With experience in retail energy markets going back to the start of natural gas deregulation, the two executives tapped by the board at Costa Mesa, CA-based Commerce Energy Group, Inc. to return the national electric/natural gas retail marketer to profitability have long energy ties to Texas and California. Commerce Energy is the result of several acquisitions and mergers over the past two years as it has tried to turn profitable in seven states with retail competition in the natural gas and/or electricity industries.
Commerce's board decided last week to terminate both its president and CFO, naming Steven S. Boss as president/CEO. Boss subsequently named as interim CFO a former colleague from earlier in his career in Texas, Lawrence Clayton, Jr. Both have roots tied to large and small players in the energy industry. Boss remains a director and the board is searching to fill one more vacant spot on the board.
"The board felt that my operational experience was what the company needed to return it to profitability," said Boss in an interview with NGI. He acknowledged that he had been a new board member of Commerce Energy, named last month after two directors left -- one retiring and the other because of restrictions placed on his outside directorships by his own company.
Commerce's CEO position has been vacant since last November. Earlier last year (April 7, 2004), a merger of California-based Commonwealth Energy and Houston-based energy information technology consulting firm, Skipping Stone, was completed, bringing in Peter Weigand, one of the senior executives at Skipping Stone, as president of newly named Commerce, but without the CEO title, according to Boss.
Under the employment contracts for Weigand and CFO Richard L. Boughrum, Commerce Energy was required to give the two 60 days notice before terminating them, so technically they are still Commerce Energy employees, but they no longer have duties and responsibilities (as employees) with the company. Weigand remains on the six-member board because of a large ownership interest he acquired as part of the Skipping Stone merger, Boss said.
"With the Skipping Stone acquisition, he received a lot of stock," said Boss, who, among other past jobs in the oil/gas patch, began his legal career in the mid-1970s with one of the predecessor companies to Sempra Energy, Pacific Lighting Corp. The then-holding company for Southern California Gas Co. in Los Angeles helped found one of the major natural gas energy service companies in the mid-1980s, Sunrise Energy Services, Inc., and was president of one of the early versions of Nevada-based Sierra Pacific Resources.
Joining Boss as CFO is Clayton, who once served as CFO at Sunrise during Boss's tenure there, and has been the CFO subsequently at Aquila (1994-2000) and EOTT Energy (2000-02).
Two days after selecting Boss as the CEO, the Commerce Energy Group board last Thursday announced in a news release the terminations "without cause" of Weigand as president and of Boughrum as CFO. Weigand was said to be remaining as a director, although all of his employment duties were stopped.
"Pursuant to terms of the employment agreements [60-day clause] for Messrs. Weigand and Boughrum, the termination of their employment will become effective on or about Oct. 8, 2005, although they were relieved of all duties and responsibilities as officers and employees of the company and all of its subsidiaries and affiliates, effective immediately," the announcement said. "The company's board of directors has reserved the right to terminate the employment [of either executive] with cause prior to Oct. 8, 2005 in accordance with the terms of their employment agreements."
Along with getting the company back in the black, Boss said his strategy going forward is to build on Commerce Energy's relatively large customer base. "We want to build upon that base and expand it in profitable markets." Commerce will "maintain the status quo, at least for now." Longer term, he is going to focus on directing Commerce's resources more efficiently, to focus its efforts in what he called "more optimal markets" first before looking for any new expansion.
Commerce Energy operates energy services in California, Texas, Michigan, Ohio, Georgia, Pennsylvania and New Jersey. Last June, the company reported losses for its third quarter and nine-month results ending April 30, 2005 for its fiscal year, which ended July 31 -- a net loss of $2.8 million, or 9 cents/share, for the nine months, compared with a net loss of $14.4 million, or 52 cents/share, for the same period in the previous fiscal year. For the third quarter, it reported a loss of $900,000, or 3 cents/share, compared with a loss of $5.6 million, or 20 cents/share for the same period ended April 30, 2004.
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