Company
PUCT	Public Utility Commission of Texas
RCE	Residential customer equivalent, which is a unit of measurement equivalent to a customer using 2,815 m3 (or 106 GJs or 1,000 Therms or 1,025 CCFs) of natural gas on an annual basis or 10 MWh (or 10,000 kWh) of electricity on an annual basis
REC	Renewable energy certificates
Reorganization Costs	The amounts incurred related to the filings under the CCAA Proceedings. These costs include professional and advisory costs, key employee retention plan, contract terminations, prepetition claims, and other costs
SEC	U.S. Securities and Exchange Commission
Selling commission	Expenses customer acquisition costs amortized under ASC 606, “Revenue from contracts with customers”, or directly expensed within the current period and consist of commissions paid to independent sales contractors, brokers and sales agents and is reflected on the Consolidated Statements of Operations as part of selling and marketing expenses
Selling non-commission and marketing expenses	The cost of selling overhead, including digital marketing cost not directly associated with the costs of direct customer acquisition costs within the current period and is reflected on the Consolidated Statements of Operations as part of selling and marketing expenses
September 2020 Recapitalization	The recapitalization transaction that the Company completed on September 28, 2020
SISP	Proposed Sale and Investment Solicitation Process announced on August 4, 2022
SISP Order	An order of the Ontario Court approving the SISP
SISP Support Agreement	An agreement between the Just Energy Entities, the Stalking Horse Purchaser and certain other parties under which the parties agree to support the Stalking Horse Transaction and the SISP process

Table of Contents

Stalking Horse Purchaser	Collectively, the lenders under the Company’s debtor-in-possession financing facility, one of their affiliates and the holder of the BP Claim
Stalking Horse Transaction	The transaction contemplated by the stalking horse transaction agreement under which the Stalking Horse Purchaser will become the sole owner of the Just Energy Entities
Stalking Horse Transaction Agreement	The agreement between the Stalking Horse Purchaser and the Just Energy Entities under which the Stalking Horse Purchaser will become the sole owner of the Just Energy Entities with the key terms described in Part I, Item I, Business Overview
Strategic Review	The Company’s formal review announced on June 6, 2019 to evaluate strategic alternatives available to the Company. The Company finalized the Strategic Review with the completed September 2020 Recapitalization
Term Loan	The $206 million senior unsecured 10.25% term loan facility entered into on September 28, 2020 pursuant to the September 2020 Recapitalization, which has a maturity date of March 31, 2024
Unlevered Free Cash Flow	Free cash flow plus interest expense excluding the non-cash portion as defined in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
U.S.	United States of America
U.S. GAAP	U.S. Generally Accepted Accounting Principles
Vesting Order	An order of the Ontario Court approving the Stalking Horse Transaction
Weather Event	The extreme weather event in Texas in February 2021
Weather Event Costs	(i) ancillary service charges above $9,000/MWh during the Weather Event; (ii) reliability deployment price adders charged by ERCOT during the Weather Event; and (iii) amounts owed to ERCOT due to defaults of competitive market participants, which were subsequently “short-paid” to market participants, including Just Energy

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

INDEX TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Interim Condensed Consolidated Balance Sheets	F-1

Interim Condensed Consolidated Statements of Operations	F-2

Interim Condensed Consolidated Statements of Comprehensive Income	F-3

Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity	F-4

Interim Condensed Consolidated Statements of Cash Flows	F-5

Notes to the Interim Condensed Consolidated Financial Statements	F-6

Table of Contents

Interim Condensed Consolidated Balance Sheets

As at June 30

(in thousands of U.S. dollars)


		As at		As at
		June 30, 2022		March 31, 2022
	Notes	(Unaudited)		(Audited)

ASSETS
Current assets
Cash and cash equivalents		$	220,962	$	125,755
Restricted cash			2,630		2,736
Trade and other receivables, net	4(a)		356,059		308,941
Securitization proceeds receivable from ERCOT			–		147,500
Gas in storage			23,333		3,313
Derivative instruments	6		727,447		538,700
Income taxes recoverable			10,724		11,774
Other current assets	5(a)		175,581		131,570
Total current assets			1,516,736		1,270,289
Non-current assets
Property and equipment, net			5,846		6,505
Intangible assets, net			44,434		43,815
Goodwill			127,522		130,945
Derivative instruments	6		171,835		133,014
Deferred income taxes			148		198
Other non-current assets	5(b)		44,850		39,048
Total non-current assets			394,635		353,525
TOTAL ASSETS		$	1,911,371	$	1,623,814

LIABILITIES
Current liabilities
Trade and other payables	7	$	385,391	$	349,923
Deferred revenue			1,528		695
Income taxes payable			2,169		2,370
Derivative instruments	6		11,953		13,170
Current portion of long-term debt	9		125,854		126,289
Total current liabilities			526,895		492,447
Liabilities subject to compromise	7, 8, 9		847,239		845,890
Non-current liabilities
Long-term debt	9		39		130
Derivative instruments	6		22,627		12,916
Deferred income taxes			140,422		75,792
Other non-current liabilities			16,742		2,438
Total non-current liabilities			179,830		91,276
TOTAL LIABILITIES		$	1,553,964	$	1,429,613
Commitments and contingencies	15
SHAREHOLDERS’ EQUITY
Common shares, no par value; unlimited shares authorized at June 30, 2022 and March 31, 2022; 48,078,637 shares issued and outstanding at June 30, 2022; 48,078,637 shares issued and outstanding at March 31, 2022	12	$	1,168,162	$	1,168,162
Contributed deficit			(11,908)		(12,073)
Accumulated deficit			(927,493)		(1,088,119)
Accumulated other comprehensive income			128,925		126,527
Non-controlling interest			(279)		(296)
TOTAL SHAREHOLDERS’ EQUITY			357,407		194,201
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,911,371	$	1,623,814

See accompanying notes to the Interim Condensed Consolidated Financial Statements


F-1	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Interim Condensed Consolidated Statements of Operations

For the three months ended June 30

(in thousands of U.S. dollars, except per share amounts)


		Three months ended June 30,
	Notes	2022		2021

Revenue	10	$	570,586	$	496,361
Cost of goods sold			663,212		431,011
GROSS MARGIN			(92,626)		65,350
INCOMES (EXPENSES)
Administrative			(27,487)		(24,643)
Selling and marketing			(32,472)		(32,336)
Provision for expected credit loss			(10,450)		(6,073)
Depreciation and amortization			(2,917)		(3,645)
Interest expense	9		(8,488)		(8,831)
Reorganization costs	13		(19,131)		(16,486)
Unrealized gain on derivative instruments	6		222,439		236,055
Realized gain on derivative instruments			197,078		14,017
Other income (expenses), net			232		(367)
Income from operations before income taxes			226,178		223,041
Income tax expense (benefit)	11		65,564		(793)
NET INCOME		$	160,614	$	223,834
Less: Net loss attributable to non-controlling interest			(12)		(52)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	160,626	$	223,886

Earnings per share	14
Basic		$	3.34	$	4.66
Diluted		$	3.28	$	4.58
Weighted average shares outstanding
Basic			48,078,637		48,078,637
Diluted			48,919,620		48,919,620

See accompanying notes to the Interim Condensed Consolidated Financial Statements


F-2	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Interim Condensed Consolidated Statements of Comprehensive Income

For the three months ended June 30

(in thousands of U.S. dollars)


	Three months ended June 30,
	2022			2021

NET INCOME	$	160,614	$	223,834
Other comprehensive income, net of income tax:
Unrealized gain on translation of foreign operations, net of income tax		2,398		341
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF INCOME TAX	$	163,012	$	224,175

Total comprehensive loss attributable to:
Less: Net loss attributable to non-controlling interest		(12)		(52)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS, NET OF INCOME TAX	$	163,024	$	224,227

See accompanying notes to the Interim Condensed Consolidated Financial Statements


F-3	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Interim Condensed Consolidated Statements of Shareholders’ Equity

For the three months ended June 30

(in thousands of U.S. dollars)


		For the three months ended June 30,
	Notes	2022		2021


ATTRIBUTABLE TO THE SHAREHOLDERS
Accumulated earnings (loss)
Accumulated earnings (loss), beginning of period		$	447,319	$	(231,208)
Net income for the period as reported, attributable to shareholders			160,626		223,886
Accumulated earnings (loss), end of period		$	607,945	$	(7,322)

DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions, end of period		$	(1,535,438)	$	(1,535,438)
ACCUMULATED DEFICIT		$	(927,493)	$	(1,542,760)

ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income, beginning of period		$	126,527	$	132,797
Other comprehensive income			2,398		341
Accumulated other comprehensive income, end of period		$	128,925	$	133,138

SHAREHOLDERS’ CAPITAL
Common shares, end of period	12(a)	$	1,168,162	$	1,168,162

CONTRIBUTED DEFICIT
Balance, beginning of period		$	(12,073)	$	(13,558)
Add: Share-based compensation expense			165		492
Balance, end of period		$	(11,908)	$	(13,066)

NON-CONTROLLING INTEREST
Balance, beginning of period		$	(296)	$	(312)
Foreign exchange impact on non-controlling interest			29		49
Loss attributable to non-controlling interest			(12)		(52)
Balance, end of period		$	(279)	$	(315)
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)		$	357,407	$	(254,841)

See accompanying notes to the Interim Condensed Consolidated Financial Statements


F-4	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Interim Condensed Consolidated Statements of Cash Flows

For the three months ended June 30

(in thousands of U.S. dollars)


