EGR Commerce Energy Grp.,

COSTA MESA, Calif., Dec. 15 /PRNewswire-FirstCall/ -- Commerce Energy Group, Inc. (AMEX:EGR), a leading U.S. electricity and natural gas marketing company, today announced results for its fiscal first quarter ended October 31, 2005. First Quarter Results The company reported net income of $0.2 million, or $0.01 per share, for the first quarter of fiscal 2006, compared with a net loss of $0.0 million, or $0.00 per share, for the first quarter of fiscal 2005. Net revenues for the first quarter of fiscal 2006 were $64.4 million, a 10% increase compared with $58.5 million for the first quarter of fiscal 2005. The increase was primarily attributable to the natural gas and electric customers that were added as a result of the company's acquisition in February 2005 of the ACN energy assets, and was partly offset by lower revenues in the company's electricity markets in California, Pennsylvania and Michigan. Gross profit for the first quarter of fiscal 2006 increased to $8.2 million, a 15% increase from $7.2 million in the first quarter fiscal 2005. The addition of $1.9 million of gross profit from the ACN energy assets was partly offset by lower gross profit on electricity sales in Commerce Energy's Michigan and Pennsylvania markets due primarily to lower mark-to-market supply contract gains and reduced sales volumes. Retail sales volumes in the Michigan and Pennsylvania electricity markets totaled 300 million kWh for the first quarter of fiscal 2006, a 43% decline from the comparable period in fiscal 2005. General and administrative expenses for the first quarter of fiscal 2006 increased to $7.6 million, a 52% increase from $5.0 million in first quarter fiscal 2005. The increase reflects $1.8 million of added direct costs related to the acquired operations of the ACN energy assets; $0.6 million in higher legal, board, and other expenses primarily incurred in connection with severance agreements to former executive officers; and $0.2 million resulting from the adoption of SFAS 123R. "In the first quarter we made significant progress in our efforts to move Commerce Energy to a position of sustainable profitability," said Steven S. Boss, chief executive officer. "As we progress through the year, our focus is on leveraging our substantial market presence and operational support capabilities in our existing market areas and on exploiting opportunities to expand into new markets that offer the potential for customer growth and margin contributions." Liquidity At October 31, 2005, the company had total cash and cash equivalents of $21.2 million and no long-term debt. The company does not have open lines of credit for direct unsecured borrowings or letters of credit. Credit terms from Commerce Energy's suppliers often require the company to post collateral against its energy purchases and against its mark-to-market exposure with certain suppliers. Commerce Energy currently finances these collateral obligations with available cash. As of October 31, 2005, the company had $8.3 million in restricted cash and cash equivalents to secure letters of credit required by suppliers and $13.2 million in deposits principally pledged as collateral in connection with energy purchase agreements. About Commerce Energy Group, Inc. Commerce Energy Group, Inc. (AMEX:EGR) is a leading independent U.S. electricity and natural gas marketing company, operating through its wholly owned subsidiaries, Commerce Energy, Inc. and Skipping Stone, Inc. Commerce Energy, Inc. is a FERC-licensed unregulated retail marketer of natural gas and electricity to homeowners, commercial and industrial consumers and institutional customers operating in nine states. Skipping Stone is an energy consulting firm serving utilities, pipelines, merchant trading and technology companies. For more information, visit http://www.commerceenergygroup.com/. Forward-Looking Statements Except for historical information contained in this release, statements in this release, including those of Mr. Boss, may constitute forward-looking statements regarding the company's assumptions, projections, expectations, targets, intentions or beliefs about future events. Words or phrases such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "targets," "will likely result," "will continue," "may," "could" or similar expressions identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. Commerce Energy cautions that while such statements are made in good faith and the company believes such statements are based upon reasonable assumptions, including without limitation, management's examination of historical operating trends, data contained in records, and other data available from third parties, the company cannot assure that its projections will be achieved. In addition to other factors and matters discussed from time to time in our filings with the U.S. Securities and Exchange Commission, or the SEC, some important factors that could cause actual results or outcomes for Commerce Energy Group, Inc. or its subsidiaries to differ materially from those discussed in forward-looking statements include: the volatility of the energy market, competition, operating hazards, uninsured risks, failure of performance by suppliers and transmitters, changes in general economic conditions, seasonal weather or force majeure events that adversely effect electricity or natural gas supply or infrastructure, increased or unexpected competition, adverse state or federal legislation or regulation or adverse determinations by regulators, including failure to obtain regulatory approvals. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, Commerce Energy undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors. Commerce Energy Group, Inc. Consolidated Statements of Operations (in thousands, except per share data) First Quarter Ended October 31, 2005 2004 Net revenue $64,368 $58,496 Direct energy costs 56,128 51,335 Gross profit 8,240 7,161 Selling and marketing expenses 698 953 General and administrative expenses 7,609 5,007 Income (loss) from operations (67) 1,201 Other income and expenses: Initial formation litigation expenses -- (1,439) Interest income, net 287 190 Net Income (loss) $220 $(48) Net Income (loss) per common share -- Basic & Diluted $0.01 $(0.00) Weighted-average shares outstanding: Basic 31,719 30,519 Diluted 31,999 30,519 Volume and Customer Count Data First Quarter Ended October 31, 2005 2004 Electric -- Thousand kilowatt-hour (kWh) 551,000 775,000 Natural Gas -- Dekatherms (Dth) 715,000 -- Customer Count 134,000 100,000 Condensed Consolidated Balance Sheets (in thousands) October 31, 2005 July 31, 2005 Assets Cash and cash equivalents $21,233 $33,344 Accounts receivable, net 27,565 27,843 Inventory 8,140 4,561 Other current assets 7,708 3,542 Total current assets 64,646 69,290 Restricted cash and cash equivalents 8,313 8,222 Deposits 13,201 11,347 Property and equipment, net 2,251 2,007 Goodwill, intangible and other assets 11,489 11,766 Total assets $99,900 $102,632 Liabilities and stockholders' equity Accounts payable $22,901 $25,625 Accrued liabilities 6,664 6,946 Total current liabilities 29,565 32,571 Total stockholders' equity 70,335 70,061 Total liabilities and stockholders' equity $99,900 $102,632 DATASOURCE: Commerce Energy Group, Inc. CONTACT: Investor Relations of Commerce Energy Group, Inc., +1-800-962-4655, ; or Cecilia Wilkinson, , or Wade Huckabee, , both of PondelWilkinson Inc., +1-310-279-5980, for Commerce Energy Group, Inc. Web site: http://www.commerceenergygroup.com/

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