##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
      (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended July
    31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    001-32239
      Commerce Energy Group,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware


20-0501090(State or other jurisdiction of
    
    incorporation or organization)


(I.R.S. Employer
    Identification No.
)   600 Anton Boulevard


92626Suite 2000
    Costa Mesa, California(Address of principal
    executive offices)


(Zip Code
)   Registrants telephone number, including area code
 (714) 259-2500
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value

American Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
  None
  (Title of class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  o o þ
  Rule 12b-2 o þ




---



##### 



TABLE OF
    CONTENTS
  PagePART IItem 1.


Business


2Item 1A.


Risk Factors


16Item 1B.


Unresolved Staff Comments


21Item 1C.


Executive Officers of the Registrant


21Item 2.


Properties


23Item 3.


Legal Proceedings


24Item 4.


Submission of Matters to a Vote of Security
    Holders


25PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


25Item 6.


Selected Financial Data


28Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operation


29Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


43Item 8.


Financial Statements and Supplementary Data


45Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


45Item 9A.


Controls and Procedures


45Item 9B.


Other Information


45PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


46Item 11.


Executive Compensation


50Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


74Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


76Item 14.


Principal Accounting Fees and Services


77PART IVItem 15.


Exhibits and Financial Statement Schedules


78Signatures


86EXHIBIT 10.53EXHIBIT 10.57EXHIBIT 10.62EXHIBIT 10.63EXHIBIT 10.64EXHIBIT 10.65EXHIBIT 10.66EXHIBIT 10.67EXHIBIT 10.73EXHIBIT 10.76EXHIBIT 10.80EXHIBIT 10.81EXHIBIT 10.82EXHIBIT 10.83EXHIBIT 10.84EXHIBIT 10.86EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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Form 10-K
  SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K
    Form 10-K,
  
    regulatory changes in the states in which we operate that could
    adversely affect our operations;
    fluctuations in the market price of energy resulting from
    seasonal weather and other factors that adversely impact the
    cost of our energy supplies and could prevent us from
    competitively servicing the demand requirements of our customers;
    changes in the restructuring of retail markets which could
    prevent us from selling electricity and natural gas on a
    competitive basis;
    our dependence upon a limited number of third-party suppliers of
    electricity and natural gas;
    our dependence upon a limited number of local electric and
    natural gas utilities to transmit and distribute the electricity
    and natural gas we sell to our customers;
    decisions by electricity and natural gas utilities not to raise
    their rates to reflect higher market cost of electricity and
    natural gas, thereby adversely affecting our competitiveness;
    our ability to obtain and retain credit necessary to support
    both current operations and future growth and profitability;
    our ability to successfully integrate businesses we may acquire;
    our ability to successfully compete in new electricity and
    natural gas markets that we may enter, and;
    our dependence upon independent system operators, regional
    transmission organizations, natural gas transmission companies,
    and local distribution companies to properly coordinate and
    manage their transmission grids and distribution networks and to
    accurately and timely calculate and allocate the cost of
    services to market participants.   1




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##### Table of Contents



PART I
  Item 1.
    Business  Overview
        (714) 259-2500.
  Industry
    Background
  Electricity
         2




---



##### Table of Contents



i.e. i.e.
        Natural
    Gas
   3




---



##### Table of Contents



Core
    Products and Services
    Commerce
    Energy, Inc.
      Skipping
    Stone Inc.
   4




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##### Table of Contents



Our
    Customers and Markets
            Strategy
    
    Substantially growing our customer base in energy markets that
    have rate structures, market rules, consumer demographics,
    energy consumption patterns, access to favorable energy supply
    and risk management profiles that allow us to economically serve
    the market.
    Establishing a market position for the Commerce Energy brand
    that is differentiated from competitors, relevant to customers
    and other key stakeholders and executable by the Company.
    Within our mass market division, continuing to develop a robust
    sales channel mix including outbound and inbound telesales,
    online sales and enrollment, affinity alliances, direct mail and
    advertising, as well as various indirect sales partnerships,
    including network marketing, door-to-door solicitations,
    independent agents and online affiliates.
    Establishing strategic supplier relationships that will enable
    us to offer a broad range of innovative service plans, pricing
    flexibility and competitive rates.
    Offering additional products and services to our customers
    designed to help consumers use energy more efficiently and to
    otherwise bring better control of their energy costs.
    Pursuing community aggregation programs that enable us to enroll
    larger numbers of consumers more economically than through
    traditional
    one-by-one
    marketing efforts. 5




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##### Table of Contents




    Continuing to develop our Commercial & Industrial or
    C&I division in its pursuit of small- and medium-size
    commercial consumers, particularly those with multiple-location
    (multi-state) requirements.  Sales and
    Marketing
    on-line
      Commercial &
    Industrial
  medium-size
    Mass
    Market
    Energy
    Supply
   6




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long-term
    Competition
  Commerce
    Energy, Inc.
         7




---



##### Table of Contents



Skipping
    Stone Inc.
    Seasonality
    Governmental
    Regulation
      State
    Regulations
   8




---



##### Table of Contents



Electricity
  California.
    15-17%
    2 2 2
 9




---



##### Table of Contents



California
    Refund Proceeding
  No. EL00-95)
    California Litigation. Lockyer v. FERC.
  CPUC v. FERC.
   10




---



##### Table of Contents



Pennsylvania.
      PJM.
  Michigan.
         11




---



##### Table of Contents



Maryland.
      New Jersey.
        Texas
   12




---



##### Table of Contents



Natural
    Gas
      California.
  Florida.
  Georgia.
  Maryland.
 13




---



##### Table of Contents



Nevada.
  Ohio.
        Pennsylvania.
  Federal
    Regulations
  Federal
    Energy Regulatory Commission
    The
    Federal Energy Policy Act of 2005
   14




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Intellectual
    Property
  ® ® ® ® ® ® 1-800-Electric
    Employees
    Available
    Information
  www.CommerceEnergy.com. Form 10-K, Form 10-Q, Form 8-K
  1-800-SEC-0330. http://www.sec.gov.
 15




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##### Table of Contents



Item 1A.
    Risk
    Factors.  If
    competitive restructuring of the retail energy market is delayed
    or does not result in viable competitive market rules, our
    business will be adversely affected.
          We
    face many uncertainties that may cause substantial operating
    losses and we cannot assure stockholders that we can achieve and
    maintain profitability.
    
    our ability to attract and to retain a critical mass of
    customers at a reasonable cost;
    our ability to continue to develop and maintain internal
    corporate organization and systems;
    the continued competitive restructuring of retail energy markets
    with viable competitive market rules;
    our ability to effectively manage our energy procurement and
    shaping requirements, and to sell our energy at a sufficient
    profit margin; and
    our ability to obtain and retain credit necessary to support
    future growth and profitability. 16




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We may
    have difficulty obtaining a sufficient number of
    customers.
      We
    depend upon internally developed, and, in the future will rely
    in part on vendor-developed, systems and processes to provide
    several critical functions for our business, and the loss of
    these functions could materially adversely impact our
    business.
    Substantial
    fluctuations in electricity and natural gas prices or the cost
    of transmitting and distributing electricity and natural gas
    could have a material adverse affect on us.
     17




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The
    terms of our credit facility may restrict our financial and
    operational flexibility.
    We may
    need additional capital in the future and it may not be
    available on acceptable terms, or not at all.
    We may
    issue additional shares of common stock that may dilute the
    value of our common stock and adversely affect the market price
    of our common stock.
      If the
    wholesale price of electricity decreases, we may be required to
    post letters of credit for margin to secure our obligations
    under our long term energy contracts.
    Some
    suppliers of electricity have been experiencing deteriorating
    credit quality.
    We are
    required to rely on utilities with whom we compete to perform
    some functions for our customers.
   18




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##### Table of Contents



We are
    required to rely on utilities with whom we compete to provide us
    accurate and timely data.
    We are
    subject to federal and state regulations in our electricity and
    natural gas marketing business and the rules and regulations of
    regional Independent System Operators, or ISOs, in our
    electricity business.
    bi-lateral
  In
    some markets, we are required to bear credit risk and billing
    responsibility for our customers.
    Our
    revenues and results of operations are subject to market risks
    that are beyond our control.
      
    weather conditions, including hydrological conditions such as
    precipitation, snow pack and stream flow; 19




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##### Table of Contents




    seasonality;
    unexpected changes in customer usage;
    transmission or transportation constraints or inefficiencies;
    planned and unplanned plant or transmission line outages;
    demand for electricity;
    natural gas, crude oil and refined products, and coal supply
    availability to generators from whom we purchase electricity,
    natural disasters, wars, embargoes and other catastrophic
    events; and
    federal, state and foreign energy and environmental regulation
    and legislation.  We may
    experience difficulty in successfully identifying, integrating
    and managing the risks related to businesses or assets that we
    may acquire and in realizing the anticipated economic benefits
    related thereto.
    
    The need to implement or remediate controls, procedures and
    policies appropriate for a public company at companies that
    prior to the acquisition lacked these controls, procedures and
    policies;
    Diversion of management time and focus from operating our
    business to acquisition integration challenges;
    Cultural challenges associated with integrating employees from
    the acquired company into our organization;
    Retaining employees working in the businesses or group of assets
    we acquire;
    The need to integrate the accounting, management information,
    human resource and other administrative systems of an acquired
    business or assets to permit effective management;
    The possibility of increased customer attrition with respect to
    the assets we acquire; and
    The need to secure adequate supplies of electricity and natural
    gas to service the demands of the acquired business or assets.    If we
    fail to maintain an effective system of internal controls, we
    may not be able to accurately report our financial results or
    prevent fraud. As a result, current and potential stockholders
    could lose confidence in our financial reporting; which would
    harm our business and the trading price of our
    stock.
     20




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Investor
    confidence and share value may be adversely impacted if our
    independent registered public accountants are unable to provide
    us with the attestation of the adequacy of our internal controls
    over financial reporting, as required by Section 404 of the
    Sarbanes-Oxley Act of 2002.
  Form 10-K Form 10-K
  Item 1B.
    Unresolved
    Staff Comments.  Not Applicable.
  Item 1C.
    Executive
    Officers of the Registrant.  Information
    About Our Executive Officers
    Name and Position

Age


Principal Occupation and Other InformationSteven S. BossChief Executive Officer and Director


61


Mr. Boss has served as a director of the Company since July 2005
    and was appointed Chief Executive Officer of the Company in
    August 2005. Since August 2005, Mr. Boss also has served as a
    director and President of the Companys principal operating
    subsidiary, Commerce Energy, Inc., and as a director and Chief
    Executive Officer of Skipping Stone Inc., another wholly-owned
    subsidiary of the Company. 21




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##### Table of Contents



Name and Position

Age


Principal Occupation and Other InformationFrom 2003 to August 2005, Mr. Boss practiced law, specializing
    in the representation of energy companies and commercial energy
    users. He also has significant operating experience in the
    retail energy industry. From 2000 to 2003, he served as
    President of Energy Buyers Network LLC, an energy consulting
    firm that provided regulatory representation and structured
    direct-access energy transactions for commercial energy users.Before that, Mr. Boss served as President of Sierra Pacific
    Energy Company and Nevada Power Services, both of which were
    non-regulated energy services operating subsidiaries of Sierra
    Pacific Resources, and served as President and Chief Executive
    Officer of Sunrise Energy Services Inc. an independent, natural
    gas marketing company whose stock was publicly traded on the
    Amex and London stock exchanges.He earned a Bachelor of Science degree in Aerospace Engineering
    from the University of Texas, a Juris Doctorate from the
    University of Southern California and has been a member of the
    California State Bar since 1974.J. Robert HippsInterim Chief Financial Officer