		For the three months ended June 30,
	Notes	2022		2021


CASH FLOWS FROM OPERATING ACTIVITIES
Net income			160,614		223,834

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			3,040		3,678
Share-based compensation expense			165		492
Interest expense, non-cash portion			1,360		–
Reorganization items (non-cash)			4,016		4,032
Unrealized gain on derivative instruments	6		(222,439)		(236,055)
Operating leased asset payments			(506)		(562)
Net change in working capital balances			(61,203)		19,477
Securitization proceeds receivable from ERCOT			147,500		–
Liabilities subject to compromise			3,996		(10,459)
Income and deferred income taxes			65,529		(1,834)
Net cash provided by operating activities			102,072		2,603

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment			(86)		(57)
Purchase of intangible assets			(3,376)		(1,403)
Net cash used in investing activities			(3,462)		(1,460)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from DIP Facility	9		–		25,000
Debt issuance costs			–		(1,293)
Repayment of long-term debt	9		(487)		(648)
Finance leased asset payments			(3)		(24)
Credit Facility payments			(1,167)		(45,718)
Net cash used in financing activities			(1,657)		(22,683)

Effect of foreign currency translation on cash balances			(1,852)		221

Net increase (decrease) in cash and cash equivalents and restricted cash			95,101		(21,319)
Cash and cash equivalents and restricted cash, beginning of period			128,491		172,666
Cash and cash equivalents and restricted cash, end of period		$	223,592	$	151,347

Supplemental cash flow information:
Interest paid		$	7,128	$	8,831
Income taxes paid			562		1,051

See accompanying notes to the Interim Condensed Consolidated Financial Statements


F-5	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended June 30, 2022

(in thousands of U.S. dollars, except where indicated and per share amounts)

1.ORGANIZATION

Just Energy is a corporation established under the laws of Canada to hold securities of its directly or indirectly owned operating subsidiaries. The registered office of Just Energy is First Canadian Place, 100 King Street West, Toronto, Ontario, Canada. The Interim Condensed Consolidated Financial Statements consist of Just Energy and its subsidiaries. The Interim Condensed Consolidated Financial Statements were approved by the Board of Directors on August 29, 2022.

Companies’ creditors arrangement and Chapter 15 proceedings

In February 2021, the State of Texas experienced the Weather Event. The Weather Event led to increased electricity demand and sustained high prices from February 13, 2021 through February 20, 2021. As a result of the losses sustained and without sufficient liquidity to pay the corresponding invoices from the ERCOT when due, and accordingly, on March 9, 2021, Just Energy applied for and received Court Orders under the CCAA from the Ontario Court and under Chapter 15 in the U.S. from the Houston Court. Protection under the Court Orders allows Just Energy to operate while it restructures its capital structure.

As part of the CCAA filing, the Company entered into a $125.0 million DIP Facility financing with certain affiliates of PIMCO (refer to Part I, Item 1, “Interim Condensed Consolidated Financial Statements And Notes”, Note 9(a) Long-Term Debt and Financing). The Company also entered into qualifying support agreements with its largest commodity supplier and ISO services provider. The filings and associated DIP Facility arranged by the Company, enabled Just Energy to continue all operations without interruption throughout the U.S. and Canada and to continue making payments required by ERCOT and satisfy other regulatory obligations.

On September 15, 2021, the Ontario Court approved the Company’s request to establish a claims process to identify and determine claims against the Company and its subsidiaries that are subject to the ongoing Claims Procedure Order. As part of the CCAA proceedings and in accordance with the Claims Procedure Order, Just Energy continues to review and determine which claims will be allowed, modified or disallowed, which may result in additional liabilities subject to compromise that are not currently reflected in the Interim Condensed Consolidated Financial Statements (refer to Part I, Item 1, “Interim Condensed Consolidated Financial Statements And Notes” Note 15(b) Commitments and Contingencies). On August 18, 2022 the Ontario Court suspended the Claims Procedure Order with (i) the barring of claims pursuant to the applicable provisions of such order remaining in effect and (ii) the Company’s ability, with the consent of the Monitor, to refer claims for adjudication for the purposes of determining entitlement to proceeds to be distributed in accordance with a transaction completed pursuant to the SISP.

Plan Support Agreement

As previously disclosed, in connection with the CCAA filing, on May 12, 2022, the Company, the Stalking Horse Purchaser and certain other parties thereto, entered into a plan support agreement (the “Plan Support Agreement”). Upon the execution of the SISP Support Agreement (as described below), the Plan Support Agreement and the transactions contemplated thereunder were automatically terminated pursuant to its terms.

The Plan Support Agreement contemplated the implementation of a recapitalization and financial restructuring of the Just Energy Entities through: (i) a reorganization of the Just Energy Entities, (ii) a rights offering for the issuance of approximately $192.5 million of new common equity which would be backstopped by the Stalking Horse Purchaser pursuant to the Backstop Commitment Letter, (iii) the issuance of new preferred equity, which would be owned entirely by the Stalking Horse Purchaser, and new common equity, (iv) the cancellation for no consideration of all outstanding shares of the Company and (v) the entry into the new credit agreement and the new intercreditor agreement.


F-6	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

The Plan Support Agreement contained certain covenants on the part of the parties thereto, as well as certain conditions to the obligations of such parties and for termination upon the occurrence of certain events, including, without limitation, the failure to achieve certain milestones and certain breaches by the parties under the Plan Support Agreement.

Backstop Commitment Letter

Also, as previously disclosed, in connection with the Plan Support Agreement, on May 12, 2022, the Stalking Horse Purchaser entered into a Backstop Commitment Letter (the “Backstop Commitment Letter”) with Just Energy (U.S.) Corp., pursuant to which the Stalking Horse Purchaser (the “Backstop Parties”) agreed to backstop the approximately $192.5 million rights offering contemplated by the Plan Support Agreement. Upon the execution of the SISP Support Agreement (as described below), the Backstop Commitment Letter and the transactions contemplated thereunder were automatically terminated pursuant to its terms without payment of the termination fee described below.

Under the Backstop Commitment Letter, the Backstop Parties agreed, subject to the terms and conditions of the Backstop Commitment Letter, to (i) purchase new common equity of the new parent company of the Just Energy Entities, (ii) subscribe for and receive its pro rata share of any unsubscribed new common equity in the rights offering and (iii) subscribe for and receive its pro rata share of new common equity in the rights offering upon the failure by another participant to fulfill its subscription obligations by the participation deadline. The issuance of the new common equity under the rights offering represented in the aggregate 80% of the new common equity of the new parent company of the Just Energy Entities.

Under the Backstop Commitment Letter, Just Energy (U.S.) Corp. agreed to issue and deliver 10% of the outstanding new common shares on the effective date, which would have constituted backstop commitment fee shares. In addition, Just Energy (U.S.) Corp. agreed to pay a termination fee of $15 million to the Backstop Parties if the Plan Support Agreement was terminated under certain circumstances. Pursuant to the Backstop Commitment Letter, the term loan lenders of the Just Energy Entities were entitled to participate in the rights offering as backstop parties for their pro rata shares of new common equity. The Backstop Parties’ commitments to backstop the rights offering and the other transactions contemplated by the Backstop Commitment Letter were conditioned upon the satisfaction of all applicable conditions set forth in the Backstop Commitment Letter.

Sale and Solicitation Process and Stalking Horse Transaction

On August 4, 2022, the Company entered into the Stalking Horse Transaction Agreement with the Stalking Horse Purchaser and the SISP Support Agreement in connection with the SISP that is intended to facilitate its exit from the Company’s ongoing insolvency proceedings as a going concern.

Under the SISP, interested parties are invited to participate in accordance with the approved SISP procedures. If one or more qualified bids (other than the transaction contemplated by the Stalking Horse Transaction) are received by September 29, 2022, then Just Energy intends to proceed with an auction to determine the successful bid(s), subject to the terms of the approved SISP procedures. If the Stalking Horse Purchaser is determined to be the successful bidder at the conclusion of the SISP and is subsequently approved by the Ontario Court and recognized by the Houston Court, the Stalking Horse Purchaser will become the sole shareholder of Just Energy (U.S.) Corp., which will be the new parent company of all of the Just Energy Entities, including the Company, and the Just Energy Entities will continue their business and operations as a going concern.

The Stalking Horse Transaction pursuant to the Stalking Horse Transaction Agreement, under which, among other things, (A) the Stalking Horse Purchaser agreed to act as a “stalking horse” bidder with respect to the SISP, (B) the existing common shares and all other equity interests of the Company would be cancelled or redeemed for no consideration, (C) the issuance of new common equity and new preferred equity of Just Energy (U.S.) Corp, the new parent company of the Just Energy Entities, which will be owned entirely by the Stalking Horse Purchaser, and (v) the entry into a new credit agreement and a new intercreditor agreement on the terms set forth in the term sheets appended to the SISP Support Agreement.


F-7	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

The SISP Support Agreement contains certain covenants on the part of the parties thereto, as well as certain termination rights upon the occurrence of certain events, including, without limitation, (i) the failure to achieve certain milestones and certain breaches by the parties under the SISP Support Agreement and (ii) the Stalking Horse Purchaser not being the successful bidder under the SISP procedures. Additionally, upon the execution of the SISP Support Agreement, each of the Plan Support Agreement, the Backstop Commitment Letter and the transactions contemplated thereunder were automatically terminated.

Key terms of the Stalking Horse Transaction include:

●

The Stalking Horse Purchaser will become the sole shareholder of Just Energy (U.S.) Corp., which will be the new parent company of all of the Just Energy Entities, including the Company, and the Just Energy Entities will continue their business and operations as a going concern.

●

The purchase price payable pursuant to the Stalking Horse Transaction is (i) $184.9 million in cash; plus (ii) a credit bid of approximately $230 million plus accrued interest of secured claims assigned to the Stalking Horse Purchaser; plus (iii) the assumption of Assumed Liabilities (as defined below), including up to CAD$10 million owing under the Credit Facility (the “Credit Facility Remaining Debt”) to remain outstanding under an amended and restated credit agreement.

