EGR Commerce Energy Grp.,

Commerce Energy Group, Inc. (AMEX:EGR), a leading U.S. electricity and natural gas marketing company, today announced its financial results for the fiscal 2008 first quarter ended October�31,�2007. First Quarter Results The company reported a net loss of $1.1 million or $0.04 per share, for the first quarter of fiscal 2008, compared to net income of $384,000, or $0.01 per share, for the first quarter of fiscal 2007. Net revenues increased 50% to $105.6�million from $70.5 million for the same period last year, driven primarily by higher retail electricity sales to customers in Texas and Maryland. Gross profit increased to $16.4 million from $10.1 million for the first quarter of fiscal 2007. Gross profit from electricity grew to $15.0 million compared with $8.4 million for the same period in fiscal 2007, due to customer growth in Texas and Maryland. Gross profit from natural gas decreased to $1.4 million from $1.7 million in the first quarter of fiscal 2007. �We are particularly pleased with the strong growth in gross profit during the quarter, given the first quarter is typically a slower quarter due to seasonality,� said Steven S. Boss, chief executive officer. �However, bad-debt expense and higher-than-usual professional fees negatively impacted our bottom-line results. We have taken steps to address these issues, including the implementation of more stringent requirements for signing up new customers.� Selling and marketing expenses increased to $3.9 million in fiscal 2008 from $2.2 million in the comparable quarter of fiscal 2007, reflecting higher telemarketing and third-party sales expenses related to the company�s expanded customer acquisition initiatives. General and administrative expenses were $13.5 million in the first quarter of fiscal 2008 compared with $7.8 million in the first quarter of fiscal 2007, primarily reflecting increased bad debt expenses resulting from a 50% increase in net revenues, higher bad debt reserves in Texas, increased payroll expenses and higher professional services fees related to its fiscal year-end SEC reports and the Company�s review of its strategic alternatives. Liquidity At October 31, 2007, the company had unrestricted and restricted cash and equivalents of $15.5 million, $39.3 million of working capital and no debt. Restricted cash and equivalents were principally comprised of $10.0 million deposited pursuant to the terms of the company�s credit facility. Credit terms from energy suppliers may require the company to post collateral against its forward energy supply purchases. Such collateral obligations are funded with cash and availability under the company�s credit facility. In November 2007, the company entered into an amendment to the credit facility. The amendment revised several provisions of the facility including deleting the provision which required the company to have cash and cash equivalents of $10.0 million on deposit at all times. Fiscal 2008 Earnings and Customer Growth Outlook Commerce reiterated its fiscal 2008 earnings and customer growth outlook of net income in the range of $6.1�-�$6.6 million, or $0.20 to $0.22 per share, and an estimated 8% - 10% increase in year-over-year customer growth. Completion of Review of Strategic Alternatives The Company announced that it had completed its review of the Company's strategic alternatives assisted by its financial advisor, RBC Capital Markets, and determined that its best course of action to maximize shareholder value is to focus on continued execution of its business plan. This decision was the result of a detailed review of the Company's major strategic alternatives, including a sale of the Company. After this review, the Company has determined that, in light of its present business model and its future opportunities, it can deliver the highest shareholder value by remaining a stand-alone company at this time. Chairman of the Board of Directors The Board of Directors of the Company decided on December 14, 2007 to rotate the position of Chairman of the Board. Dennis R. Leibel, a current member of the Board, assumed the position of Chairman, formerly held by Robert C. Perkins. Mr. Perkins will remain on the Board. Annual Meeting of Stockholders The Annual Meeting of Stockholders relating to the Fiscal Year Ended July 31, 2007, or the Annual Meeting, will be held at 10:00 a.m. Pacific Time, on March 27, 2008, at the Hilton Costa Mesa, located at 3050 Bristol Street, Costa Mesa, California. Additional details can be found in the Company's 10-Q for the quarter ended October 31, 2007. Conference Call and Webcast Commerce will host a conference call to discuss financial results today at 5 p.m. ET (2 p.m. PT). The call will be available to all interested parties through a live audio webcast at www.CommerceEnergy.com and www.earnings.com. Please go to the Web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. A replay of the conference call will be archived and available at www.CommerceEnergy.com for one year. A telephonic replay will be available through December 24, 2007, and can be accessed by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and using the playback Passcode 35559901. About Commerce Energy Group, Inc. Commerce Energy Group, Inc. (Commerce) 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 is publicly traded on the American Stock Exchange (Amex) under the symbol: EGR. Commerce Energy, Inc. is licensed by the Federal Energy Regulatory Commission and by state regulatory agencies as an unregulated retail marketer of natural gas and electricity to homeowners, commercial and industrial consumers and institutional customers. Headquartered in Orange County, California, the company also has an office in Dallas, Texas, as well as several area offices located around the U.S. For nearly a decade, customers have relied on Commerce to deliver competitive pricing, innovative product offerings and personalized customer service, in addition to quality gas and electric services. For more information, visit www.CommerceEnergy.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 Group, Inc. cautions that while such statements in this release, whether express or implied, are made in good faith and the company believes such statements are based on 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 (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: higher than expected attrition of, and/or unforeseen operating difficulties relating to, customer accounts, 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 affect electricity or natural gas supply or infrastructure, decisions by our energy suppliers requiring us to post additional collateral for our energy purchases, uncertainties in the capital markets should we seek to raise additional capital, uncertainties relating to federal and state proceedings relating to other issues in the 2000-2001 California energy crisis, 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 Group, Inc. 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. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) (Unaudited) � Three Months Ended October 31, 2007 � 2006 � Net revenue $ 105,597 $ 70,507 Direct energy costs 89,209 60,451 Gross profit 16,388 10,056 Selling and marketing expenses 3,932 2,235 General and administrative expenses 13,460 7,849 Loss from operations (1,004) (28) Other income (expense): Interest income 230 412 Interest expense (313) � Total other income and expenses (83) 412 Net income (loss) $ (1,087) $ 384 Income (loss) per common share: Basic $ (0.04) $ 0.01 Diluted $ (0.04) $ 0.01 Weighted-average shares outstanding: Basic 30,380 29,639 Diluted 30,380 29,665 Volume and Customer Count Data � Three Months Ended October 31, 2007 � 2006 Electric � Megawatt hour (MWh) 716,000 458,000 Natural Gas � Dekatherms (DTH) 3,008,000 2,130,000 Customer Count 194,000 161,000 Condensed Consolidated Balance Sheets (In Thousands) � � October 31, 2007 July 31, 2007 (Unaudited) ASSETS Cash and equivalents $ 5,442 $ 6,559 Accounts receivable, net 65,950 65,231 Natural gas inventory 9,382 5,905 Prepaid expenses and other current 9,245 7,224 Total current assets 90,019 84,919 Restricted cash and equivalents 10,104 10,457 Deposits and other assets 1,802 1,906 Property and equipment, net 8,970 8,662 Goodwill and other intangible assets, net 10,193 10,632 Total assets $ 121,088 $ 116,576 LIABILITIES AND STOCKHOLDERS� EQUITY Energy and accounts payable $ 31,068 $ 37,926 Short-term borrowings 12,400 � Accrued liabilities 7,209 8,130 Total current liabilities 50,677 46,056 Total stockholders� equity 70,411 70,520 Total liabilities and stockholders� equity $ 121,088 $ 116,576