67


Mr. Hipps joined the Company as Interim Chief Financial Officer
    in July 2007. Mr. Hipps has been a partner with Tatum, LLC, an
    executive service and consulting firm, since April 1998 and a
    member of its board of managers since January 2003. While at
    Tatum, he served as Interim Chief Financial Officer of Southstar
    Energy, the parent company of Georgia Natural Gas, a natural gas
    marketer, from October 2001 to February 2004 and Interim Chief
    Financial Officer for the Municipal Electric Authority of
    Georgia for a three month period.Earlier, Mr. Hipps was Senior Vice President of Finance and
    Chief Financial Officer of National Services Industries (NSI), a
    diversified New York Stock Exchange (NYSE) company, from 1990 to
    1996. He previously served as Vice President and Controller, and
    Vice President and Treasurer of General Signal Corporation, a
    Fortune 300 company and producer of electronic and
    electrical control systems. Prior to that, Mr. Hipps was
    vice president and treasurer of Neptune International
    Corporation, a NYSE company involved in fluid measurement and
    water pollution control equipment. 22




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##### Table of Contents



Name and Position

Age


Principal Occupation and Other InformationMr. Hipps began his career at Price Waterhouse & Co.s
    New York office. He earned a Bachelor of Arts degree from
    Yale University and a Master of Business Administration degree
    from Stanford University. He received his CPA certification in
    New York State.Thomas L. UlrySenior Vice President, Sales and Marketing


43


Mr. Ulry joined the Company in February 2005 as Senior Vice
    President, Sales and Operations and currently serves as Senior
    Vice President, Sales and Marketing teams.From October 2003 until he joined Commerce, Mr. Ulry served as
    Global Vice President and Chief Operating Officer of ACN Energy,
    a network sales organization with a broad range of services
    across the deregulated industries that we acquired in February
    2005. ACN Energy is a division of ACN, Inc.From November 2001 to July 2003, Mr. Ulry served as Senior Vice
    President for Nicor Energy LLC., a diversified company providing
    natural gas distribution, where he was responsible for managing
    the profit and loss center for its consumer business unit.Prior to that, Mr. Ulry served as President and Chief Operating
    Officer for Energy.com Corporation, a company providing
    comparison energy shopping over the Worldwide Web.Mr. Ulry has also worked at Access Energy Corporation and with
    Unicorp Energy Inc., as Manager of Information Systems. In
    addition, Mr. Ulry served as Director of Operations for Aquila
    Inc. / Broad Street Oil & Gas where he designed, built and
    implemented office systems.R. Nick CiollVice President, Chief Risk Officer


49


Mr. Cioll was appointed Chief Risk Officer of the Company in
    October 2006. Mr. Cioll has served as Vice President of Risk
    Management for Commerce Energy since July 2004.From April 2002 to July 2004, Mr. Cioll served as director of
    Risk Management at TXU Corporation, a company that engages in
    electricity generation, residential and business retail
    electricity sales, and wholesale power and natural gas market
    activities. From 2001 to 2002, Mr. Cioll served as Internal
    Business Consultant at TXU Corporation. From 1999 to 2001, Mr.
    Cioll served as Senior Vice President and Chief Strategy Officer
    of RateXChange Corporation, an
    e-commerce
    startup.Mr. Cioll received a Bachelor of Science degree in Economics
    from Louisiana State University and a Master of Business
    Administration degree with a finance option from the University
    of New Orleans. Mr. Cioll became a Certified Public Accountant
    in 1993.   Item 2.
    Properties.   23




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##### Table of Contents



Item 3.
    Legal
    Proceedings.  American
    Communications Network
        California
    Refund Case
  No. EL00-95;
     24




---



##### Table of Contents



Lawrence
    Clayton, Jr.
  litigation-related
  Other
    Matters
  above-referenced
  Item 4.
    Submission
    of Matters to a Vote of Security Holders.    PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    Information
    Fiscal Year Ending July 31, 2006

High


LowFirst Quarter

$
1.80


$
1.32Second Quarter

$
1.68


$
1.20Third Quarter

$
1.51


$
0.82Fourth Quarter

$
1.62


$
1.05   25




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##### Table of Contents



Fiscal Year Ending July 31, 2007

High


LowFirst Quarter

$
1.49


$
1.01Second Quarter

$
1.75


$
1.32Third Quarter

$
3.25


$
1.37Fourth Quarter

$
2.35


$
1.71     Holders
    Dividend
    Policy
    Form 10-K
  Equity
    Compensation Plan Information
  Form 10-K
  Recent
    Sales of Unregistered Securities
    Purchase
    of Equity Securities
   26




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##### Table of Contents



Performance
    Graph
  Form 10-K
          
    $100 invested on July 31, 2004 in our Common Stock compared
    with a $100 investment in the S&P 500 Stock Index and in
    the Utility Select Sector Index.
    All dividends are reinvested.  
  Value of
    Investment
 July 31,


July 31,


July 31,


July 31,2004


2005


2006


2007Commerce Energy Group, Inc. Common Stock

$
100.00


$
90.30


$
83.64


$
127.27S&P 500 Index

$
100.00


$
112.02


$
115.88


$
132.09Utilities Select Sector Index

$
100.00


$
133.80


$
140.49


$
157.48  27




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##### Table of Contents



Item 6.
    Selected
    Financial Data.  Form 10-K
  Fiscal Year Ended July 31,2007


2006


2005


2004


2003(Amounts in thousands except per share information)Consolidated Statement of Operations Data:Net revenue

$
371,614


$
247,080


$
253,853


$
210,623


$
165,526Direct energy costs


314,371



218,289



225,671



191,180



128,179Gross profit


57,243



28,791



28,182



19,443



37,347Operating expenses


47,933



32,170



35,585



33,313



22,732Income (loss) from operations


9,310



(3,379
)


(7,403
)


(13,870
)


14,615Initial formation litigation expenses










(1,601
)


(1,562
)


(4,415
)Recovery of (provision for) impairment on investments










2,000



(7,135
)


Loss on termination of Summit














(1,904
)


Loss on equity investments


















(567
)Minority interest share of loss














1,185



187ACN arbitration settlement


(3,900
)














Interest income


1,296



1,140



890



549



715Interest expense


(1,053
)














Income (loss) before provision for (benefit from) income taxes


5,653



(2,239
)


(6,114
)


(22,737
)


10,535Provision for (benefit from) income taxes


122











(1,017
)


5,113Net income (loss)

$
5,531


$
(2,239
)

$
(6,114
)

$
(21,720
)

$
5,422Earnings (loss) per common shareBasic

$
0.18


$
(0.07
)

$
(0.20
)

$
(0.77
)

$
0.19Diluted

$
0.18


$
(0.07
)

$
(0.20
)

$
(0.77
)

$
0.18Weighted-average shares outstanding:Basic


29,906



30,419



30,946



28,338



27,424Diluted


30,044



30,419



30,946



28,338



30,236   28




---



##### Table of Contents



As of July 31,2007


2006


2005


2004


2003(Amounts in thousands)Consolidated Balance Sheet Data:Working capital

$
38,863


$
32,253


$
36,719


$
58,105


$
56,411Total assets

$
116,576


$
99,076


$
102,632


$
110,823


$
125,870Stockholders equity

$
70,520


$
66,333


$
70,061


$
74,106


$
93,017   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation.          APX
    Settlement
    HESCO
    Customer Acquisition
    ACN
    Energy Transaction
   29




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##### Table of Contents



Market
    and Regulatory
    Electricity
        Lockyer v. FERC CPUC v. FERC
  Lockyer v. FERC.
 30




---



##### Table of Contents



CPUC v. FERC.
    Natural
    Gas
           31




---



##### Table of Contents



Results
    of Operations
    Fiscal Year Ended July 31,2007


2006


2005Dollars


% Revenue


Dollars


% Revenue


Dollars


% RevenueRetail electricity sales

$
236,627



64
%

$
176,290



71
%

$
186,389



73
%Natural gas sales


126,028



34
%


61,701



25
%


25,476



10
%Excess energy sales(1)


1,535







7,627



3
%


40,061



16
%APX settlement


6,525



2
%














Other


899







1,462



1
%


1,927



1
%Net revenue


371,614



100
%


247,080



100
%


253,853



100
%Direct energy costs


314,371



85
%


218,289



88
%


225,671



89
%Gross profit


57,243



15
%


28,791



12
%


28,182



11
%Selling and marketing expenses


10,642



3
%


5,231



2
%


4,081



1
%General and administrative expenses


37,291



10
%


26,939



11
%


31,504



13
%Income (loss) from operations

$
9,310



2
%

$
(3,379
)


(1
)%

$
(7,403
)


(3
)%     (1)
    
    Electricity supply greater than retail electricity demand which
    is sold back into the wholesale market.  Fiscal
    Year Ended July 31, 2007 Compared to Fiscal Year Ended
    July 31, 2006
     32




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##### Table of Contents



Net
    revenue
    Fiscal Year Ended July 31,2007


2006Dollars


% Revenue


Dollars


% RevenueRetail Electricity Sales:Texas

$
102,357



28
%

$
24,886



10
%California


58,152



16
%


67,114



27
%Pennsylvania/New Jersey


46,025



12
%


63,200



26
%Maryland


21,005



6
%


20



Michigan and Other States


9,088



2
%


21,070



8
%Total Retail Electricity Sales


236,627



64
%


176,290



71
%Retail Natural Gas Sales:Ohio


34,193



9
%


25,449



10
%California


22,187



6
%


22,375



9
%Georgia


2,758



1
%


8,853



4
%HESCO Customers


64,838



17
%






All Other States


2,052



1
%


5,024



2
%Total Natural Gas Sales


126,028



34
%


61,701



25
%Excess Energy Sales


1,535







7,627



3
%APX settlement


6,525



2
%






Other


899







1,462



1
%Net Revenue

$
371,614



100
%

$
247,080



100
%          33




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##### Table of Contents



Direct
    energy costs
      Operating
    expenses
      Other
    expenses
    Interest
    income
    Interest
    Expense
    Income
    before Provision for Income Taxes
    Provision
    for Income Taxes
   34




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##### Table of Contents



Year
    Ended July 31, 2006 Compared to Year Ended July 31,
    2005
      Net
    revenue
    Fiscal Year Ended July 31,2006


2005Dollars


% Revenue


Dollars


% RevenueRetail Electricity Sales:California

$
67,114



27
%

$
64,186



25
%Texas


24,886



10
%


9,386



3
%Pennsylvania/New Jersey


63,200



26
%


76,063



30
%Maryland


20











Michigan and Other States


21,070



8
%


36,754



15
%Total Retail Electricity Sales


176,290



71
%


186,389



73
%Natural Gas Sales:California


22,375



9
%


7,902



3
%Ohio


25,449



10
%


10,782



4
%Georgia


8,853



4
%


4,314



2
%All Other States


5,024



2
%


2,478



1
%Total Natural Gas Sales


61,701



25
%


25,476



10
%Excess Electricity Sales


7,627



3
%


40,061



16
%Other


1,462



1
%


1,927



1
%Net Revenue

$
247,080



100
%

$
253,853



100
%          35




---



##### Table of Contents



Direct
    energy costs
    Operating
    expenses
      Other
    expenses
   36




---



##### Table of Contents



Interest
    income, net
    Benefit
    from Income Taxes
    Liquidity
    and Capital Resources
    July 31,


July 31,2007


2006(Dollars in thousands)Cash and cash equivalents

$
6,559


$
22,941Working capital

$
38,863


$
32,253Current ratio (current assets to current liabilities)