●

Post-filing claims, the Credit Facility Remaining Debt, claims by energy regulators, and certain other liabilities enumerated in the Stalking Horse Transaction Agreement (“Assumed Liabilities”) will continue to be liabilities of the Just Energy Entities following consummation of the Stalking Horse Transaction. Excluded liabilities and assets of the Just Energy Entities will be discharged from the Just Energy Entities pursuant to a Vesting Order to be sought subject to the Stalking Horse Transaction being the successful bid in the SISP.

●

No amounts will be available for distribution to the Just Energy Entities’ general unsecured creditors, including the Term Loan lenders.

●

All currently outstanding shares, options and other equity of Just Energy will be cancelled or redeemed for no consideration and without any vote of the existing shareholders.

●

A break-up fee of $14.7 million to be paid to the Stalking Horse Purchaser upon the consummation of an Alternative Restructuring Proposal (as defined in the Transaction Agreement) in the event of termination of the Stalking Horse Transaction Agreement in certain specified circumstances.

The parties’ obligations under the Stalking Horse Transaction Agreement are conditioned upon the satisfaction or waiver of all applicable conditions set forth in the Stalking Horse Transaction Agreement, including, among others, the entry by the Ontario Court and recognition by the Houston Court of the SISP Order and the Vesting Order, the completion of the implementation steps by the Just Energy Entities, the receipt of all required transaction regulatory approvals (as defined in the Stalking Horse Transaction Agreement).

On August 18, 2022, the Ontario Court extended the stay until October 31, 2022. The stay extension allows the Company to continue to operate in the ordinary course of business while pursuing its proposed restructuring.

Common shares transfer to NEX

On May 19, 2022, the common shares of the Company were transferred from the TSX Venture Exchange to the NEX and are trading under the symbol “JE.H.”. The Company’s common shares continue to trade on the OTC Pink Market under the symbol “JENGQ”.


F-8	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Weather-event related uplift securitization proceeds

On June 16, 2021, HB 4492 became law in Texas. HB 4492 provides a mechanism for recovery of certain Weather Event Costs, incurred by various parties, including the Company, during the Weather Event, through certain securitization structures.

On October 13, 2021, the PUCT approved the Final Order authorizing the securitization of certain Weather Event Costs by ERCOT. On December 7, 2021, ERCOT filed its calculation with the PUCT in accordance with the PUCT Final Order implementing HB 4492. The Company received $147.5 million in June 2022.

2.OPERATIONS

Just Energy is a retail energy provider specializing in electricity and natural gas commodities and bringing energy efficient solutions, carbon offset and renewable energy options to customers. Operating in the U.S. and Canada, Just Energy serves both residential and commercial customers, providing homes and businesses with a broad range of energy solutions that deliver comfort, convenience and control. Just Energy is the parent company of Amigo Energy, Filter Group, Hudson Energy, Interactive Energy Group, Tara Energy and Terrapass.

Just Energy’s current commodity product offerings include fixed, variable, index and flat rate options. By fixing the price of electricity or natural gas under its fixed-price or price-protected program contracts for a period of up to five years, Just Energy’s customers offset their exposure to changes in the price of these essential commodities. Variable rate products allow customers to maintain flexibility while retaining the ability to lock into a fixed price at their discretion. Flat-bill products allow customers to pay a flat rate each month regardless of usage. Just Energy derives its gross margin from the difference between the price at which it is able to sell the commodities to its customers and the related price at which it purchases the associated volumes from its suppliers.

Just Energy has two business segments: the mass markets segment and the commercial segment. The mass markets segment includes customers acquired and served under the Just Energy, Tara Energy, Amigo Energy and Terrapass brands. Marketing of the energy products of this segment is primarily done through digital and retail sales channels. The commercial segment includes customers acquired and served under Hudson Energy, as well as brokerage services managed by Interactive Energy Group. Hudson Energy sales are made through three main channels: brokers, door-to-door commercial independent contractors and inside commercial sales representatives.

Just Energy offers green products through Terrapass and its JustGreen program. Green products offered through Terrapass allow customers to offset their carbon footprint without buying energy commodity products and can be offered in all states and provinces without being dependent on energy deregulation. The JustGreen electricity product offers customers the option of having all or a portion of their electricity sourced from renewable green sources such as wind, solar, hydropower or biomass, via power purchase agreements and renewable energy certificates. The JustGreen gas product offers carbon offset credits that allow customers to reduce or eliminate the carbon footprint of their homes or businesses.

Through Filter Group, Just Energy provides subscription-based home water filtration systems to residential customers, including under-counter and whole-home water filtration solutions.

Just Energy markets its product offerings through multiple sales channels including digital, retail, door-to-door, brokers and affinity relationships.


F-9	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

3.BASIS OF PRESENTATION

(a) Compliance with U.S. GAAP

These Interim Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, ASC 270, Interim Reporting, as issued by the FASB. In the opinion of management, the unaudited Interim Condensed Consolidated Financial Statements include all adjustments that are of a recurring nature and necessary for a fair presentation of the results of interim operations.

(b) Basis of presentation and interim reporting

These Interim Condensed Consolidated Financial Statements should be read in conjunction with and follow the same accounting policies and methods of application as those used in the most recent March 31, 2022 annual audited Consolidated Financial Statements under U.S. GAAP.

The interim operating results are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2023, due to seasonal variations resulting in fluctuations in quarterly results. Gas consumption by customers is typically highest in October through March and lowest in April through September. Electricity consumption is typically highest in January through March and July through September and lowest in October through December and April through June.

Going concern

Due to the Weather Event and associated CCAA filing, the Company’s ability to continue as a going concern for the next 12 months is dependent on the Company emerging from CCAA protection and maintaining liquidity. The material uncertainties arising from the CCAA filings cast substantial doubt upon the Company's ability to continue as a going concern and, accordingly the ultimate appropriateness of the use of accounting principles applicable to a going concern. These Interim Condensed Consolidated Financial Statements do not reflect the adjustments to carrying values of assets and liabilities and the reported expenses and Interim Condensed Consolidated Balance Sheets classifications that would be necessary if the going concern assumption was deemed inappropriate. These adjustments could be material. There can be no assurance that the Company will be successful in emerging from CCAA as a going concern.

The preparation of the Interim Condensed Consolidated Financial Statements requires the use of estimates and assumptions to be made in applying the accounting policies that affect the reported amount of assets, liabilities, income and expenses. The estimates and related assumptions based on previous experience and other factors are considered reasonable under the circumstances, the results of which form the basis for making the assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. There have been no material changes from the disclosures from the most recent March 31, 2022 annual audited Consolidated Financial Statements and notes to the March 31, 2022 annual audited Consolidated Financial Statements with respect to significant accounting judgments, estimates and assumptions.


F-10	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

4.TRADE AND OTHER RECEIVABLES, NET

(a)Trade and other receivables, net


		As at June 30,		As at March 31,
	2022			2022
Trade accounts receivable, net	$	147,709	$	147,063
Unbilled revenue, net		109,939		82,946
Accrued gas receivable		767		1,414
Commodity receivables		97,644		77,518
Total trade and other receivables, net	$	356,059	$	308,941

(b)Aging of accounts receivable

Customer credit risk

The lifetime ECL reflects Just Energy’s best estimate of losses on the accounts receivable and unbilled revenue balances. Just Energy determines the lifetime ECL by using historical loss rates and forward-looking factors, if applicable. The Company accrues an allowance for current ECL based on (i) estimates of uncollectable revenues by analyzing accounts receivable aging and current and reasonable forecasts of expected economic factors including weather-related events; and (ii) historical collections and delinquencies.

Just Energy is exposed to customer credit risk on its continuing operations in Alberta, Texas, Illinois (gas), California and Ohio (electricity). Credit review processes have been implemented to perform credit evaluations of customers and manage customer default. If a significant number of customers were to default on their payments, it could have a material adverse effect on the operations and cash flows of Just Energy.

In the remaining markets, the LDCs provide collection services and assume the risk of any bad debts owing from Just Energy’s customers for a fee that is recorded in cost of goods sold. Although there is no assurance that the LDCs providing these services will continue to do so in the future, management believes that the risk of the LDCs failing to deliver payment to Just Energy is minimal.

The aging of the trade accounts receivable, excluding the provision for expected credit losses, from the markets where the Company bears customer credit risk was as follows:


		As at June 30,		As at March 31,
	2022			2022

Current	$	73,188	$	57,766
1–30 days		12,276		16,061
31–60 days		2,305		4,470
61–90 days		2,841		1,220
Over 90 days		2,754		5,106
Total trade receivables	$	93,364	$	84,623


F-11	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

(c)Provision for expected credit losses

Changes in the provision for expected credit losses related to the balances in the table above were as follows:


		As at June 30,		As at March 31,
	2022			2022

Balance, beginning of period	$	14,037	$	18,578
Provision for expected credit losses		10,450		24,242
Bad debts written off		(8,260)		(34,504)
Recoveries		936		5,148
Foreign exchange		(437)		573
Balance, end of period	$	16,726	$	14,037

The unbilled revenue subject to customer credit risk is $102.2 million as at June 30, 2022 (March 31, 2022 – $71.2 million).

(d)Securitization proceeds receivable from ERCOT

The Company expected to receive the proceeds of $147.5 million from ERCOT the first half of calendar year 2022 and concluded that the threshold for recognizing a receivable was met in December 2021 as the amounts to be received were determinable and ERCOT was directed by its governing body, the PUCT, to take all actions required to effectuate the funding approved in the Final Order. The associated Weather Event Cost Recovery is reflected in cost of goods sold within the Interim Condensed Consolidated Statements of Operations as that is where the initial costs, which are being compensated for, were recorded. The Company received the proceeds of $147.5 million from ERCOT in June 2022.

