The attrition rate was 13% on a trailing 12-month basis, down from 14% in the prior year period, with U.S. gas markets higher and U.S. electricity markets lower. Canadian attrition was unchanged at 10%. Overall attrition remains at target levels.
Renewal rates were near target at an average 69% for the last 12 months. Canadian consumer renewals were weak, at approximately 50% while the U.S. was over 80%, better than target. Management believes that there is an opportunity for further improvement in renewal rates, however, commercial renewal rates can be volatile on a quarter to quarter basis.
Profitability
Operating profits lagged the overall Company growth during the quarter. Gross margin for the quarter was $142.5 million, down 3% from $147.4 million in fiscal 2012. Adjusted EBITDA was $72.5 million, down 18% from $88.5 million in the prior year. This resulted in payout ratios of 62% on Adjusted EBITDA versus 50% well above target levels, and 124% on Base Funds from Operations versus 88% in the comparable quarter of fiscal 2012.
The following factors drove quarterly profitability:
-- Gas margin was down 21% versus Q3 F2012 reflecting a 12% decline in customers, lower realized commercial margins per customer and $0.9 million in payout on weather options versus $9.0 million in fiscal 2012.-- Electricity margin was up 11% due to a 19% increase in customers and high residential margins driven by JustGreen consumption offset by lower margins per new customer in the commercial book.-- New customer annual margins averaged $169 per RCE for residential customers and $64 per RCE for commercial customers, less than the annual margin on customers lost of $182 per RCE for residential and $94 per RCE for commercial. The lower commercial margins reflect a stabilized level in major markets. While less profitable than in the past, commercial customers continue to generate margins more than double annual aggregation costs maintaining it as a very profitable business segment.-- Aggregation cost per residential customer was down 22% to $158 from $203 a year prior. Commercial customer aggregation costs were, on average, down slightly. This continued positive trend has been driven by the use of multiple sales channels and economies of scale as fixed marketing costs are spread across more customers.-- NHS saw its gross margin grow 32% year over year to $9.5 million up from $7.2 million. NHS EBITDA was $6.4 million, up 21% from $5.3 million a year earlier.-- The TGF ethanol plant saw both lower ethanol prices and higher wheat feedstock costs. The result was sharply lower margins of $2.2 million, down from $6.5 million in Q3 F2012. While ethanol remains a mandated component of gasoline, its prices have fallen below historic levels. Management cannot forecast when the performance of TGF will improve.-- Administrative costs per customer were an annual $34, up slightly from $32 a year earlier. Management believes that this measure will fall to the $30 range as new markets like the U.K. and new channels like Momentis begin to reach their potential.-- Bad debt expense was down 25%, reflecting markets where Just Energy bears credit risk. Bad debt equaled 2.1% of relevant sales down from 2.5% in the third quarter of fiscal 2012.-- Financing costs were $19.7 million for the quarter, up from $16.4 million a year earlier. The increase reflects inclusion of the new $105 million unsecured debentures, the convertible debenture funding for the acquisition of Fulcrum and higher drawings on the working capital line of credit as a result of our accelerated growth levels.