1.8:1.0



2.0:1.0Restricted cash

$
10,457


$
17,117Short term borrowings






Letters of credit outstanding

$
19,334


$
24,053   Consolidated
    Cash Flows
    Fiscal Years Ended July 31,2007


2006


2005(Dollars in thousands)Net cash provided by (used in):Operating activities

$
(16,050
)

$
6,063


$
(3,561
)Investing activities


(8,229
)


(4,742
)


28,012Financing activities


7,897



(11,724
)


(1,860
)Net increase (decrease) in cash and cash equivalents

$
(16,382
)

$
(10,403
)

$
22,591    37




---



##### Table of Contents



Credit
    Facility
       38




---



##### Table of Contents



Supply
    Agreements
  Tenaska
    Power Services Co.
       39




---



##### Table of Contents



Pacific
    Summit Energy LLC
         40




---



##### Table of Contents



Planned
    capital expenditures
    Off-Balance
    sheet arrangements
    Contractual
    obligations
        Payments Due by PeriodLess Than


1-3


3-5


More ThanContractual Obligations

Total


1 Year


Years


Years


5 YearsEnergy purchases

$
63,098


$
63,098


$



$



$
Operating leases


1,905



1,289



616







Total

$
65,003


$
64,387


$
616


$



$
     Seasonal
    Influences
    Critical
    Accounting Policies and Estimates
  Form 10-K
 41




---



##### Table of Contents




    Accounting for Derivative Instruments and Hedging Activities We purchase substantially all of our power and
    natural gas under forward physical delivery contracts for supply
    to our retail customers. These forward physical delivery
    contracts are defined as commodity derivative contracts under
    Statement of Financial Accounting Standard, or SFAS No.
    133, Accounting for Derivative Instruments and Hedging
    Activities. Using the exemption available for qualifying
    contracts under SFAS No. 133, we apply the normal purchase
    and normal sale accounting treatment to a majority of our
    forward physical delivery contracts. Accordingly, we record
    revenue generated from customer sales as energy is delivered to
    our retail customers and the related energy cost under our
    forward physical delivery contracts is recorded as direct energy
    costs when received from our suppliers. We use financial
    derivative instruments (such as swaps, options and futures) as
    an effective way of assisting in managing our price risk in
    energy supply procurement. For forward or future contracts that
    do not meet the qualifying criteria for normal purchase, normal
    sale accounting treatment, we elect cash flow hedge accounting,
    where appropriate.      
    Utility and independent system operator costs Included in direct energy costs, along with the
    cost of energy that we purchase, are scheduling costs,
    Independent System Operator, or ISO, fees, interstate pipeline
    costs and utility service charges. The actual charges and
    certain energy costs are not finalized until subsequent
    settlement processes are performed for all distribution system
    participants. Prior to the completion of settlements (which may
    take from one to several months), we estimate these costs based
    on historical trends and preliminary settlement information. The
    historical trends and preliminary information may differ from
    actual information resulting in the need to adjust previous
    estimates.
    Allowance for doubtful accounts We maintain
    allowances for doubtful accounts for estimated losses resulting
    from non-payment of customer billings. If the financial
    conditions of certain of our customers were to deteriorate,
    resulting in an impairment of their ability to make payments,
    additional allowances may be required.
    Net revenue and unbilled receivables Our
    customers are billed monthly at various dates throughout the
    month. Unbilled receivables represent the estimated sale amount
    for power delivered to a customer at the end of a reporting
    period, but not yet billed. Unbilled receivables from sales are
    estimated based upon the amount of power delivered, but not yet
    billed, multiplied by the estimated sales price per unit.
    Inventory Inventory consists of natural gas
    in storage as required by state regulators and contracted
    obligations under customer choice programs. Inventory is stated
    at the lower of cost or market. 42




---



##### Table of Contents




    Customer Acquisition Cost Direct Customer
    acquisition costs paid to third parties and directly related to
    specific new customers are deferred and amortized over the life
    of the initial customer contract, typically one year.
    Legal matters From time to time, we may be
    involved in litigation matters. We regularly evaluate our
    exposure to threatened or pending litigation and other business
    contingencies and accrue for estimated losses on such matters in
    accordance with SFAS No. 5, Accounting for
    Contingencies. As additional information about current or
    future litigation or other contingencies becomes available,
    management will assess whether such information warrants the
    recording of additional expense relating to our contingencies.
    Such additional expense could potentially have a material
    adverse impact on our results of operations and financial
    position.  Recent
    Accounting Pronouncements
  The Fair Value Option for Financial Assets and
    Financial Liabilities Including an Amendment of FASB Statement
    No. 115
  Considering the Effects of Prior
    Year Misstatements when Quantifying Misstatements in Current
    Year Financial Statements
  Fair Value Measurements
  Accounting
    for Uncertainty in Income Taxes Accounting for Income
    Taxes
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk.   43




---



##### Table of Contents



Commodity
    Risk Management
  and/or
      Credit
    Risk
       44




---



##### Table of Contents



Interest
    Rate Risk
    Item 8.
    Financial
    Statements and Supplementary Data.  Form 10-K page F-28 Form 10-K
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures.
  Rule 13a-15(e) 15d-15(e)
  Changes
    in Internal Controls.
    Item 9B.
    Other
    Information.   45




---



##### Table of Contents



PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Information
    About Our Directors
    Name and Position

Age

Principal Occupation and Other InformationClass I DirectorsSteven S. Boss


61


Mr. Boss has served as a director of the Company since July 2005
    and was appointed Chief Executive Officer of the Company in
    August 2005. Since August 2005, Mr. Boss also has served as a
    director and President of the Companys principal operating
    subsidiary, Commerce Energy, Inc., and as a director and Chief
    Executive Officer of Skipping Stone Inc., another wholly-owned
    subsidiary of the Company.From 2003 to August 2005, Mr. Boss practiced law, specializing
    in the representation of energy companies and commercial energy
    users. He also has significant operating experience in the
    retail energy industry. From 2000 to 2003, he served as
    President of Energy Buyers Network LLC, an energy consulting
    firm that provided regulatory representation and structured
    direct-access energy transactions for commercial energy users.Before that, Mr. Boss served as President of Sierra Pacific
    Energy Company and Nevada Power Services, both of which were
    non-regulated energy services operating subsidiaries of Sierra
    Pacific Resources.  He also served as President and Chief
    Executive Officer of Sunrise Energy Services Inc, an independent
    natural gas marketing company with shares listed on the American
    and London Stock Exchanges.He earned a Bachelor of Science degree in Aerospace Engineering
    from the University of Texas, a Juris Doctorate from the
    University of Southern California and has been a member of the
    California State Bar since 1974.Gary J. Hessenauer


52


Mr. Hessenauer has served as a director of the Company since
    August 2005. He is a member of the Audit and Compensation
    Committees and serves as the Chair of the Strategic
    Opportunities Committee of the Board.Since July 2007, Mr. Hessenauer has served as Chief Executive
    Officer of Applied Utility Systems, Inc. or Applied Utility, a
    provider of emissions control solutions for the energy sector.
    Applied Utility is a subsidiary of Catalytic Solutions, Inc. In
    addition, since 2003, Mr. Hessenauer has been an investor
    and advisor to early stage companies. From 2002 to 2003, Mr.
    Hessenauer served as President and Chief Executive Officer of
    Sixth Dimension, an energy technology company that developed
    solutions for real-time monitoring and control of dispersed
    energy assets. 46




---



##### Table of Contents



Name and Position

Age

Principal Occupation and Other InformationPrior to that, he served as Senior Vice President of Sempra
    Energy Solutions, a retail energy services provider that also
    provided non-regulated energy marketing and trading services.
    Sempra Energy Solutions was a subsidiary of Sempra Energy, a
    large distributor of natural gas and electricity that is listed
    on the New York Stock Exchange.Previously, he served in management positions with a number of
    public and private companies. These positions included Vice
    President, Marketing and Sales for the retail energy services
    subsidiary of Edison International; Corporate Area General
    Manager of Multiple Business Unit Development Operations for
    General Electric Company; and Regional Sales Manager for General
    Electric Companys Electrical Distribution and Control
    business unit.Mr. Hessenauer holds a bachelors degree in Mechanical
    Engineering from the U.S. Naval Academy and completed Stanford
    Universitys executive business program.Class II DirectorsMark S. Juergensen


47


Mr. Juergensen has served as a director of the Company since
    December 2003. He also served as a director of Commonwealth
    Energy Corporation, the predecessor corporation to the Company,
    from May 2003 to July 2004. Mr. Juergensen is a member of the
    Audit, Compensation, and Strategic Opportunities Committees of
    the Board and is the Chair of the Nominating and Corporate
    Governance Committee.  He also has served as a director of
    Commerce Energy, Inc. from May 2003 to August 2005 and as a
    director of Skipping Stone Inc. and Utilihost, Inc., both
    subsidiaries of the Company from August 2005 to January 2006.Mr. Juergensen has served as a director of Sterling Energy
    International, Inc., a private management service company in the
    power generation industry since 2003. He has also served as a
    managing director of CleanTech Energy, Inc., an energy
    technology investment and advisory firm, since January 2007. In
    addition, he is on the Board and is the past president of the
    Board of the Los Angeles Power Association, a non-profit
    corporation focused on Southern California energy supply issues.
    He is also a member of the Board and Chairman of Nominations of
    CleanTech San Diego, a non-profit organization committed to
    form and foster an energy and environmental technology cluster
    in the San Diego region which promotes a clean and
    sustainable future.From June 2000 to January 2007, he served as Vice President and
    Co-Founder of Predict Power, an energy solution software
    company. From February 1995 to June 2000, he served in multiple
    management positions, including as a commercial Manager, for
    Solar Turbines, Caterpillars gas turbine division. From
    February 1992 to February 1995, he served as Director of
    Management Services for Sterling Energy International, a power
    generation management consulting firm he co-founded. 47




---



##### Table of Contents



Name and Position

Age

Principal Occupation and Other InformationMr. Juergensen received a bachelors degree in electrical
    engineering from the University of Southern California and is a
    graduate of its NROTC program. He is a retired senior Navy
    Officer after 22 years of active and reserve service.Charles E. Bayless


64


Mr. Bayless has served as a director of the Company since July
    2004.   He is a member of the Audit, Nomination and Corporate
    Governance and Strategic Opportunities Committees of the Board.Mr. Bayless has been the Provost of the West Virginia University
    Institute of Technology since April 2005. Mr. Bayless held the
    position of Chief Executive Officer and President of Illinova
    and Illinois Power from July 1998 until September 1999 and
    served as Chairman of Illinova and Illinois Power from August
    1998 until his retirement in December 1999. Prior to that, he
    was Chairman, President and Chief Executive Officer of Tucson
    Electric Power. Mr. Bayless served as a Director of Illinova and
    Illinois Power from 1998 until the closing of the merger with
    Dynegy Inc. in February 2000, and served as a director of Dynegy
    Inc. from February 2000 until May 2006.Mr. Bayless received his Bachelor of Science degree in
    Electrical Engineering from West Virginia Institute of
    Technology. He earned a Masters of Science degree in Electrical
    Engineering with a focus in Power Engineering, and a Juris
    Doctorate degree, both from West Virginia University. Mr.
    Bayless also holds a Master of Business Administration from the
    Graduate School of Business Administration, University of
    Michigan.Class III DirectorsDennis R. Leibel