5.OTHER CURRENT AND NON-CURRENT ASSETS

(a)Other current assets


		As at June 30,		As at March 31,
	2022			2022
Prepaid expenses and deposits	$	92,980	$	40,347
Customer acquisition costs		38,441		35,680
Green certificates assets		41,088		53,824
Gas delivered in excess of consumption		2,142		793
Inventory		930		926
Total other current assets	$	175,581	$	131,570

(b)	Other non-current assets


		As at June 30,		As at March 31,
	2022			2022
Customer acquisition costs	$	33,296	$	30,273
Other long-term assets		11,554		8,775
Total other non-current assets	$	44,850	$	39,048


F-12	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

6.DERIVATIVE INSTRUMENTS

(a)Fair value of derivative instruments

The fair value of derivative instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). Management has estimated the value of financial swaps, physical forwards and option contracts for electricity, natural gas, carbon offsets and RECs, using a discounted cash flow method, which employs market forward curves that are either directly sourced from third parties or developed internally based on third-party market data. These curves can be volatile, thus leading to volatility in the mark to market with no immediate impact to cash flows. Gas options and green power options have been valued using the applicable market forward curves and the implied volatility from other market traded options.

The following table illustrates unrealized gains (losses) related to Just Energy’s derivative instruments classified as fair value through the Interim Condensed Consolidated Statements of Operations and recorded on the Interim Condensed Consolidated Balance Sheets as derivative instrument assets and derivative instruments liabilities, with their offsetting values recorded in unrealized gain (loss) of derivative instruments on the Interim Condensed Consolidated Statements of Operations


	For the three months ended June 30,
	2022			2021
Physical forward contracts and options (i)	$	184,550	$	183,590
Financial swap contracts and options (ii)		36,237		54,101
Foreign exchange forward contracts		1,652		900
Other derivative options		–		(2,536)
Unrealized gain on derivative instruments	$	222,439	$	236,055

The following table summarizes certain aspects of the derivative instrument assets and liabilities recorded in the Interim Condensed Consolidated Balance Sheet as at June 30, 2022:

Derivative

instrument

assets

liabilities

(current)

(non-current)

(current)

(non-current)

Physical forward contracts and options (i)

552,912

103,006

11,953

20,536

Financial swap contracts and options (ii)

172,012

67,635

–

2,074

Foreign exchange forward contracts

476

163

–

Other derivative options

2,047

1,031

–

As at June 30, 2022

727,447

171,835

11,953

22,627

The following tables summarize certain aspects of the derivative instrument assets and liabilities recorded in the Interim Condensed Consolidated Balance Sheet as at March 31, 2022:


	Derivative		Derivative		Derivative		Derivative
	instrument		instrument		instrument		instrument
	assets		assets		liabilities		liabilities
	(current)		(non-current)		(current)		(non-current)

Physical forward contracts and options (i)	$	373,268	$	81,392	$	10,195	$	5,865
Financial swap contracts and options (ii)		161,838		51,161		2,134		6,856
Foreign exchange forward contracts		–		–		841		195
Other derivative options		3,594		461		–		–
As at March 31, 2022	$	538,700	$	133,014	$	13,170	$	12,916


F-13	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Individual derivative asset and liability transactions are offset and the net amount reported in the Interim Condensed Consolidated Balance Sheets if, and only if, there is currently an enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously. Individual derivative transactions are typically offset at the legal entity and counterparty level. The impact of netting derivative assets and liabilities is presented in the table below.


	Gross basis amount		Netting impact		Net basis amount
Derivative instrument assets	$	1,386,800	$	(487,518)	$	899,282
Derivative instrument liabilities		(521,038)		486,458		(34,580)
As at June 30, 2022	$	865,762	$	(1,060)	$	864,702

	Gross basis amount		Netting impact		Net basis amount
Derivative instrument assets	$	910,174	$	(238,460)	$	671,714
Derivative instrument liabilities		(265,011)		238,925		(26,086)
As at March 31, 2022	$	645,163	$	465	$	645,628

Below is a summary of the derivative instruments classified through the Interim Condensed Consolidated Statement of Operations as at June 30, 2022, to which Just Energy has committed:


		Total remaining volume		Weighted average price		Expiry date
(i)	Physical forward contracts and options
	Electricity contracts	30,091,003	MWh	$46.02	/MWh	December 31, 2029
	Natural gas contracts	91,734,956	MMBtu	$4.83	/MMBtu	March 31, 2027
	RECs	4,373,759	MWh	$13.53	/REC	December 31, 2029
	Green Gas Certificates	408,000	tonnes	$7.08	/tonnes	June 1, 2023
	Electricity generation capacity contracts	1,570	MWCap	$3,992.64	/MWCap	May 31, 2026
	Ancillary contracts	1,055,000	MWh	$20.08	/MWh	December 31, 2025

(ii)	Financial swap contracts and options
	Electricity contracts	22,819,077	MWh	$66.34	/MWh	December 31, 2026
	Natural gas contracts	110,579,100	MMBtu	$3.63	/MMBtu	March 31, 2027
	Ancillary contracts	2,046,082	MWh	$20.65	/MWh	December 31, 2025

These derivative instruments create a credit risk for Just Energy since they have been transacted with a limited number of counterparties. Should any counterparty be unable to fulfill its obligations under the contracts, Just Energy may not be able to realize the derivative instrument asset balance recognized in the Interim Condensed Consolidated Financial Statements.

Fair value hierarchy of derivatives

Level 1

The fair value measurements are classified as Level 1 in the fair value hierarchy if the fair value is determined using quoted unadjusted market prices. Currently, there are no derivatives carried in this level.

Level 2

Fair value measurements that require observable inputs other than quoted prices in Level 1, either directly or indirectly, are classified as Level 2 in the fair value hierarchy. This could include the use of statistical techniques to derive the fair value curve from observable market prices. However, in order to be classified under Level 2, significant inputs must be directly or indirectly observable in the market. Just Energy values its NYMEX financial gas fixed-for-floating swaps under Level 2.


F-14	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Level 3

Fair value measurements that require unobservable market data or use statistical techniques to derive forward curves from observable market data and unobservable inputs are classified as Level 3 in the fair value hierarchy. For the electricity supply contracts, Just Energy uses quoted market prices as per available market forward data and applies a price-shaping profile to calculate the monthly prices from annual strips and hourly prices from block strips for the purposes of mark-to-market calculations. The profile is based on historical settlements with counterparties or with the system operator and is considered an unobservable input for the purposes of establishing the level in the fair value hierarchy.

For the natural gas supply contracts, Just Energy uses three different market observable curves: (i) commodity (predominately NYMEX), (ii) basis and (iii) foreign exchange. NYMEX curves extend for over five years (thereby covering the length of Just Energy’s contracts); however, most basis curves extend only 12 to 15 months into the future. In order to calculate basis curves for the remaining years, Just Energy uses extrapolation, which leads natural gas supply contracts to be classified under Level 3.

The unobservable inputs could range from $5/MWh or $0.50/MMBtu for power and natural gas respectively. Additional disclosure regarding Level 3 derivative instruments is available below under the heading “Commodity price sensitivity – Level 3 derivative instruments”.

Fair value measurement input sensitivity

The main cause of changes in the fair value of derivative instruments is changes in the forward curve prices used for the fair value calculations. Just Energy provides a sensitivity analysis of these forward curves under the “Market risk” section of this note.

The following table illustrates the classification of derivative instrument assets (liabilities) in the fair value hierarchy as at June 30, 2022:

Level 1

Level 2

Level 3

Total

Physical forward contracts

–

623,429

Financial swap contracts

–

125,144

112,429

237,573

Foreign exchange forward contracts

–

639

Other derivative options

–

3,061

Total net derivative instrument assets

–

125,144

739,558

864,702

The following table illustrates the classification of derivative instrument assets (liabilities) in the fair value hierarchy as at March 31, 2022:


	Level 1		Level 2		Level 3		Total
Physical forward contracts and options	$	–	$	–	$	438,600	$	438,600
Financial swap contracts and options		–		124,188		79,821		204,009
Foreign exchange forward contracts		–		–		(1,036)		(1,036)
Other derivative options		–		–		4,055		4,055
Total net derivative instrument assets	$	–	$	124,188	$	521,440	$	645,628

Commodity price sensitivity — Level 3 derivative instruments

If the energy prices associated with only Level 3 derivative instruments including natural gas, electricity, and RECs had risen by 10%, assuming that all of the other variables had remained constant, income from continuing operations before income taxes for the three months ended June 30, 2022 would have increased by $401.7 million.


F-15	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

On the contrary, if the energy prices associated with only Level 3 derivative instruments including natural gas, electricity, and RECs had fallen by 10%, assuming that all of the other variables had remained constant, income from continuing operations before income taxes for the three months ended June 30, 2022 would have decreased by $401.7 million, primarily as a result of the change in fair value of derivative instruments.

The following table illustrates the changes in net fair value of derivative instrument assets (liabilities) classified as Level 3 in the fair value hierarchy for the following periods:


		As at June 30,		As at March 31,
	2022			2022
Balance, beginning of period	$	521,440	$	(33,489)
Total gains		364,255		349,541
Purchases		(91,848)		283,394
Sales		37,085		(71,514)
Settlements		(91,374)		(6,492)
Balance, end of period	$	739,558	$	521,440

(b)Classification of non-derivative financial assets and liabilities

As at June 30, 2022 and March 31, 2022, the carrying value of cash and cash equivalents, restricted cash, trade and other receivables, and trade and other payables approximates their fair value due to their short-term nature.

The risks associated with Just Energy’s derivative instruments are as follows:

(i)Market risk

Market risk is the potential loss that may be incurred as a result of changes in the market or fair value of a particular instrument or commodity. Components of market risk to which Just Energy is exposed are discussed below.

