Costa Mesa electricity and gas seller Commerce Energy Group Inc. has won a contract to sell electricity to a quarter of the Los Angeles Unified School District’s 800 schools.
Company officials didn’t disclose financial terms of the deal or how much electricity the school district typically uses in a year.
They did say the deal was big.
“It’s one of our largest contracts to date,” said Commerce Energy spokeswoman Verna Ray.
Last month Commerce Energy reported sales of $61 million in the quarter ended Jan. 31, up 30% from a year earlier. The company, which resells electricity from Southern California Edison Co. and other big utilities, swung to an operating profit of $1.3 million in the period, compared to a loss of $4.6 million last year. Its results were helped by a one-time gain from a sale.
The L.A. school district is the country’s second largest next to New York’s. There are more than 700,000 students in grades K-12.
Commerce Energy’s 18-month supply deal began May 1. It covers 217 schools in the system that are allowed to shop for their own electricity supplier.
The deal is good news for Commerce Energy, which had hoped to see new electricity rules go into effect that give it access to more contracts.
In 2002, former Gov. Gray Davis signed Assembly Bill 117. It was supposed to give California homeowners and businesses the option of buying power directly from their local government, rather than from Edison or another big provider. Commerce Energy hoped to grab some of the supply contracts from the local governments.
But the bill hasn’t changed anything.
“The California Public Utilities Commission still is working out rules on how it would be implemented,” said Rebecca Schlanert, Commerce Energy’s vice president of retail markets.
Schlanert said there’s about an 80% chance the PUC would come up with a full set of rules by the end of the year.
Meanwhile, another bill that could have helped Commerce Energy,Assembly Bill 2006,was vetoed by Gov. Arnold Schwarzenegger last year.
AB 2006 would’ve allowed businesses that use more than 500 kilowatts of power at peak times to switch from their utility to energy retailers such as Commerce Energy.
But even the company pulled its support of the bill after Assembly Speaker Fabian Nu & #324;ez, D-Los Angeles, removed language that would have benefited so-called direct access customers (ones who are allowed to choose their own energy supplier).
In vetoing the bill, the governor said it would have created a “redundant and burdensome process” for utilities and customers.
“We’re hoping that there will be another bill in next year’s legislative session where direct access and the ability for consumers to choose will be addressed,” Schlanert said.
Commerce Energy survived California’s energy crisis in 2000, though it lost a lot of its market in the fallout. Regulators in 2001 created so-called “no switch” rules to stabilize the market. That meant Commerce Energy and other alternative energy suppliers could sell electricity only to those who already had switched from their utility to a retailer.
The company went from drawing all of its sales from California customers before the crisis to about one-third now. Its primary markets outside California include Pennsylvania, Michigan and New Jersey. Commerce Energy reported 94,000 customers at the end of January compared to 107,000 a year ago.
Earlier this year Commerce Energy said it planned to pay about $14 million for ACN Energy, which operates in several other states.
In other company news, Commerce Energy last month said it settled a dispute with Ian Carter, a director and the company’s former chief executive.
The settlement calls for Commerce Energy to pay Carter $3 million plus two months of Cobra health insurance. Carter keeps his option to buy 2.5 million shares of the company’s common stock at $2.50 per share.
He also will maintain his seat on the board.
Shares of the company recently traded at about $2, giving it a market value of $63 million.
Last fall, the company put Carter on administrative leave and installed President Peter Weigand to run the company.
The move came after Commerce Energy’s audit committee found that a consulting contract with an investment advisory firm founded by David Barnes didn’t reflect the services provided to the company.
Barnes later became Commerce Energy’s vice president of finance and investor relations.
He resigned in the fall.