63


Mr. Leibel has served as a director of the Company since
    December 2005. He is a member of the Audit and Strategic
    Opportunities Committees of the Board and is the chair of the
    Compensation Committee.Mr. Leibel has served as a founding partner of Esquire
    Associates LLC, a financial advisory and consulting firm, since
    1998. Mr. Leibel is also a private investor and previously
    served as a senior financial and legal executive with AST
    Research Inc. and Smith International, Inc.He has been a member of the board of directors of Microsemi
    Corporation since May 2002 and served as its chairman since July
    2004. He has also served on the board of directors of DPAC
    Technologies Corp., a device networking and connectivity
    solutions company, since February 2006.Mr. Leibel holds a bachelors degree in accounting from
    Brooklyn College, a Juris Doctorate degree from Brooklyn Law
    School and a master of law degree in taxation from Boston
    University School of Law. He is a certified public accountant
    and a member of New York State Bar.Robert C. Perkins


68


Mr. Perkins has been the Chairman of the Board of Directors of
    the Company since May 2005 and a director of the Company since
    December 2003. 48




---



##### Table of Contents



Name and Position

Age

Principal Occupation and Other InformationHe also served as a director of Commonwealth Energy Corporation,
    the predecessor corporation to the Company, from 1999 to January
    2006. Mr. Perkins is a member of the Compensation, Nominating
    and Corporate Governance and Strategic Opportunities Committees
    of the Board and is the Chair of the Audit Committee.Mr. Perkins has served as Chairman and Chief Executive Officer
    of Hospital Management Services, a provider of financial and
    management consulting services to hospitals and similar
    institutions since June 1969.Mr. Perkins received his Bachelor of Science degree in
    accounting from Bob Jones University.     Information
    with Respect to Our Executive Officers
  Form 10-K
  Section 16(a)
    Beneficial Ownership Reporting Compliance
        Code of
    Ethics
    Audit
    Committee and Audit Committee Financial Expert
   49




---



##### Table of Contents



Item 11.
    Executive
    Compensation.  Compensation
    Discussion and Analysis for Named Executive Officers
  Overview 
    Compensation Objectives
        
    offer base compensation sufficient to attract, retain and
    motivate a high quality management team;
    foster a goal-oriented, highly motivated management team whose
    participants have a clear understanding of business objectives
    and shared corporate values;
    provide variable compensation components (including short and
    long-term incentive awards) that are aligned with our business
    objectives and the interests of our stockholders;
    provide a competitive benefits package; and
    control costs in each facet of our business to maximize our
    efficiency.     50




---



##### Table of Contents



Role
    of Our Compensation Committee
  Rule 16b-3
      
    evaluated our compensation practices and assisted in developing
    and implementing the executive compensation philosophy;
    developed recommendations with regard to executive compensation
    structures that were reviewed and approved by our compensation
    committee and board of directors;
    established a practice of prospectively reviewing the
    performance and determining the compensation earned, paid or
    awarded to our chief executive officer independent of input from
    him; and
    established a policy to review on an annual basis the
    performance of our other executive officers with assistance from
    our chief executive officer and determining what we believe to
    be appropriate total compensation.  Components
    of our Compensation Approach
    
    base salary;
    annual cash bonuses;
    discretionary bonuses;
    equity-based incentives; and
    other benefits.   51




---



##### Table of Contents



Base Salary.
      Annual Cash Bonuses.
  and/or i.e. 20-70% 12-40%
 52




---



##### Table of Contents



Discretionary Bonuses.
 53




---



##### Table of Contents



Equity-Based Incentives.
          Form 10-K
  Other Benefits.
 54




---



##### Table of Contents



Severance
    and Termination Protection
  Employment and Letter Agreements.
  Acceleration of Vesting of Equity-Based
    Awards.
  Accounting
    and Tax Considerations
     55




---



##### Table of Contents



Financial
    Restatements
    Summary
    Compensation Table
    Non-EquityIncentivePlanStock


Option


Compen-


All OtherFiscal


Salary


Bonus


Awards


Awards


sation


Compensation


TotalName and Principal Position(s)

Year


($)


($)


($)(1)


($)(2)


($)(3)


($)4)


($)Steven S. Boss


2007


$
412,000






$
100,084


$
141,120


$
111,242






$
764,446Chief Executive OfficerLawrence Clayton, Jr.


2007


$
334,274
(6)





$
24,730
(7)

$
14,083










$
373,087Chief Financial Officer(5)J. Robert Hipps


2007


$
2,769






















$
2,769Interim Chief Financial Officer(8)Thomas L. Ulry


2007


$
248,192






$
17,744






$
45,538
(9)





$
311,474Senior Vice President, Sales and MarketingNick Cioll


2007


$
168,654














$
26,392
(10)





$
195,046Vice President, Chief Risk OfficerErik A. Lopez, Sr.


2007


$
86,635






$
17,675


$
9,628










$
113,938Senior Vice President, General Counsel(11)     (1)
    
    Amounts reflect the amount of stock awards we recognized, or
    expensed, during fiscal 2007, calculated in accordance with
    SFAS No. 123(R). See Note 2 to the Notes to
    Consolidated Financial Statements for a discussion of
    assumptions made in determining the grant date fair value and
    compensation expense of our restricted stock awards.(2)
    
    Amounts reflect the amount of stock options expensed in 2007,
    based on the vesting of grants made during or prior to fiscal
    2007 as compensation costs for financial reporting purposes in
    accordance with SFAS No. 123R. See Note 2 to the
    Notes to Consolidated Financial Statements for a discussion of
    assumptions made in determining the grant date fair value and
    compensation expense of our stock options.(3)
    
    Consists of bonus payments earned for fiscal 2007 under the
    Commerce Energy Group, Inc. Bonus Program. To receive the bonus
    amounts shown, each named executive officer must be an active
    employee of the Company in good standing on the date the bonus
    is paid, which is anticipated to be in November 2007.(4)
    
    Under the rules of the SEC, the Company is required to identify
    by type all perquisites and other personal benefits for a named
    executive officer only if the total value for that individual
    equals or exceeds $10,000, and to report and quantify each
    perquisite or personal benefit only if the value thereof exceeds
    the greater of $25,000 or 10% of the total amount of perquisites
    and personal benefits for that individual.(5)
    
    Mr. Clayton served as our Chief Financial Officer until
    July 25, 2007.(6)
    
    Includes $59,274 in non-reimbursable long-distance commuting
    expenses paid to Mr. Clayton.(7)
    
    In connection with Mr. Claytons departure, we have
    remitted payment to Mr. Clayton for the repurchase of the
    30,000 shares of unvested restricted stock. The closing of
    the repurchase transaction is pending the resolution 56




---



##### Table of Contents



of the current employment dispute between Mr. Clayton and
    the Company. The vesting of all 30,000 shares would have
    been subject to the achievement of performance targets. In
    fiscal 2007, the performance target for 15,000 shares was
    the Companys attainment of positive net income, a goal
    which it attained; for fiscal 2008, a financial target has not
    to date been set by the Compensation Committee. Please see
    Note 2 to the Notes to Consolidated Financial Statements
    for a discussion regarding the valuation of such
    performance-based shares.(8)
    
    Mr. Hipps began serving as our Interim Chief Financial
    Officer on July 30, 2007. Mr. Hipps compensation
    arrangement is discussed below under
     Employment Letter Agreements.(9)
    
    Does not include a discretionary bonus payment of $25,000 in
    fiscal 2007 awarded by the Compensation Committee to
    Mr. Ulry in recognition for superior performance during
    fiscal 2006.(10)
    
    Does not include a discretionary bonus payment of $20,000 that
    was awarded by the Compensation Committee to Mr. Cioll in
    recognition for superior performance during fiscal 2006.(11)
    
    Mr. Lopez served as our Senior Vice President, General
    Counsel, between March 26, 2007 and October 5, 2007 at
    an annual base salary of $265,000.  Grants
    of Plan-Based Awards in Fiscal 2007
    Estimated Future Payouts Under


Estimated Future Payouts UnderNon-Equity Incentive Plan Awards(1)


Equity Incentive Plan Awards(2)Grant


Threshold


Target I


Target II


Maximum


Threshold


Target


MaximumName

Date


($)


($)


($)


($)


(#)


(#)


(#)Steven S. Boss


1/25/2007


$
74,161


$
111,242


$
166,862


$
259,564







150,000 (3
)


Lawrence Clayton, Jr.


1/25/2007























30,000(4
)


J. Robert Hipps






























Thomas J. Ulry


1/25/2007


$
20,359


$
45,538


$
68,248


$
101,196











Nick Cioll


1/25/2007


$
17,594


$
26,392


$
36,655


$
58,648











Erik A. Lopez, Sr.


3/27/2007



























   All OtherAll Other


OptionStock


Awards:





Grant DateAwards:


Number of





Fair ValueNumber of


Securities


Exercise


of StockShares of


Underlying


Price per


and OptionName

Grant Date


Stock (#)


Options (#)


Share ($/Sh)


Awards ($)(5)Steven S. Boss













$



$
Lawrence Clayton, Jr.


















J. Robert Hipps


















Thomas J. Ulry


















Nick Cioll


















Erik A. Lopez, Sr.


3/27/2007



60,000
(6)





$
2.56


$
153,6003/27/2007







45,000
(7)

$
2.56


$
83,745     (1)
    
    Represents awards under the Companys Bonus Program for
    fiscal 2007 under various scenarios. Pursuant to the terms of
    the Bonus Program, the bonus award for certain of the named
    executive officers is calculated as the product of the named
    executive officers base annual salary as of April 30,
    2007, multiplied by (i) the named executive officers
    potential bonus percentage assigned by the compensation
    committee, and (ii) the named executive officers
    earned bonus percentage. The potential bonus percentage is a
    factor based upon the Companys net income. At the
    beginning of fiscal 2007, the compensation committee established
    four levels of net income targets and assigned potential bonus
    percentages applicable to the named executive officers for each
    corresponding level. For the chief executive officer,
    Mr. Boss, the potential bonus percentages for the 57




---



##### Table of Contents



Threshold, Target I, Target II and Maximum categories
    were 20%, 30%, 45% and 70%, and the potential bonus percentages
    for the other named executive officers were 12%, 18%, 25% and
    40%. The earned bonus percentage is a factor based upon the
    attainment of certain individual business goals assigned by the
    compensation committee. Based upon an evaluation of the
    attainment of such goals, the earned bonus percentages for
    Messrs. Boss, Ulry and Cioll were 90%, 100% and 85%.Amounts shown under the Threshold, Target I, Target II
    and Maximum columns correspond to the four levels of net income
    goals for fiscal 2007, which were, respectively,
    $1.35 million, $3.0 million, $4.0 million and
    $5.0 million. Amounts shown in each column reflect the
    bonus that would have been earned by the respective named
    executive officer under the Bonus Program had the Company
    achieved the applicable net income target. We assumed that the
    earned bonus percentage for each of the named executive officers
    in fiscal 2007 remained constant in each of the four target
    income scenarios. The Target 1 column sets forth the bonus
    amounts actually earned for fiscal 2007 based on the
    Companys net income as defined in the Bonus Plan of
    $3.6 million Lawrence Clayton, Jr., J. Robert Hipps and
    Erik A. Lopez, Sr. each are not eligible to receive a bonus
    under the Bonus Program. Messrs. Clayton and Lopez are no
    longer employees of the Company and thus would not be entitled
    to receive a bonus because they would not meet the vesting
    requirements of the Bonus Program. Mr. Hipps did not meet
    the eligibility requirements under the Bonus Program.(2)
    
    Represents performance-based shares of restricted stock awarded
    under the Companys 1999 Equity Incentive Plan.(3)
    
    The award, granted under the 1999 Equity Incentive Plan
    described herein, is exercisable with respect to
    75,000 shares upon our achievement of net income for fiscal
    2007 and confirmation of such net income as set forth in this
    Annual Report on
    Form 10-K.
    Vesting for the remaining 75,000 shares will be determined
    based on the achievement of performance targets for fiscal 2008
    that have not to date been set by the Compensation Committee.(4)
    