Foreign currency risk

Foreign currency risk is created by fluctuations in the fair value or cash flows of derivative instruments due to changes in foreign exchange rates and exposure as a result of investments in Canadian operations.

The performance of the U.S. dollar relative to the Canadian dollar could positively or negatively affect Just Energy’s Interim Condensed Consolidated Statements of Operations, as a significant portion of Just Energy’s income or loss is generated in Canadian dollars and is subject to currency fluctuations upon translation to U.S. dollars. Just Energy has a policy to economically hedge between 50% and 100% of forecasted cross-border cash flows that are expected to occur within the next 12 months and between 0% and 50% of certain forecasted cross-border cash flows that are expected to occur within the following 13 to 24 months. The level of economic hedging is dependent on the source of the cash flows and the time remaining until the cash repatriation occurs.

Just Energy may, from time to time, experience losses resulting from fluctuations in the values of its foreign currency transactions, which could adversely affect its operating results. Translation risk is not hedged.

Interest rate risk

Just Energy is only exposed to interest rate fluctuations associated with its floating rate Credit Facility.

A 1% increase (decrease) in interest rates would have resulted in a decrease (increase) of approximately $0.3 million in income from continuing operations before income taxes in the Interim Condensed Consolidated Statement of Operations for the three months ended June 30, 2022.


F-16	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Commodity price risk

Just Energy is exposed to market risks associated with commodity prices and market volatility where estimated customer requirements do not match actual customer requirements. Management actively monitors these positions on a daily basis in accordance with its risk management policy. This policy sets out a variety of limits, most importantly thresholds for open positions in the gas and electricity portfolios, which also feed a value at risk limit. Should any of the limits be exceeded, they are closed expeditiously or express approval to continue to hold is obtained. Just Energy’s exposure to market risk is affected by a number of factors, including accuracy of estimation of customer commodity requirements, commodity prices, volatility and liquidity of markets. Just Energy enters into derivative instruments in order to manage exposures to changes in commodity prices. The derivative instruments that are used are designed to fix the price of supply for estimated customer commodity demand and thereby fix margins. Derivative instruments are generally transacted over the counter. The inability or failure of Just Energy to manage and monitor commodity price risk could have a material adverse effect on the operations and cash flows of Just Energy. Just Energy mitigates the exposure to variances in customer requirements that are driven by changes in expected weather conditions through active management of the underlying portfolio, which involves, but is not limited to, the purchase of options including weather derivatives. Just Energy’s ability to mitigate weather effects is limited by the degree to which weather conditions deviate from normal.

Commodity price sensitivity — all derivative instruments

If all the energy prices associated with derivative instruments including natural gas, electricity and RECs had risen by 10%, assuming that all of the other variables had remained constant, income from continuing operations before income taxes for the three months ended June 30, 2022 would have increased by $454.2 million.

On the contrary, a fall of 10% in the energy prices associated with derivative instruments including natural gas, electricity and RECs, assuming that all of the other variables had remained constant, income from continuing operations before income taxes for the three months ended June 30, 2022 would have decreased by $454.4 million, primarily as a result of the change in fair value of Just Energy’s derivative instruments.

(ii)Physical supplier risk

Just Energy purchases the majority of the gas and electricity delivered to its customers through long-term contracts entered into with various suppliers. Just Energy has an exposure to supplier risk as the ability to continue to deliver gas and electricity to its customers is reliant upon the ongoing operations of these suppliers and their ability to fulfill their contractual obligations.

(iii)Counterparty credit risk

Counterparty credit risk represents the loss that Just Energy would incur if a counterparty fails to perform under its contractual obligations. This risk would manifest itself in Just Energy replacing contracted supply at prevailing market rates, thus impacting the related customer margin. Counterparty limits are established within the risk management policy. Any exceptions to these limits require approval from the Risk Committee of the Board of Directors of Just Energy. The risk department and Risk Committee of the Board of Directors monitor current and potential credit exposure to individual counterparties and also monitor overall aggregate counterparty exposure. However, the failure of a counterparty to meet its contractual obligations could have a material adverse effect on the operations and cash flows of Just Energy.

As at June 30, 2022, Just Energy has applied an adjustment factor to determine the fair value of its derivative instruments in the amount of $2.0 million (March 31, 2022 – $2.3 million) to accommodate for its counterparties’ risk of default.

As at June 30, 2022, the estimated net counterparty credit risk exposure amounted to $771.5 million (March 31, 2022 – $580.5 million) representing the risk relating to Just Energy’s exposure to derivatives that are in an asset position, of which the Company held collateral (cash and letters of credit) against those positions of $231.4 million (March 31, 2022 – $103.2 million), resulting in a net exposure of $540.0 million (March 31, 2022 – 477.3 million).


F-17	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

As at June 30, 2022, the Company recorded $54.8 million (March 31, 2022 - $20.3 million) of cash collateral posted on its Interim Condensed Consolidated Balance Sheets in other current assets.

7.TRADE AND OTHER PAYABLES


		As at June 30,		As at March 31,
	2022			2022
Commodity suppliers' accruals and payables	$	266,481	$	209,703
Green provisions		42,545		52,478
Sales tax payable		12,705		15,656
Non-commodity trade accruals and accounts payable		56,825		53,872
Accrued gas payable		1,077		818
Other payables		5,758		17,396
Total trade and other payables	$	385,391	$	349,923

8.LIABILITIES SUBJECT TO COMPROMISE


		As at June 30,		As at March 31,
	2022			2022

Commodity suppliers' accruals and payables	$	443,447	$	438,068
Non-commodity trade accruals and accounts payable		40,531		41,914
Debts and financings		363,261		365,908
Total liabilities subject to compromise	$	847,239	$	845,890

9.LONG-TERM DEBT AND FINANCING


		As at June 30,		As at March 31,
	2022			2022
DIP Facility (a)	$	125,000	$	125,000
Filter Group financing (b)		893		1,419
Total debt		125,893		126,419
Less: Current portion		(125,854)		(126,289)
Total long-term debt	$	39	$	130

Future annual minimum principal repayments are as follows:


	Less than						More than
	1 year		1–3 years		4–5 years		5 years		Total
DIP Facility (a)	$	125,000	$	–	$	–	$	–	$	125,000
Filter Group financing (b)		854		39		–		–		893
Total principal repayment	$	125,854	$	39	$	–	$	–	$	125,893


F-18	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

The following table details interest expense. Interest is expensed based on the effective interest rate.


	Three months ended June 30,
	2022		2021
DIP Facility (a)	$	4,051	$	3,998
Filter Group financing (b)		28		79
Credit Facility (c)		4,127		4,706
Term Loan (d)		–		(54)
Note Indenture (e)		–		(1)
Supplier finance and others		282		103
Total interest expense	$	8,488	$	8,831

(a)

As discussed in Note 1, Just Energy filed and received the Court Order under the CCAA on March 9, 2021. In conjunction with the CCAA filing, the Company entered into the DIP Facility for $125.0 million. Just Energy Ontario L.P., Just Energy Group Inc. and Just Energy (U.S.) Corp. are the borrowers under the DIP Facility and are supported by guarantees of certain subsidiaries and secured by a super-priority charge against and attaching to the property that secures the obligations arising under the Credit Facility, created by the Court Order. The DIP Facility has an interest rate of 13.0%, paid quarterly in arrears. On November 11, 2021, the Company amended the DIP Facility to extend the maturity of the DIP Facility to September 30, 2022. For consideration for making the DIP Facility available, Just Energy paid a 1.0% origination fee, a 1.0% commitment fee on March 9, 2021 and a 1.0% amendment fee on November 16, 2021.

(b)

Filter Group has a $0.9 million outstanding loan payable to HTC. The loan is a result of factoring receivables to finance the cost of rental equipment that matures no later than October 2023 with HTC, and bears interest at 8.99% per annum. Principal and interest are payable monthly. Filter Group did not file under the CCAA and, accordingly, the stay does not apply to Filter Group and any amounts outstanding under the loan payable to HTC.

(c)

On March 18, 2021, Just Energy Ontario L.P, Just Energy (U.S.) Corp. and Just Energy Group Inc. entered into the Lender Support Agreement with the lenders under the Credit Facility. Under the Lender Support Agreement, the lenders agreed to allow issuance or renewals of Letters of Credit under the Credit Facility during the pendency of the CCAA proceedings within certain restrictions. In return, the Company has agreed to continue paying interest and fees at the non-default rate on the outstanding advances and Letters of Credit under the Credit Facility. The amount of Letters of Credit that may be issued is limited to the lesser of CAD $46.1 million (excluding the Letters of Credit guaranteed by Export Development Canada under its Account Performance Security Guarantee Program), plus any amount the Company has repaid and CAD $125 million. As at June 30, 2022, the Company had repaid CAD $79.6 million and had a total of CAD $123.7 million of Letters of Credit outstanding.

Certain amounts outstanding under the LC Facility are guaranteed by Export Development Canada under its Account Performance Security Guarantee Program. As at June 30, 2022, the Company had $44.2 million of Letters of Credit outstanding and Letter of Credit capacity of $1.2 million available under the LC Facility. Just Energy’s obligations under the Credit Facility are supported by guarantees of certain subsidiaries and secured by a general security agreement and a pledge of the assets and securities of Just Energy and the majority of its operating subsidiaries, excluding primarily Filter Group. Just Energy has also entered into an inter-creditor agreement in which certain commodity and hedge providers are also secured by the same collateral. As a result of the CCAA filing, the borrowers are in default under the Credit Facility. However, any potential actions by the lenders have been stayed pursuant to the Court Order.

The outstanding advances are all prime rate advances at a rate of bank prime (Canadian bank prime rate or U.S. prime rate) plus 4.25% and letters of credit are at a rate of 5.25%.

As at June 30, 2022, the Canadian prime rate was 3.7% and the U.S. prime rate was 4.75%.

As a result of the CCAA filing, the Credit Facility is reflected as a liability subject to compromise.


F-19	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

(d)

As part of the September 2020 Recapitalization, Just Energy issued the Term Loan maturing on March 31, 2024. The Term Loan bears interest at 10.25%. The balance at June 30, 2022 includes an accrual of $12.6 million for interest payable on the Term Loan through March 9, 2021. As a result of the CCAA filing, the Company is in default under the Term Loan. However, any potential actions by the lenders under the Term Loan have been stayed pursuant to the Court Order, and the Company is not issuing additional notes equal to the capitalized interest. The Term Loan is shown as liability subject to compromise.

(e)

As part of the September 2020 Recapitalization, Just Energy issued the Note Indenture. The principal amount was reduced through a tender offer for no consideration on October 19, 2020 to CAD $13.2 million. The Note Indenture bears an annual interest rate of 7.0% payable in kind. The balance at June 30, 2022 includes an accrual of $0.4 million for interest payable on the Note Indenture through March 9, 2021. As a result of the CCAA filing, the Company is in default under the Note Indenture’s Trust Indenture agreement. However, any potential actions by the lenders under the Note Indenture have been stayed pursuant to the Court Order and the Company is not issuing additional notes equal to the capitalized interest. The Note Indenture is shown as a liability subject to compromise.

10.REPORTABLE BUSINESS SEGMENTS

Just Energy has two business segments: the mass market segment and the commercial segment. The mass markets segment includes customers acquired and served under the Just Energy, Tara Energy, Amigo Energy and Terrapass brands. Marketing of the energy products of this segment is primarily done through digital and retail sales channels. The commercial segment includes customers acquired and served under Hudson Energy, as well as brokerage services managed by Interactive Energy Group. Hudson Energy sales are made through three main channels: brokers, in-person commercial independent contractors and inside commercial sales representatives.

The chief operating decision-maker monitors the operational results of the mass market and commercial segments for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on certain non-U.S. GAAP measures such as base EBITDA, base gross margin and embedded gross margin.

Transactions between segments are in the normal course of operations and are recorded at the exchange amount.

Corporate and shared services report the costs related to management oversight of the business units, public reporting and filings, corporate governance and other shared services functions such as Human Resources, Finance and Information Technology.

The chief operating decision maker does not review the assets and liabilities for the reporting units for decision making purposes.


F-20	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

For the three months ended June 30, 2022:

Corporate and

Mass markets

Commercial

shared services

Consolidated

Revenues

340,577

230,009

–

570,586

Cost of goods sold

409,203

254,009

–

663,212

Gross margin

(68,626)

(24,000)

–

(92,626)

Administrative expenses

7,770

2,719

16,998

27,487

Selling and marketing expenses

21,589

10,883

–

32,472

Provision for expected credit loss

10,324

126

–

10,450

Depreciation and amortization

2,418

499

–

2,917

Segment loss

(110,727)

(38,227)

(16,998)

(165,952)

Interest expense

(8,488)

Reorganization costs

(19,131)

Unrealized gain on derivative instruments

222,439

Realized gain on derivative instruments

197,078

Other expense, net

232

Income tax expense

(65,564)

Net income

160,614

As at June 30, 2022

Total goodwill

127,522

–

127,522

For the three months ended June 30, 2021:


					Corporate and
	Mass markets		Commercial		shared services		Consolidated

Revenues	$	256,866	$	239,495	$	–	$	496,361
Cost of goods sold		208,422		222,589		–		431,011
Gross margin		48,444		16,906		–		65,350
Administrative expenses		7,425		2,709		14,509		24,643
Selling and marketing expenses		20,485		11,851		–		32,336
Provision for expected credit loss		5,158		915		–		6,073
Depreciation and amortization		2,984		661		–		3,645
Segment income (loss)	$	12,392	$	770	$	(14,509)	$	(1,347)
Interest expense								(8,831)
Reorganization costs								(16,486)
Unrealized gain on derivative instruments								236,055
Realized gain on derivative instruments								14,017
Other expense, net								(367)
Income tax benefit								793
Net income							$	223,834

As at June 30, 2021
Total goodwill	$	131,876	$	–	$	–	$	131,876


F-21	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

Revenue from external customers

The revenue is based on the location of the customer.


	Three months ended June 30,
	2022		2021
Canada	$	108,023	$	114,472
United States		462,563		381,889
Total	$	570,586	$	496,361

11.INCOME TAXES


	Three months ended June 30,
	2022		2021
Current tax expense (benefit)	$	889	$	(912)
Deferred tax expense		64,675		119
Total tax expense (benefit)	$	65,564	$	(793)

For the three months ended June 30, 2022, the effective tax rate was higher than the statutory tax rate of 26.5% primarily due to non-deductible expenses, differences in foreign tax rates and valuation allowance. The Company continues to maintain an overall valuation allowance in Canada. In the US, the deferred tax liability exceeded deferred tax assets available for offset due to the significant unrealized gain on derivative instruments. For the three months ended June 30, 2021, the effective tax rate was lower than the statutory tax rate of 26.5% due to the Company maintaining an overall valuation allowance position with the exception of limited deferred tax assets that were benefitted.

12.SHAREHOLDERS’ CAPITAL

Just Energy is authorized to issue an unlimited number of common shares with no par value. Shares outstanding have no preferences, rights or restrictions attached to them.

Details of issued and outstanding shareholders’ capital:


	Three months ended			Year ended
	June 30, 2022			March 31, 2022
	Shares	Amount		Shares	Amount
Common shares:
Issued and outstanding
Balance, beginning of period	48,078,637	$	1,168,162	48,078,637	$	1,168,162
Share-based awards exercised	–		–	–		–
Shareholders' capital	48,078,637	$	1,168,162	48,078,637	$	1,168,162


F-22	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

13.REORGANIZATION COSTS

Reorganization costs represent the amounts incurred related to the filings under the CCAA Proceedings and consist of:


	For the three months ended June 30,
	2022		2021
Professional and advisory costs	$	13,603	$	10,274
KERP		1,513		2,077
Prepetition claims and other costs¹		4,015		4,135
Total reorganization costs	$	19,131	$	16,486

These represent charges associated with early termination of certain agreement allowed by the CCAA filing, settlement of claims and the acceleration of deferred financing costs and other fees for the long-term debt subject to compromise and certain other related costs.

14.EARNINGS PER SHARE


	Three months ended June 30,
	2022		2021
BASIC EARNINGS PER SHARE
Income for the period available to shareholders	$	160,614	$	223,834
Basic weighted average shares outstanding		48,078,637		48,078,637
Basic earnings per share from continuing operations available to shareholders	$	3.34	$	4.66
Basic earnings per share available to shareholders	$	3.34	$	4.66

DILUTED EARNINGS PER SHARE
Income for the period available to shareholders	$	160,614	$	223,834
Basic weighted average shares outstanding		48,078,637		48,078,637
Dilutive effect of:
Deferred share units		190,983		190,983
Options		650,000		650,000
Shares outstanding on a diluted basis		48,919,620		48,919,620
Diluted earnings from continuing operations per share available to shareholders	$	3.28	$	4.58
Diluted earnings per share available to shareholders	$	3.28	$	4.58


F-23	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

15.COMMITMENTS AND CONTINGENCIES

Commitments as at June 30, 2022, for each of the next five years and thereafter are as follows:


	Less than 1 year		1–3 years		4–5 years		More than 5 years		Total
Trade and other payables	$	385,391	$	–	$	–	$	–	$	385,391
Commodity suppliers' accruals and payables subject to compromise		443,447		–		–		–		443,447
Non-commodity trade accruals and accounts payable subject to compromise		40,531		–		–		–		40,531
Long-term debt		125,854		39		–		–		125,893
Debt and financing subject to compromise		363,261		–		–		–		363,261
Gas, electricity and non-commodity contracts		1,784,374		1,695,634		349,018		45,432		3,874,458
Total	$	3,142,858	$	1,695,673	$	349,018	$	45,432	$	5,232,981

Under the terms of the Court Orders, any actions against Just Energy to enforce or otherwise effect payment from Just Energy of pre-petition obligations were stayed during the CCAA proceedings.

Just Energy has entered into leasing contracts for office buildings and administrative equipment. These leases have a leasing period of between one and six years. No purchase options are included in any major leasing contracts. Just Energy is also committed under long-term contracts with customers to supply gas and electricity. These contracts have various expiry dates and renewal options.

(a)Surety bonds and letters of credit

As at June 30, 2022

Under 1 year

1-3 Years

3-5 Years

Over 5 Years

Total

Surety bonds (i)

39,400

–

39,400

Letters of credit (CAD) (ii)

123,700

–

123,700

(i)

Pursuant to separate arrangements with Surety Bond Providers, Just Energy has had surety bonds issued to various counterparties including states, regulatory bodies, utilities, and various other surety bond holders in return for a fee and/or meeting certain collateral posting requirements. Such surety bond postings are required in order to operate in certain states or markets. As at June 30, 2022, Just Energy has provided cash collateral or letters of credit for all outstanding surety bonds.

(ii)

The Company has issued letters of credit in accordance with its credit facility to various counterparties, primarily utilities, state regulatory bodies in the markets it operates in, as well as suppliers.

(b)Legal proceedings

Just Energy and its subsidiaries are party to a number of legal proceedings. Other than as set out below, Just Energy believes that each proceeding constitutes legal matters that are incidental to the business conducted by Just Energy and that the ultimate disposition of the proceedings will not have a material adverse effect on its consolidated earnings, cash flows or financial position.