    Under the terms of Mr. Claytons amended employment
    agreement and amended restricted stock agreement, the award,
    granted under the 1999 Equity Incentive Plan, was exercisable
    with respect to 15,000 shares upon our achievement of net
    income for fiscal 2007 and confirmation of such net income as
    set forth in this Annual Report on
    Form 10-K,
    with vesting of the remaining 15,000 shares based on the
    achievement of performance targets for fiscal 2008 that have not
    yet been set by the Compensation Committee. Subsequent to
    Mr. Claytons departure from the Company on
    July 25, 2007, we have remitted payment to Mr. Clayton
    for the repurchase of his 30,000 shares of restricted stock
    for $0.001 per share pursuant to the terms of his restricted
    stock agreement. The closing of the repurchase transaction is
    pending the resolution of the current employment dispute between
    Mr. Clayton and the Company.(5)
    
    Amounts reflect the total fair value of stock awards or stock
    options granted in fiscal 2007, calculated in accordance with
    SFAS No. 123(R).(6)
    
    The award, granted under the 2006 Stock Incentive Plan, vested
    as to 20,000 shares on March 26, 2008 and as to 20,000
    on each of the first two anniversaries thereafter under its
    original terms. Pursuant to a separation agreement and general
    release dated October 5, 2007; such vesting was amended as
    follows: 10,000 shares of such restricted stock were
    forfeited and 50,000 shares of restricted stock will vest
    as of January 2, 2008.(7)
    
    The options shares, granted under the 2006 Stock Incentive Plan,
    vested as to 15,000 shares on March 26, 2008 and as to
    15,000 shares on each of the first two anniversaries
    thereafter under its original terms. Under our separation
    agreement with Mr. Lopez, his option to purchase all such
    45,000 shares was canceled. 58




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##### Table of Contents



Outstanding
    Equity Awards at July 31, 2007
    Option Awards





Stock AwardsEquityEquity


IncentiveIncentive


Plan Awards:Plan Awards:


Market orMarket


Number of


Payout Value ofNumber of Securities








Number of


Value of


Unearned


UnearnedUnderlying Unexercised Options at


Option


Option


Shares of


Shares of


Shares That


SharesJuly 31, 2007 (#)


Exercise


Expiration


Stock Not Vested


Stock Not


Have Not


That HaveName

Exercisable


Unexercisable


Price ($)


Date


(#)


Vested ($)(1)


Vested (#)


Not Vested ($)Steven S. Boss


200,000



100,000
(2)

$
1.80



07/31/2015











150,000
(3)

$
315,00050,000






$
1.80



07/22/2015















Lawrence Clayton, Jr.(4)






























J. Robert Hipps






























Thomas J. Ulry


100,000






$
3.50



03/02/2015



20,000
(5)

$
42,000







Nick Cioll


85,000






$
1.92



07/27/2014















Erik A. Lopez, Sr.(6)






45,000


$
2.56



03/27/2013



60,000


$
126,000







     (1)
    
    Market value based on our common stocks closing price of
    $2.10 on July 31, 2007, the last day of fiscal 2007.(2)
    
    These option shares became exercisable on August 1, 2007.(3)
    
    The award is exercisable with respect to 75,000 shares upon
    our achievement of net income for fiscal 2007 and confirmation
    of such net income as set forth in this Annual Report on
    Form 10-K.
    Vesting for the remaining 75,000 shares will be determined
    based on the achievement of performance targets for fiscal 2008
    that have not to date been set by the Compensation Committee.(4)
    
    Prior to his departure on July 25, 2007, Mr. Clayton
    held options to purchase a total of 120,000 shares of our
    common stock, 40,000 of which were exercisable and 80,000 of
    which were not. As a result of Mr. Claytons
    termination, all stock option shares held by Mr. Clayton,
    including those that were exercisable, were terminated. In
    addition, subsequently, we have remitted payment to
    Mr. Clayton for the repurchase of 30,000 shares of
    unvested restricted stock previously held by Mr. Clayton.
    The closing of the repurchase transaction is pending the
    resolution of the current employment dispute between
    Mr. Clayton and the Company.(5)
    
    Of these restricted stock shares, 10,000 will vest on
    January 1, 2008 and 10,000 will vest on January 1,
    2009.(6)
    
    Under the terms of a separation agreement with Mr. Lopez
    dated October 5, 2007, 10,000 shares of restricted
    stock were forfeited pursuant to their original terms. The
    vesting relating to the remaining 50,000 shares of
    restricted stock was amended so that such shares will vest as of
    January 2, 2008, and the option to purchase
    45,000 shares of our common stock was canceled pursuant to
    its terms.  Option
    Exercises in Fiscal 2007
    Option Awards


Stock AwardsNumber of Shares





Number of SharesAcquired


Value Realized


Acquired


Value RealizedName

on Exercise (#)


on Exercise ($)


on Exercise (#)


on Vesting ($)Steven S. Boss










50,000


$
69,500Lawrence Clayton, Jr.










15,000


$
24,300J. Robert Hipps














Thomas J. Ulry










10,000


$
14,600Nick Cioll


15,000


$
15,600







Erik A. Lopez, Sr.














  59




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##### Table of Contents



Pension
    Benefits
    Nonqualified
    Contribution Plans
    Deferred
    Compensation
    Employment
    Agreements
  Steven S.
    Boss
      Form 10-K Form 10-K
  12-month
 60




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##### Table of Contents




    causegenerally means: (i) a material
    breach of the employment agreement, or of a Company policy or
    law applicable to the Company, (ii) demonstrated and
    material neglect of duties or failure to perform material duties
    following written notice and a reasonable cure period,
    (iii) misconduct, dishonesty, self-dealing, fraud or
    similar conduct, or (iv) conviction of a crime or plea of
    guilty or nolo contendere, with limited exceptions.
    good reasongenerally means (i) a
    reduction in Mr. Boss salary or benefits, except as
    part of a general change in compensation benefits for similarly
    situated executives, (ii) a failure by us to comply with
    the material provisions of the employment agreement or
    (iii) within 180 days of a change in control, as
    defined below; provided, that the Company has a period of
    20 days after receipt of written notice from the executive
    to cure an event or condition described in clause (i) or
    (ii).
    A change in controlgenerally means
    (i) the acquisition by any person or group of our
    securities, after which such person or group owns more than 50%
    of our outstanding voting stock, (ii) a merger or
    consolidation involving the Company which results in the holders
    of the Companys outstanding voting securities immediately
    prior to such transaction failing to hold more than 50% of the
    outstanding voting power of the corporation resulting from such
    merger or consolidation, or (iii) the acquisition or sale
    of all or substantially all of our assets in a transaction or
    series of transactions.    Lawrence
    Clayton, Jr.
    Form 10-K Form 10-K
   61




---



##### Table of Contents



Erik A.
    Lopez, Sr.
           62




---



##### Table of Contents



Separation
    Agreement with Mr. Lopez
    Offer
    Letters with Other Executives
  J. Robert
    Hipps
      Thomas L.
    Ulry
   63




---



##### Table of Contents



Cash
    Bonus Plan
    Background.
  Administration.
  Eligibility.
  Determination of Bonus. i.e.,
     64




---



##### Table of Contents



Timing of Payment and Vesting.
  Amendment.
  Employee
    Benefit Plans
  Commerce
    Energy Group, Inc. 2006 Stock Incentive Plan
  Purpose.
  Shares Subject to the SIP. Form S-8
    Administration.
 65




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##### Table of Contents



Rule 16b-3 Rule 16b-3
      Eligibility.
  Options.
  Share Appreciation Rights (SARs). and/or
  Exercise Price for Options and SARs.
  Exercise of Options and SARs.
   66




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##### Table of Contents



Restricted Shares, Restricted Share Units, Unrestricted
    Shares and Deferred Share Units.
    Performance Awards.
      Transferability.
  Certain Corporate Transactions.
 67




---



##### Table of Contents



Term of SIP; Amendments and Termination.
  Termination, Rescission and Recapture.
 68




---



##### Table of Contents



Internal Revenue Code Section 409A
    Requirements.
  1999
    Equity Incentive Plan
    Background.
  Shares Subject to the EIP. Form S-8
  Administration.
 69




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##### Table of Contents



Eligibility.
  Options.
            Restricted Stock.
   70




---



##### Table of Contents



Stock Bonuses.
  Payment for Share Purchases.
  Transferability.
  Certain Corporate Transactions.
    Amendment or Termination of EIP.
  Potential
    Payments upon Termination or Change in Control
    12-month
 71




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##### Table of Contents



Termination by UsWithout Cause/ ResignationExecutive Officer

Benefit Upon Termination

by Executive for Good ReasonSteven S. Boss

Salary Cash Payment

$
412,000Continuation of Benefits


2,934Accelerated Vesting of Options

$
30,000Accelerated Vesting of Restricted Stock

$
157,500Total

$
602,434Erik A. Lopez, Sr.

Salary Cash Payment

$
265,000Continuation of Benefits

$
17,606Accelerated Vesting of Options

$
Accelerated Vesting of Restricted Stock

$
42,000Total

$
324,606Thomas J. Ulry

Salary Cash Payment

$
126,500   Change in





Change inChange in


Control in


Change in


Control inControl


which


Control in


whichAcceleration of

in which


Compensation


which


CompensationVesting Upon

Compensation


Committee


Compensation


CommitteeChange in Control

Committee


Does Not


Committee


Does NotUnder Equity

Accelerates


Accelerate


Accelerates


AccelerateExecutive Officer

Benefit Plans(1)

Options


Options


Restricted Stock


Restricted StockSteven S. Boss

Accelerated Vesting of 
    Restricted Stock

$
105,000


$
75,000


$
315,000


$
157,500Thomas J. Ulry

Accelerated Vesting of 
    Restricted Stock









$
42,000



Erik A. Lopez, Jr.

Accelerated Vesting of 
    Restricted Stock









$
126,000


$
42,000     (1)
    
    For Mr. Boss and Mr. Ulry benefits related to awards
    granted under the 1999 Equity Incentive Plan. For Mr. Lopez
    benefits relate to awards granted under the 2006 Stock Incentive
    Plan.  Arrangements
    with Former Executive Officers
   72




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##### Table of Contents



401(k)
    Plan
    Non-Employee
    Director Compensation
    Cash Compensation.
  Equity-Based Awards.
  