F-24	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

On March 9, 2021, Just Energy filed for and received creditor protection pursuant to the Court Order under the CCAA and similar protection under Chapter 15 of the Bankruptcy Code in the United States in connection with the Weather Event. On September 15, 2021, the Ontario Court approved the Company’s request to establish a claims process to identify and determine claims against the Company and its subsidiaries that are subject to the ongoing Claims Procedure Order. As part of the CCAA proceedings and in accordance with the Claims Procedure Order, Just Energy continues to review and determine which claims will be allowed, modified or disallowed, which may result in additional liabilities subject to compromise that are not currently reflected in the Interim Condensed Consolidated Financial Statements. Currently, the total claims filed against Just Energy and its subsidiaries pursuant to the Claims Procedure Order are in excess of $14 billion, including approximately $1 billion in secured claims, which include letters of credit. The previously disclosed class action against Just Energy, Just Energy Corp. and Just Energy Ontario L.P. with Haidar Omarali as plaintiff, and certain other class action claims, are subject to the Claims Procedure Order. Just Energy expects that the final amount of accepted unsecured claims will be much lower than the face amount of the filed claims. However, on August 4, 2022 Just Energy entered into the Stalking Horse Transaction Agreement with the Stalking Horse Purchaser and the SISP Support Agreement in connection with the SISP that is intended to facilitate its exit from the Company’s ongoing insolvency proceedings as a going concern. The Stalking Horse Transaction provides that certain secured creditors will receive cash payments and/or equity in exchange for their debt, and existing equityholders’ interests will be cancelled or redeemed for no consideration. In addition, no amounts will be available for distribution to the Just Energy Entities’ general unsecured creditors, including the previously disclosed class action against Just Energy, Just Energy Corp. and Just Energy Ontario L.P. with Haidar Omarali as plaintiff, and certain other class action claims. On August 18, 2022 the Ontario Court suspended the Claims Procedure Order with (i) the barring of claims pursuant to the applicable provisions of such order remaining in effect and (ii) the Company’s ability, with the consent of the Monitor, to refer claims for adjudication for the purposes of determining entitlement to proceeds to be distributed in accordance with a transaction completed pursuant to the SISP.

On July 23, 2019, Just Energy announced that, as part of its Strategic Review process, management identified customer enrolment and non-payment issues, primarily in Texas. In response to this announcement, and in some cases in response to this and other subsequent related announcements, putative class action lawsuits were filed in the United States District Court for the Southern District of New York, in the United States District Court for the Southern District of Texas and in the Ontario Court, on behalf of investors that purchased Just Energy Group Inc. securities during various periods, ranging from November 9, 2017 through August 19, 2019. The U.S. lawsuits have been consolidated in the United States District Court for the Southern District of Texas with one lead plaintiff and the Ontario lawsuits have been consolidated with one lead plaintiff. The U.S. lawsuit seeks damages allegedly arising from violations of the United States Securities Exchange Act. The Ontario lawsuit seeks damages allegedly arising from violations of Canadian securities legislation and of common law. The Ontario lawsuit was subsequently amended to, among other things, extend the period to July 7, 2020. On September 2, 2020, pursuant to Just Energy’s plan of arrangement, the Superior Court of Justice (Ontario) ordered that all existing equity class action claimants shall be irrevocably and forever limited solely to recovery from the proceeds of the insurance policies payable on behalf of Just Energy or its directors and officers in respect of any such existing equity class action claims, and such existing equity class action claimants shall have no right to, and shall not, directly or indirectly, make any claim or seek any recoveries from any of the released parties or any of their respective current or former officers and directors in respect of any existing equity class action claims, other than enforcing their rights to be paid by the applicable insurer(s) from the proceeds of the applicable insurance policies. Pursuant to the CCAA proceedings, these proceedings have been stayed. Just Energy denies the allegations and will vigorously defend against these claims if they proceed.

On November 12, 2021, Just Energy, along with the Just Energy Parties, initiated the ERCOT Lawsuit against ERCOT and the PUCT in the Houston Court. The ERCOT Lawsuit seeks to recover payments that were made by the Just Energy Parties to ERCOT for certain invoices relating to the Weather Event. On February 2, 2022, the Houston Court dismissed the Lawsuit against the PUCT.

16.SUBSEQUENT EVENTS

On August 18, 2022 the Court granted the SISP Order. Please refer to note 1 for further details.


F-25	JUST ENERGY \| FIRST QUARTER REPORT 2023

Table of Contents

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following MD&A is a review of the financial condition and operating results of Just Energy for the three months ended June 30, 2022. This MD&A should be read in conjunction with Just Energy’s Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2022 and related notes (Part I, Item 1, “Interim Condensed Consolidated Financial Statements And Notes”) and (ii) Consolidated Financial Statements for the year ended March 31, 2022 and related notes (Part II, Item 8, “Financial Statements and Supplementary Data”. The financial information contained herein has been prepared in accordance with U.S. GAAP. All dollar amounts are expressed in US dollars unless otherwise noted. Quarterly reports, the Annual Report and supplementary information can be found on Just Energy’s corporate website at investors.justenergy.com. Additional information can be found on SEDAR at www.sedar.com or on the SEC website at www.sec.gov.

COMPANIES’ CREDITORS ARRANGEMENT AND CHAPTER 15 PROCEEDINGS

Plan Support Agreement

Table of Contents

Backstop Commitment Letter

PROPOSED SALE AND INVESTMENT SOLICITATION PROCESS AND STALKING HORSE TRANSACTION

Table of Contents

Key terms of the Stalking Horse Transaction include:

●

No amounts will be available for distribution to the Just Energy Entities’ general unsecured creditors, including the Term Loan lenders.

●

All currently outstanding shares, options and other equity of Just Energy will be cancelled or redeemed for no consideration and without any vote of the existing shareholders.

●

COMMON SHARES TRANSFER TO NEX

WEATHER EVENT RELATED UPLIFT SECURITIZATION PROCEEDS

Table of Contents

Forward–looking information

This MD&A may contain forward-looking statements, including, without limitation, statements with respect to the CCAA proceedings. These statements are based on current expectations that involve several risks and uncertainties which could cause actual results to differ from those anticipated, which risks are described in Part1A “Risk Factors” of the Company’s Annual Report. These risks include, but are not limited to, risks with respect to the ability of the Company to continue as a going concern; the outcome of proceedings under the CCAA and similar proceedings in the United States, including the SISP; the outcome of any potential litigation with respect to the Weather Event, the outcome of any invoice dispute with ERCOT; the Company’s discussions with key stakeholders regarding the CCAA proceedings; the impact of the evolving COVID-19 pandemic on the Company’s business, operations and sales; uncertainties relating to the ultimate spread, severity and duration of COVID-19 and related adverse effects on the economies and financial markets of countries in which the Company operates; the ability of the Company to successfully implement its business continuity plans with respect to the COVID-19 pandemic; the Company’s ability to access sufficient capital to provide liquidity to manage its cash flow requirements; general economic, business and market conditions; the ability of management to execute its business plan; levels of customer natural gas and electricity consumption; extreme weather conditions; rates of customer additions and renewals; customer credit risk; rates of customer attrition; fluctuations in natural gas and electricity prices; interest and exchange rates; actions taken by governmental authorities including energy marketing regulation; increases in taxes and changes in government regulations and incentive programs; changes in regulatory regimes; results of litigation and decisions by regulatory authorities; competition; and dependence on certain suppliers. Additional information on these and other factors that could affect Just Energy’s operations or financial results are included in Just Energy’s Annual Report and other reports on file with the SEC’s website at www.sec.gov or Canadian securities regulatory authorities which can be accessed through the SEDAR website at www.sedar.com or through Just Energy’s website at investors.justenergy.com.

Company overview

Just Energy is a retail energy provider specializing in electricity and natural gas commodities, energy efficient solutions, carbon offsets and renewable energy options. Operating in the U.S. and Canada, Just Energy serves both residential and commercial customers, providing homes and businesses with a broad range of energy solutions that deliver comfort, convenience and control. Just Energy is the parent company of Amigo Energy, Filter Group, Hudson Energy, Interactive Energy Group, Tara Energy and Terrapass.

On May 19, 2022, the common shares of the Company were transferred from the Toronto Venture Exchange to the NEX and are trading under the symbol “JE.H.”. The Company’s common shares continue to trade on the OTC Pink Market under the symbol “JENGQ”.

Continuing operations overview

MASS MARKETS SEGMENT

The Mass Markets segment includes customers acquired and served under the Just Energy, Tara Energy, Amigo Energy and Terrapass brands. Marketing of the energy products of this segment is primarily done through the digital and retail sales channels. Mass Market customers make up 75% of Just Energy’s Base Gross Margin , which is currently focused on price–protected and flat–bill product offerings, as well as JustGreen products. To the extent that certain markets are better served by shorter–term or enhanced variable rate products, the Mass Markets segment’s sales channels offer these products.

Just Energy also provides home water filtration systems with its line of consumer product and service offerings through Filter Group.

Table of Contents

COMMERCIAL SEGMENT

The Commercial segment includes customers acquired and served under Hudson Energy, as well as brokerage services managed by Interactive Energy Group. Hudson Energy sales are made through three main channels: brokers, in-person commercial independent contractors and inside commercial sales representatives. Commercial customers make up 25% of Just Energy’s Base Gross Margin. Products offered to Commercial customers range from standard fixed–price offerings to “one off” offerings, tailored to meet the customer’s specific needs. These products can be fixed or floating rate or a blend of the two, and normally have a term of less than five years. Base Gross Margin per RCE for this segment is lower than it is for the Mass Markets segment, but customer acquisition costs and ongoing customer care costs per RCE are lower as well. Commercial customers also have significantly lower attrition rates than Mass Markets customers.

ABOUT JUST ENERGY’S PRODUCTS

Just Energy offers products and services to address customers’ essential needs, including electricity and natural gas commodities, energy efficient solutions, carbon offsets and renewable energy options as well as water quality and filtration devices.