    Initial Grant of Restricted Stock.  On the date
    of the initial appointment or election of each non-employee
    director to the Board, he or she receives 20,000 restricted
    shares of the Companys restricted stock. Such shares vest
    in full on the first day of the month in which the one year
    anniversary of the date of issuance occurs, with any unvested
    shares being forfeited to the Company if the Board members
    service is terminated.
    Annual Grant of Restricted Stock.  In addition,
    on the date of each annual meeting of stockholders at which
    directors are elected, each non-employee director who is either
    re-elected as a non-employee director or who continues in office
    as an incumbent non-employee director, will be issued
    20,000 shares of restricted stock. Such shares vest in full
    on January 1 of the next succeeding calendar year after the date
    of issuance, with any unvested shares being forfeited to the
    Company if the Board members service is terminated.   73




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##### Table of Contents



Fees Earnedor Paid


Stock


Option


All OtherName

in Cash ($)


Awards ($)(1)


Awards ($)(2)


Compensation ($)


Total ($)Charles E. Bayless

$
61,528


$
23,165


$
12,070


$



$
96,763Gary J. Hessenauer

$
60,750


$
23,165


$
12,070


$



$
95,985Mark S. Juergensen

$
63,492


$
23,165


$
12,070


$



$
98,727Dennis R. Leibel

$
60,250


$
23,165


$
12,070


$



$
95,485Robert C. Perkins

$
84,000


$
23,165


$
12,070


$



$
119,235     (1)
    
    The value reported above in the Stock Awards column
    is the amount we recognized for stock awards during fiscal 2007
    for each director calculated in accordance with
    SFAS No. 123(R). See Note 12 to the Notes to
    Consolidated Financial Statements for a discussion of
    assumptions made in determining the grant date fair value and
    compensation expense of our restricted stock awards.(2)
    
    The value reported above in the Option Award column is the
    amount we recognized for stock options during fiscal 2007 for
    each director calculated in accordance with
    SFAS No. 123(R). See Note 2 to the Notes to
    Consolidated Financial Statements for a discussion of
    assumptions made in determining the stock option expense.  Compensation
    Committee Interlocks and Insider Participation
    Compensation
    Committee Report
  Form 10-K Form 10-K
          Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.   74




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##### Table of Contents



Beneficial
    Ownership Table
    
    each person known by us to own beneficially more than 5% of our
    outstanding common stock;
    each of our current directors;
    our chief executive officer and the other named executive
    officers listed in the Summary Compensation Table in
    Part III, Item 11. Executive Compensation of this
    annual report on
    Form 10-K; and
    all of our current directors and executive officers as a group.    and/or
  Common StockAmount and Nature ofBeneficial OwnershipNumber ofShares


Right to


Percent ofName

Owned


Acquire(1)


ClassPrincipal Stockholders:Daniel Zeff(2)


3,195,916
(3)






10.5
%Ian B. Carter(4)


250,000



2,500,000



8.4
%Directors and Named Executive Officers:Charles E. Bayless


132,000



120,000



*Steven S. Boss


225,000



350,000



1.9
%Lawrence Clayton, Jr.(5)


63,709







*Nick Cioll


15,000



85,000



*Gary J. Hessenauer


30,000



70,000



*J. Robert Hipps










*Mark S. Juergensen


50,000



157,500



*Dennis R. Leibel


30,000



20,000



*Erik A. Lopez, Sr.


50,000







*Robert C. Perkins


235,000



470,000



2.3
%Thomas L. Ulry


40,000



100,000



*All Directors and Executive Officers as a group (10 persons)


870,709



1,372,500



6.7
%     *
    
    Indicates beneficial ownership of less than 1% of the issued and
    outstanding class of securities. 75




---



##### Table of Contents



(1)
    
    Represents shares of our common stock issuable upon exercise of
    stock options or upon conversion of other convertible securities
    held by such persons that are exercisable within 60 days of
    October 16, 2007.(2)
    
    Ownership of these shares was reported on a Form 4 filed on
    October 17, 2007 jointly by Mr. Zeff, Zeff Holding
    Company LLC (Zeff Holding), Zeff Capital
    Partners, I, LLP (Zeff Capital), and Spectrum
    Galaxy Fund, Ltd. (Spectrum). Spectrum has sole
    voting and investment power with respect to
    1,379,684 shares, which powers are exercisable by
    Mr. Zeff as investment manager. Zeff Capital has sole
    voting and investment power with respect to
    1,816,232 shares, which powers are exercisable by
    Mr. Zeff as the sole manager of Zeff Holding, which is the
    general partner of Zeff Capital. The mailing address of each
    Mr. Zeff, Zeff Holding, Zeff Capital and Spectrum is: 50
    California St., Suite 1500, San Francisco, CA 94111.(3)
    
    Represents holdings as of August 10, 2007 as disclosed in a
    Schedule 13D/A filed with the SEC under the Exchange Act.(4)
    
    The mailing address of such stockholder is:
    P.O. Box 538, 1100 Irvine Blvd., Tustin, California
    92780.(5)
    
    Does not include 30,000 shares of unvested restricted common
    stock that the Company has remitted to Mr. Clayton for
    repurchase. The closing of the repurchase transaction is pending
    the resolution of the current employment dispute between
    Mr. Clayton and the Company.  Securities
    Authorized for Issuance under Equity Compensation Plan
      (a)


(b)


(c)Number of SecuritiesNumber of Securities





Remaining Available forto be Issued Upon


Weighted-Average


Future Issuance UnderExercise of


Exercise Price of


Equity Compensation PlansOutstanding Options,


Outstanding Options,


(Excluding SecuritiesPlan Category

Warrants and Rights


Warrants and Rights


Reflected in Column(a))Equity compensation plans approved by security holders


4,382,874
(1)

$
2.25



988,334
(2)Equity compensation plans not approved by security holders


2,600,000
(3)

$
2.45



Total


6,982,874


$
2.33



988,334     (1)
    
    Represents shares of common stock that may be issued pursuant to
    outstanding options granted under the Commonwealth 1999 Equity
    Incentive Plan and the Commerce Energy Group, Inc. 2006 Stock
    Incentive Plan.(2)
    
    Represents shares of common stock that may be issued pursuant to
    options available for future grant under the Commonwealth 1999
    Equity Incentive Plan and the Commerce Energy Group, Inc. 2006
    Stock Incentive Plan.(3)
    
    Represents shares of common stock that may be issued pursuant to
    options available for future grant under the following
    individual plans: options to purchase 2,500,000 shares
    granted to Ian B. Carter, the Companys former Chairman and
    Chief Executive Officer; options to purchase 100,000 shares
    granted to Robert C. Perkins, the Companys Chairman. (See
    Note 14 Stock Options to the Notes to Consolidated
    Financial Statements).  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.  Transactions
    with Related Persons, Promoters and Certain Control
    Persons.
   76




---



##### Table of Contents



Indemnification
    Agreements
    Review,
    Approval or Ratification of Transactions with Related
    Persons.
    Director
    Independence.
    Item 14.
    Principal
    Accounting Fees and Services.    Fiscal Year2007


2006Audit Fees

$
463,000


$
454,000Audit-Related Fees


8,000



Tax Fees






All Other Fees






$
471,000


$
454,000   Audit Fees: Form 10-Q
 77




---



##### Table of Contents



Audit Related Fees:
  Tax Fees.
  All Other Fees.
    de minimis
  PART IV
  Item 15.  Exhibits
    and Financial Statement Schedules.
  Index to Consolidated Financial Statements:
  Report of Hein & Associates LLP,
    independent registered public accounting firm for fiscal years
    ended July 31, 2007 and 2006


F-1Report of Ernst & Young LLP,
    independent registered public accounting firm for the fiscal
    year ended July 31, 2005


F-2Consolidated statements of operations for the
    three years in the period ended July 31, 2007


F-3Consolidated balance sheets at July 31, 2007
    and 2006


F-4Consolidated statements of stockholders
    equity for the three years in the period ended July 31,
    2007


F-5Consolidated statements of cash flows for the
    three years in the period ended July 31, 2007


F-6Notes to consolidated financial statements


F-7   Financial Statement Schedules
    Exhibits. Form 10-K.
  Exhibit

Description3
.1

Amended and Restated Certificate of Incorporation of Commerce
    Energy Group, Inc., previously filed with the SEC on
    July 6, 2004 as Exhibit 3.3 to Commerce Energy Group,
    Inc.s Registration Statement on
    Form 8-A
    and incorporated herein by reference.3
.2

Certificate of Designation of Series A Junior Participating
    Preferred Stock of Commerce Energy Group, Inc. dated
    July 1, 2004, previously filed with the SEC on July 6,
    2004 as Exhibit 3.4 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form 8-A
    and incorporated herein by reference.3
.3

Amended and Restated Bylaws of Commerce Energy Group, Inc.,
    previously filed with the SEC on July 6, 2004 as
    Exhibit 3.6 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form 8-A
    and incorporated herein by reference. 78




---



##### Table of Contents



Exhibit

Description4
.1

Rights Agreement, dated as of July 1, 2004, entered into
    between Commerce Energy Group, Inc. and Computershare
    Trust Company, as rights agent, previously filed with the
    SEC on July 6, 2004 as Exhibit 10.1 to Commerce Energy
    Group, Inc.s Registration Statement on
    Form 8-A
    and incorporated herein by reference.4
.2

Form of Rights Certificate, previously filed with the SEC on
    July 6, 2004 as Exhibit 10.2 to Commerce Energy Group,
    Inc.s Registration Statement on
    Form 8-A
    and incorporated herein by reference.Material Contracts Relating to Management Compensation Plans
    or Arrangements10
.1

Commonwealth Energy Corporation 1999 Equity Incentive Plan,
    previously filed with the SEC on October 8, 2003 as
    Exhibit 4.1 to Commonwealth Energy Corporations
    Registration Statement on
    Form S-8
    and incorporated herein by reference.10
.2

Form of Stock Option Agreement pursuant to Commonwealth Energy
    Corporation 1999 Equity Incentive Plan, previously filed with
    the SEC on November 15, 2004 as Exhibit 10.9 to
    Commerce Energy Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.3

Commerce Energy Group, Inc. 2006 Stock Incentive Plan,
    previously filed with the SEC on February 1, 2006 as
    Exhibit 99.2 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.4

Form of a Stock Option Award Agreement for U.S. Employees
    pursuant to the Commerce Energy Group, Inc. 2006 Stock Incentive
    Plan, previously filed with the SEC on April 20, 2006 as
    Exhibit 4.10 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.5

Form of a Non-Qualified Stock Option Agreement for Non-Employee
    Directors pursuant to the Commerce Energy Group, Inc. 2006 Stock
    Incentive Plan, previously filed with the SEC on April 20,
    2006 as Exhibit 4.11 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.6

Form of a Restricted Share Award Agreement for U.S. Employees
    pursuant to the Commerce Energy Group, Inc. 2006 Stock Incentive
    Plan, previously filed with the SEC on April 20, 2006 as
    Exhibit 4.12 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.7

Form of a Restricted Share Unit Award Agreement pursuant to the
    Commerce Energy Group, Inc. 2006 Stock Incentive Plan,
    previously filed with the SEC on April 20, 2006 as
    Exhibit 4.14 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.8

Form of a SAR Award Agreement pursuant to the Commerce Energy
    Group, Inc. 2006 Stock Incentive Plan, previously filed with the
    SEC on April 20, 2006 as Exhibit 4.15 to Commerce
    Energy Group, Inc.s Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.9

Form of Performance Unit and Performance Stock Award pursuant to
    the Commerce Energy Group, Inc. 2006 Stock Incentive Plan,
    previously filed with the SEC on April 20, 2006 as
    Exhibit 4.16 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.10

Form of Deferral Election Agreement for Deferred Share Units to
    the Commerce Energy Group, Inc. pursuant to the Commerce Energy
    Group, Inc. 2006 Stock Incentive Plan, previously filed with the
    SEC on April 20, 2006 as Exhibit 4.17 to Commerce
    Energy Group, Inc.s Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.11

Amended and Restated Form of Non-Qualified Stock Option Award
    Agreement (for Non-Employee Directors) pursuant to the Commerce
    Energy Group, Inc. 2006 Stock Incentive Plan, previously filed
    with the SEC on May 18, 2006 as Exhibit 99.2 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.12

Form of Restricted Share Award Agreement (for Non-Employee
    Directors) pursuant to the Commerce Energy Group, Inc. 2006
    Stock Incentive Plan, previously filed with the SEC on
    April 20, 2006 as Exhibit 4.13 to Commerce Energy
    Group, Inc.s Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    filed with the SEC on April 20, 2006 and incorporated
    herein by reference. 79