Electricity

Just Energy services various states and territories in the U.S. and Canada with electricity. A variety of electricity solutions are offered, including fixed–price, flat–bill and variable–price products on both short–term and longer–term contracts. Most of these products provide customers with price–protection programs for the majority of their electricity requirements. Just Energy uses historical usage data for enrolled customers to predict future customer consumption and to help with long–term supply procurement decisions. Flat–bill products offer customers the ability to pay a fixed amount per period regardless of usage.

Just Energy purchases electricity supply from market counterparties for Mass Markets and Commercial customers based on forecasted customer aggregation. Electricity supply is generally purchased concurrently with the execution of a contract for larger Commercial customers. Historical customer usage is obtained from LDCs, which, when normalized to average weather, provides Just Energy with expected normal customer consumption. Just Energy mitigates exposure to weather variations through active management of the electricity portfolio and the purchase of options, including weather derivatives. Just Energy’s ability to successfully mitigate weather effects is limited by the degree to which weather conditions deviate from normal and the availability and costs of such options. To the extent that balancing electricity purchases are outside the acceptable forecast, Just Energy bears the financial responsibility for excess or short supply caused by fluctuations in customer usage. Any supply balancing not fully covered through customer pass–throughs, active management or the options employed may increase or decrease Just Energy’s Base Gross Margin depending upon market conditions at the time of balancing.

Natural gas

Just Energy offers natural gas customers a variety of products ranging from five–year fixed–price contracts to month–to–month variable–price contracts. Gas supply is purchased from market counterparties based on forecasted consumption. For larger Commercial customers, gas supply is generally purchased concurrently with the execution of a contract. Variable rate products allow customers to maintain flexibility while retaining the ability to lock into a fixed price at their discretion. Flat–bill products offer customers the ability to pay a fixed amount per period regardless of usage or changes in the price of the commodity.

The LDCs provide historical customer usage which, when normalized to average weather, enables Just Energy to purchase the expected normal customer consumption. Just Energy mitigates exposure to weather variations through active management of the gas portfolio, which involves, but is not limited to, the purchase of options, including weather derivatives. Just Energy’s ability to successfully mitigate weather effects is limited by the degree to which weather conditions deviate from normal and the availability and costs of such options. To the extent that balancing requirements are outside the forecasted purchase, Just Energy bears the financial responsibility for fluctuations in customer usage. To the extent that supply balancing is not fully covered through active management or the options employed, Just Energy’s Base Gross Margin may increase or decrease depending upon market conditions at the time of balancing.

Table of Contents


Territory	Gas delivery method
Manitoba, Ontario, Quebec and Michigan	The volumes delivered for a customer typically remain constant throughout the year. Revenues are not recognized until the customer consumes the gas. During the winter months, gas is consumed at a rate that is greater than delivery, resulting in accrued gas receivables, and, in the summer months, deliveries to LDCs exceed customer consumption, resulting in gas delivered in excess of consumption. Just Energy receives cash from the LDCs as the gas is delivered.
Alberta, British Columbia, Saskatchewan, California, Illinois, Indiana, Maryland, New Jersey, New York, Ohio and Pennsylvania	The volume of gas delivered is based on the estimated consumption and storage requirements for each month. The amount of gas delivered in the months of October to March is higher than in the months of April to September. Cash flow received from most of these markets is greatest during the fall and winter quarters, as cash is normally received from the LDCs in the same period as customer consumption.

JustGreen

Many customers have the ability to choose an appropriate JustGreen program to supplement their electricity and natural gas, providing an effective method to offset their carbon footprint associated with the respective commodity consumption.

JustGreen’s electricity products offer customers the option of having all or a portion of the volume of their electricity usage sourced from renewable green sources such as wind, solar, hydropower or biomass, via power purchase agreements and renewable energy certificates. JustGreen programs for gas customers involve the purchase of carbon offsets from carbon capture and reduction projects. Additional green products allow customers to offset their carbon footprint without buying energy commodity products and can be offered in all states and provinces without being dependent on energy deregulation.

Just Energy currently sells JustGreen electricity and gas in eligible markets across North America. Of all mass market customers who contracted with Just Energy in the past year, 38% purchased JustGreen for some or all of their energy needs. On average, these customers elected to purchase 96% of their consumption as green supply. For comparison, as reported for the trailing 12 months ended June 30, 2021, 38% of Mass Market customers who contracted with Just Energy chose to include JustGreen for an average of 93% of their consumption. As at June 30, 2022, JustGreen makes up 24% of the Mass Market electricity portfolio, compared to 25% in the year ago period. JustGreen makes up 25% of the Mass Market gas portfolio, compared to 13% in the year ago period.

Terrapass

Through Terrapass, customers can offset their environmental impact by purchasing high quality environmental products. Terrapass supports projects throughout North America and world–wide that destroy greenhouse gases, produce renewable energy and restore freshwater ecosystems. Each project is made possible through the purchase of carbon offsets, renewable energy credits and BEF Water Restoration Certificates®. Terrapass offers various purchase options for Mass Markets or Commercial customers, enabling businesses to incorporate seamless carbon offset options by providing marketing and product integration solutions.

Non–U.S. GAAP financial measures

Just Energy’s Interim Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP. The financial measures that are defined below do not have a standardized meaning prescribed by U.S. GAAP and may not be comparable to similar measures presented by other companies. These financial measures should not be considered as an alternative to, or more meaningful than, net income (loss), cash flow from operating activities and other measures of financial performance as determined in accordance with U.S. GAAP; however, the Company believes that these measures are useful in providing relative operational profitability of the Company’s business.

BASE GROSS MARGIN

“Base Gross Margin” represents gross margin adjusted to exclude the effect of unrealized gains (losses) on derivative instruments and the one–time impact of the Weather Event. Base Gross Margin is a key measure used by management to assess performance and allocate resources. Management believes that these realized gains (losses) on derivative instruments reflect the long–term financial performance of Just Energy and thus have included them in the Base Gross Margin calculation.

Table of Contents

EBITDA

“EBITDA” refers to earnings before interest expense, income taxes, depreciation and amortization with an adjustment for discontinued operations. EBITDA is a non–U.S. GAAP measure that reflects the operational profitability of the business.

BASE EBITDA

“Base EBITDA” refers to EBITDA adjusted to exclude the impact of unrealized mark to market gains (losses) arising from U.S. GAAP requirements for derivative instruments, Reorganization Costs, Weather Event, share–based compensation, impairment of goodwill, intangible, inventory and others, gain on investment, realized gains (losses) related to gas held in storage until gas is sold, and non–controlling interest. This measure reflects operational profitability as the impact of the gain on investment, impairment of inventory and Reorganization Costs are one–time non–recurring events. Non–cash share–based compensation expense is treated as an equity issuance for the purposes of this calculation as it would be settled in Common Shares; and the unrealized mark to market gains (losses) are associated with supply already sold in the future at fixed prices.

Just Energy tries to ensure that customer margins are protected by entering into fixed–price supply contracts. Under U.S. GAAP, the customer contracts are not marked to market; however, there is a requirement to mark to market the future supply contracts. This creates unrealized and realized gains (losses) depending upon current supply pricing. Management believes that the unrealized mark to market gains (losses) do not impact the long–term financial performance of Just Energy and has excluded them from the Base EBITDA calculation.

Just Energy uses derivative instruments to hedge the gas held in storage for future delivery to customers. Under U.S. GAAP, the customer contracts are not marked to market: however, there is a requirement to report the realized gains (losses) in the current period instead of recognizing them as a cost of inventory until delivery to the customer. Just Energy excludes the realized gains (losses) to EBITDA during the injection season and includes them during the withdrawal season in accordance with the customers receiving the gas. Management believes that including the realized gains (losses) during the withdrawal season when the customers receive the gas is more reflective of the operations of the business.

Just Energy recognizes the incremental acquisition costs of obtaining a customer contract as an asset since these costs would not have been incurred if the contract was not obtained and are recovered through the consideration collected from the contract. Commissions and incentives paid for commodity contracts and value–added products contracts are capitalized and amortized over the term of the contract. Amortization of these costs with respect to customer contracts is included in the calculation of Base EBITDA (as selling commission expenses). Amortization of incremental acquisition costs on value–added product contracts is excluded from the Base EBITDA calculation as value–added products are considered to be a lease asset akin to a fixed asset whereby amortization or depreciation expenses are excluded from Base EBITDA.

FREE CASH FLOW AND UNLEVERED FREE CASH FLOW

Free cash flow represents cash flow from operations less maintenance capital expenditures. Unlevered free cash flow represents free cash flows plus interest expense excluding the non–cash portion.

EMBEDDED GROSS MARGIN (“EGM”)

EGM is a rolling five–year measure of management’s estimate of future contracted energy and product gross margin. The commodity EGM is the difference between existing energy customer contract prices and the cost of supply for the remainder of the term, with appropriate assumptions for commodity RCE attrition and renewals. The product gross margin is the difference between existing value–added product customer contract prices and the cost of goods sold on a five–year undiscounted basis for such customer contracts, with appropriate assumptions for value–added product attrition and renewals. It is assumed that expiring contracts will be renewed at target margin renewal rates.

EGM indicates the gross margin expected to be realized over the next five years from existing customers. It is intended only as a directional measure for future gross margin. It is neither discounted to present value nor is it intended to consider administrative and other costs necessary to realize this margin.

Table of Contents

Financial and operating highlights

For the three months ended June 30.

(thousands of dollars, except where indicated and per share amounts)


			% increase
	Fiscal 2023		(decrease)		Fiscal 2022
Revenue	$	570,586	15	%	$	496,361
Base Gross Margin¹

Just Energy Group Inc. 10-Q