---



##### Table of Contents



Exhibit

Description10
.13

Form of Restricted Share Award Agreement (for Non-Employee
    Directors) pursuant to the Commerce Energy Group, Inc. 2006
    Stock Incentive Plan, Initial Grant, previously filed with the
    SEC on May 18, 2006 as Exhibit 99.4 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.14

Commerce Energy Group, Inc. Amended and Restated 2005 Employee
    Stock Purchase Plan, previously filed with the SEC on
    February 1, 2006 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.15

Form of Subscription Agreement for the Commerce Energy Group,
    Inc. Amended and Restated 2005 Employee Stock Purchase Plan,
    previously filed with the SEC on April 20, 2006 as
    Exhibit 4.7 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.16

Form of Notice of Withdrawal for the Commerce Energy Group, Inc.
    Amended and Restated 2005 Employee Stock Purchase Plan,
    previously filed with the SEC on April 20, 2006 as
    Exhibit 4.8 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.17

Commerce Energy Group, Inc. Bonus Program, effective
    January 25, 2007, previously filed with the SEC on
    January 31, 2007 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.18

Commerce Energy Group, Inc. Bonus Program as amended by first
    amendment, effective March 27, 2007, previously filed with
    the SEC on June 14, 2007 as Exhibit 10.7 to Commerce
    Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.19

Commerce Energy Group, Inc. Amended and Restated Non-Employee
    Director Compensation Policy, effective January 27, 2006,
    previously filed with the SEC on February 1, 2006 as
    Exhibit 99.3 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.20

Commerce Energy Group, Inc. Amended and Restated Non-Employee
    Director Compensation Policy, effective May 12, 2006,
    previously filed with the SEC on May 18, 2006 as
    Exhibit 99.1 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.21

Commerce Energy Group, Inc. Amended and Restated Non-Employee
    Director Compensation Policy, effective January 25, 2007,
    previously filed with the SEC on January 31, 2007 as
    Exhibit 99.6 to Commerce Energy Group Inc.s Current Report
    on Form 8-K
    and incorporated herein by reference.10
.22

Stock Option Agreement dated as of August 29, 2003 between
    Robert C. Perkins and Commonwealth Energy Corporation,
    previously filed with the SEC on November 15, 2004 as
    Exhibit 10.13 to Commerce Energy Group, Inc.s Annual
    Report on
    Form 10-K
    and incorporated herein by reference.10
.23

Stock Option Agreement dated as of August 29, 2003 between
    Robert C. Perkins and Commonwealth Energy Corporation,
    previously filed with the SEC on November 15, 2004 as
    Exhibit 10.14 to Commerce Energy Group, Inc.s Annual
    Report on
    Form 10-K
    and incorporated herein by reference.10
.24

Indemnification Agreement dated as of November 1, 2000
    between Commonwealth Energy Corporation and Ian B. Carter, with
    Schedule attached thereto of other substantially identical
    Indemnification Agreements, which differ only in the respects
    set forth in such Schedule, previously filed with the SEC on
    November 15, 2004 as Exhibit 10.16 to Commerce Energy
    Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.25

Indemnification Agreement dated as of July 1, 2004 between
    Commerce Energy Group, Inc. and Ian Carter, with Schedule
    attached thereto of other substantially identical
    Indemnification Agreements, which differ only in the respects
    set forth in such Schedule, previously filed with the SEC on
    November 15, 2004 as Exhibit 10.17 to Commerce Energy
    Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.26

Confidential Settlement Agreement and General Release dated as
    of April 21, 2005 by and among Ian B. Carter, Commerce
    Energy, Inc. and Commerce Energy Group, Inc., previously filed
    with the SEC on April 22, 2005 as Exhibit 10.1 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference. 80




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##### Table of Contents



Exhibit

Description10
.27

Stock Option Agreement dated April 29, 2005 by and between
    Ian B. Carter and Commerce Energy Group, Inc., previously filed
    with the SEC on October 31, 2005 as Exhibit 10.33 to
    Commerce Energy Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.28

Executive Employment Agreement dated April 1, 2004 between
    Commonwealth Energy Corporation, Commerce Energy Group, Inc. and
    Peter Weigand, previously filed with the SEC on April 5,
    2004 as Exhibit 10.6 to Amendment No. 3 to Commerce
    Energy Groups Registrants Statement on
    Form S-4
    and incorporated herein by reference.10
.29

Amendment No. 1 to Executive Employment Agreement dated
    November 17, 2005, by and among Commerce Energy Group,
    Inc., Commerce Energy, Inc. and Peter Weigand, previously filed
    with the SEC on November 23, 2005 as Exhibit 99.4 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.30

Settlement Agreement and General Release dated November 17,
    2005 by and among Peter Weigand, Commerce Energy Group, Inc. and
    Commerce Energy, Inc., previously filed with the SEC on
    November 23, 2005 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.31

Executive Employment Agreement dated April 1, 2004 between
    Commonwealth Energy Corporation, Commerce Energy Group, Inc. and
    Richard L. Boughrum, previously filed with the SEC on
    April 5, 2004 as Exhibit 10.7 to Amendment No. 3
    to Commerce Energy Groups Registrants Statement on
    Form S-4
    and incorporated herein by reference.10
.32

Amendment No. 1 to Executive Employment Agreement dated
    November 17, 2005, by and among Commerce Energy Group,
    Inc., Commerce Energy, Inc. and Richard L. Boughrum, previously
    filed with the SEC on November 23, 2005 as
    Exhibit 99.11 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.33

Settlement Agreement and General Release dated November 17,
    2005 by and among Richard L. Boughrum, Commerce Energy Group,
    Inc. and Commerce Energy, Inc., previously filed with the SEC on
    November 23, 2005 as Exhibit 99.8 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.34

Employment Offer Letter Agreement between Commerce Energy Group,
    Inc. and Thomas Ulry dated May 31, 2005, previously filed
    with the SEC on October 31, 2005 as Exhibit 10.30 to
    Commerce Energy Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference10
.35

Letter from Thomas Ulry to Commerce Energy Group, Inc. dated
    October 28, 2005 regarding the May 31, 2005 Employment
    Offer Letter Agreement, previously filed with the SEC on
    October 31, 2005 as Exhibit 10.31 to Commerce Energy
    Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.36

Settlement Agreement and General Release dated November 17,
    2005, by and among Commerce Energy Group, Inc., Commerce Energy,
    Inc. and Eric Alam, previously filed with the SEC on
    November 23, 2005 as Exhibit 99.13 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.37

Agreement and Release dated November 17, 2005, by and
    among, Commerce Energy Group, Inc., Commerce Energy, Inc., Paul,
    Hastings, Janofsky & Walker LLP, Eric Alam, Bruno
    Kvetinskas, Greg Lander and Peter Weigand, previously filed with
    the SEC on November 23, 2005 as Exhibit 99.7 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.38

Executive Employment Agreement dated August 1, 2005 between
    Commerce Energy Group, Inc. and Steven S. Boss, previously filed
    with the SEC on August 2, 2005 as Exhibit 10.1 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.39

Amendment No. 1 to Employment Agreement dated
    January 25, 2007 by and between Commerce Energy Group, Inc.
    and Steven S. Boss, previously filed with the SEC on
    January 31, 2007 as Exhibit 99.2 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference10
.40

Stock Option Agreement dated August 1, 2005 between
    Commerce Energy Group, Inc. and Steven S. Boss, previously filed
    with the SEC on August 2, 2005 as Exhibit 10.2 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference. 81




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##### Table of Contents



Exhibit

Description10
.41

Restricted Stock Agreement dated August 1, 2005 between
    Commerce Energy Group, Inc. and Steven S. Boss, previously filed
    with the SEC on August 2, 2005 as Exhibit 10.3 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.42

Amendment No. 1 to Restricted Stock Agreement dated
    January 25, 2007 by and between Commerce Energy Group, Inc.
    and Steven S. Boss, previously filed with the SEC on
    January 31, 2007 as Exhibit 99.3 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference10
.43

Indemnification Agreement dated August 1, 2005 between
    Commerce Energy Group, Inc. and Steven S. Boss, previously filed
    with the SEC on August 2, 2005 as Exhibit 10.4 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.44

Employment Agreement dated December 1, 2005 between
    Lawrence Clayton, Jr. and Commerce Energy Group, Inc.,
    previously filed with the SEC on December 6, 2005 as
    Exhibit 99.1 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.45

Amendment No. 1 to Employment Agreement dated
    November 30, 2006, by and between Commerce Energy Group,
    Inc. and Lawrence Clayton, Jr., previously filed with the SEC on
    March 19, 2007 as Exhibit 10.1 to Commerce Energy
    Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.46

Amendment No. 2 to Employment Agreement dated
    January 25, 2007 by and between Commerce Energy Group, Inc.
    and Lawrence Clayton, Jr., previously filed with the SEC on
    January 31, 2007 as Exhibit 99.4 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.47

Stock Option Agreement dated December 1, 2005 between
    Lawrence Clayton, Jr. and Commerce Energy Group, Inc.,
    previously filed with the SEC on December 6, 2005 as
    Exhibit 99.2 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.48

Restricted Stock Agreement dated December 1, 2005 between
    Lawrence Clayton, Jr. and Commerce Energy Group, Inc.,
    previously filed with the SEC on December 6, 2005 as
    Exhibit 99.3 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.49

Amendment No. 1 to Restricted Stock Agreement dated
    January 25, 2007 by and between Commerce Energy Group, Inc.
    and Lawrence Clayton, Jr., previously filed with the SEC on
    January 31, 2007 as Exhibit 99.5 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.50

Indemnification Agreement dated December 1, 2005 between
    Lawrence Clayton, Jr. and Commerce Energy Group, Inc.,
    previously filed with the SEC on December 6, 2005 as
    Exhibit 99.4 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.51

Settlement Agreement and General Release by and among Andrew V.
    Coppola, Commerce Energy, Inc. and Commerce Energy Group, Inc.,
    previously filed with the SEC on April 18, 2006 as
    Exhibit 99.1 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.52

Employment Agreement dated March 26, 2007 between Commerce
    Energy Group, Inc. and Erik A. Lopez, Sr., previously filed with
    the SEC on June 14, 2007 as Exhibit 10.3 to Commerce
    Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.53

Amendment No. 1 to Employment Agreement dated
    October 5, 2007 by and between Commerce Energy Group, Inc.
    and Erik A. Lopez, Sr.10
.54

Stock Option Award Agreement dated March 27, 2007 between
    Commerce Energy Group, Inc. and Erik A. Lopez, Sr., previously
    filed with the SEC on June 14, 2007 as Exhibit 10.5 to
    Commerce Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.55

Restricted Share Award Agreement dated March 27, 2007
    between Commerce Energy Group, Inc. and Erik A. Lopez, Sr.,
    previously filed with the SEC on June 14, 2007 as
    Exhibit 10.5 to Commerce Energy Group, Inc.s
    Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.56

Indemnification Agreement dated March 26, 2007 between
    Commerce Energy Group, Inc. and Erik A. Lopez, Sr., previously
    filed with the SEC on June 14, 2007 as Exhibit 10.4 to
    Commerce Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.57

Separation Agreement and General Release dated October 5,
    2007 by and between Commerce Energy Group, Inc. and Erik A.
    Lopez, Sr. 82




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##### Table of Contents



Exhibit

Description10
.58

Interim Executive Services Agreement by and between Commerce
    Energy Group, Inc. and Tatum, LLC regarding J. Robert Hipps
    dated July 25, 2007, previously filed with the SEC on
    July 27, 2007 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference10
.59

Indemnification Agreement between Commerce Energy Group, Inc.
    and J. Robert Hipps dated July 25, 2007, previously filed
    with the SEC on July 27, 2007 as Exhibit 99.2 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.Other Material Contracts10
.60

Registration Rights Agreement by and among Commonwealth Energy
    Corporation and the holders of Skipping Stone Inc. common stock
    dated March 29, 2004, previously filed with the SEC on
    April 5, 2004 as Exhibit 2.5 to Amendment No. 3
    to Commerce Energy Group, Inc.s Registration Statement on
    Form S-4
    and incorporated herein by reference.10
.61

Consent to Sublease and Sublease Agreement dated May 28,
    2004 between E*Trade Consumer Finance Corporation and
    Commonwealth Energy Corporation, previously filed with the SEC
    on November 15, 2004 as Exhibit 10.25 to Commerce
    Energy Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.62

Agreement To Provide QSE and Marketing Services dated
    August 1, 2005 between Commerce Energy, Inc. and Tenaska
    Power Services Co.10
.63

Security Agreement dated August 1, 2005 between Commerce
    Energy, Inc. and Tenaska Power Services Co.10
.64

Blocked Account Control Agreement (with Lockbox Services) dated
    August 2005 by and among Commerce Energy, Inc., Tenaska Power
    Services Co. and U.S. Bank National Association Depository Bank.10
.65

Master Power Purchase and Sale Agreement dated August 1,
    2005 between Commerce Energy, Inc. and Tenaska Power Services Co.10
.66

Guaranty Agreement dated August 1, 2005 by Commerce Energy
    Group, Inc. in favor of Tenaska Power Services Co.10
.67

First Amendment to Security Agreement between Commerce Energy,
    Inc. and Tenaska Power Services Co., effective as of
    March 7, 2006.10
.68

Loan and Security Agreement by and among Commerce Energy, Inc.,
    as Borrower, and Commerce Energy Group, Inc., as Guarantor, and
    Wachovia Capital Finance Corporation (Western), as Agent, and
    the Lenders From Time to Time Party Thereto, as Lenders, dated
    June 8, 2006, previously filed with the SEC on
    June 12, 2006 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.69

Guaranty dated June 8, 2006 by Commerce Energy Group, Inc.,
    as Guarantor, to Wachovia Capital Finance Corporation (Western),
    as Agent, previously filed with the SEC on June 12, 2006 as
    Exhibit 99.2 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.70

First Amendment to Loan and Security Agreement and Waiver dated
    September 20, 2006 among Commerce Energy Group, Inc.,
    Commerce Energy, Inc., Wachovia Capital Finance Corporation
    (Western) and The CIT Group/Business Credit, Inc., previously
    filed with the SEC on September 26, 2006 as
    Exhibit 99.1 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.71

Second Amendment to Loan and Security Agreement and Waiver dated
    October 26, 2006 among Commerce Energy Group, Inc.,
    Commerce Energy, Inc., Wachovia Capital Finance Corporation
    (Western) and The CIT Group/Business Credit, Inc., previously
    filed with the SEC on October 30, 2006 as
    Exhibit 10.91 to Commerce Energy Group, Inc.s Annual
    Report on
    Form 10-K
    and incorporated herein by reference.10
.72

Third Amendment to Loan and Security Agreement and Waiver dated
    March 15, 2007 among Commerce Energy Group, Inc., Commerce
    Energy, Inc., Wachovia Capital Finance Corporation (Western) and
    The CIT Group/Business Credit, Inc., previously filed with the
    SEC on March 19, 2007 as Exhibit 10.9 to Commerce
    Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    for the Quarterly Period Ended January 31, 2007 83




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##### Table of Contents



Exhibit

Description10
.73

Fourth Amendment to Loan and Security Agreement and Waiver dated
    June 26, 2007 among Commerce Energy Group, Inc., Commerce
    Energy, Inc., Wachovia Capital Finance Corporation (Western) and
    The CIT Group/Business Credit, Inc.10
.74

Fifth Amendment to Loan and Security Agreement and Waiver dated
    August 1, 2007 among Commerce Energy Group, Inc., Commerce
    Energy, Inc., Wachovia Capital Finance Corporation (Western) and
    The CIT Group/Business Credit, Inc., previously filed with the
    SEC on August 2, 2007 as Exhibit 99.1 to Commerce
    Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.75

Letter Agreement, dated September 20, 2007, by and among
    Commerce Energy Group, Inc., Commerce Energy, Inc., Wachovia
    Capital Finance Corporation (Western), as Agent and Lender and
    The CIT Group/Business Credit, Inc., as Lender, previously filed
    with the SEC on September 25, 2007 as Exhibit 99.1 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.76

Second Amendment to Security Agreement between Commerce Energy,
    Inc. and Tenaska Power Services Co., effective as of
    June 22, 2006.10
.77

Asset Purchase Agreement dated September 20, 2006 between
    Houston Energy Services Company, L.L.C. and Commerce Energy,
    Inc., previously filed with the SEC on September 26, 2006
    as Exhibit 2.1 to Commerce Energy Group, Inc.s
    Current Report on
    Form 8-K
    and incorporated herein by reference.10
.78

Transition Services Agreement dated September 20, 2006
    among Commerce Energy, Inc. and Houston Energy Services Company,
    L.L.C., previously filed with the SEC on September 26, 2006
    as Exhibit 2.2 to Commerce Energy Group, Inc.s
    Current Report on
    Form 8-K
    and incorporated herein by reference.10
.79

Guaranty Agreement dated September 20, 2006 among Commerce
    Energy, Inc., Thomas L. Goudie, James Bujnoch, Jr., Gary
    Hollowell, Dustin Roach, Steve Loy and Arnold Perez, previously
    filed with the SEC on September 26, 2006 as
    Exhibit 2.3 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.80

Gas Supply Agreement dated September 20, 2006 by and among
    Pacific Summit Energy LLC and Commerce Energy, Inc. and Houston
    Energy Services Company, LLC.10
.81

Operating Agreement dated September 20, 2006 between
    Pacific Summit Energy LLC and Commerce Energy, Inc.10
.82

Security Agreement dated September 20, 2006 between Pacific
    Summit Energy LLC and Commerce Energy, Inc.10
.83

Blocked Account Control Agreement (with Lockbox Services) dated
    September 20, 2006 by and among Commerce Energy, Inc.,
    Pacific Summit Energy LLC and Wachovia Bank NA.10
.84

Base Contract for Sale and Purchase of Natural Gas dated
    September 20, 2006 between Commerce Energy, Inc. and
    Pacific Summit Energy LLC.10
.85

APX Settlement and Release of Claims Agreement dated as of
    January 5, 2007 by and among the Settling Parties,
    including Commonwealth Energy Corporation (n/k/a Commerce
    Energy, Inc.), previously filed with the SEC on March 19,
    2007 as Exhibit 10.2 to Commerce Energy Group, Inc.s
    Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.86

First Amendment to Master Power Purchase and Sale Agreement
    between Commerce Energy, Inc. and Tenaska Power Services, Co.
    dated May 25, 2007.10
.87

Settlement Agreement and Mutual Release dated June 11, 2007
    among Commerce Energy Group, Inc., Commerce Energy, Inc., Peter
    Weigand and American Communications Network, Inc., previously
    filed with the SEC on June 12, 2007 as Exhibit 99.1 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.14
.1

Commerce Energy Group, Inc. Code of Business Conduct and Ethics,
    previously filed with the SEC on November 15, 2004 as
    Exhibit 14.1 to Commerce Energy Group, Inc.s Annual
    Report on
    Form 10-K
    for the year ended July 31, 2004 and incorporated herein by
    reference.21
.1

Subsidiaries of the Registrant.23
.1

Consent of Hein & Associates LLP, independent
    registered public accounting firm.23
.2

Consent of Ernst & Young, LLP, independent registered
    public accounting firm. 84




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##### Table of Contents



Exhibit

Description31
.1

Principal Executive Officer Certification required by
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934.31
.2

Principal Financial Officer Certification required by
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934.32
.1

Principal Executive Officer Certification pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Principal Financial Officer Certification pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     
    
    Confidential treatment has been requested with respect to
    certain provisions of this agreement. Omitted portions have been
    filed separately with the SEC. 85




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##### Table of Contents



SIGNATURES
    COMMERCE ENERGY GROUP, INC.Date: October 29, 2007

By: /s/  STEVEN
    S.
    BOSSSteven
    S. BossChief Executive Officer      Signature

Title

Date/s/  STEVEN
    S. BOSSSteven
    S. Boss

Chief Executive Officer and a Director (Principal Executive
    Officer)

October 29, 2007/s/  J.
    ROBERT HIPPSJ.
    Robert Hipps

Interim Chief Financial Officer
    (Principal Financial Officer)

October 29, 2007/s/  KENNETH
    L. ROBINSONKenneth
    L. Robinson

Corporate Controller
    (Principal Accounting Officer)

October 29, 2007/s/  CHARLES
    E. BAYLESSCharles
    E. Bayless

Director

October 29, 2007/s/  DENNIS
    R. LEIBELDennis
    R. Leibel

Director

October 29, 2007/s/  GARY
    J. HESSENAUERGary
    J. Hessenauer

Director

October 29, 2007/s/  MARK
    S. JUERGENSENMark
    S. Juergensen

Director

October 29, 2007/s/  ROBERT
    C. PERKINSRobert
    C. Perkins

Chairman of the Board and a Director

October 29, 2007  86




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##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
          HEIN &
    ASSOCIATES LLP
    F-1




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##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
          ERNST &
    YOUNG LLP
    F-2




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##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Fiscal Years Ended July 31,2007


2006


2005(In thousands, except per share amounts)Revenue

$
365,089


$
247,080


$
253,853APX settlement


6,525







Net revenue


371,614



247,080



253,853Direct energy costs


314,371



218,289



225,671Gross profit


57,243



28,791



28,182Selling and marketing expenses


10,642



5,231



4,081General and administrative expenses


37,291



26,939



31,504Income (loss) from operations


9,310



(3,379
)


(7,403
)Other income and expenses:Initial formation litigation expenses










(1,601
)Recovery of (provision for) impairment on investments










2,000ACN arbitration settlement


(3,900
)






Interest income


1,296



1,140



890Interest expense


(1,053
)






Total other income and expenses


(3,657
)


1,140



1,289Income (loss) before provision for income taxes


5,653



(2,239
)


(6,114
)Provision for income taxes


122







Net income (loss)

$
5,531


$
(2,239
)

$
(6,114
)Income (loss) per common share:Basic and diluted

$
0.18


$
(0.07
)

$
(0.20
)Shares used in computing income (loss) per common share:Basic


29,906



30,419



30,946Diluted


30,044



30,419



30,946    F-3




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##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  CONSOLIDATED
    BALANCE SHEETS
  July 31,2007


2006(In thousands, except per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
6,559


$
22,941Accounts receivable, net


65,231



30,650Inventory


5,905



4,578Prepaid expenses and other current


7,224



6,827Total current assets


84,919



64,996Restricted cash


10,457



17,117Deposits


1,906



2,506Property and equipment, net


8,662



5,866Goodwill


4,247



4,801Other intangible assets


6,385



3,790Total assets

$
116,576


$
99,076LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
37,926


$
26,876Accrued liabilities


8,130



5,867Total current liabilities


46,056



32,743Commitments and contingenciesStockholders equity:Common stock  150,000 shares authorized with
    $0.001 par value and 30,383 and 29,632 shares issued
    and outstanding in fiscal 2007 and 2006, respectively


60,599



58,849Other comprehensive income (loss)


(823
)


2,271Retained earnings


10,744



5,213Total stockholders equity


70,520



66,333Total liabilities and stockholders equity

$
116,576


$
99,076    F-4




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##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  Commerce Energy Group, Inc.OtherCommon Stock


Retained


ComprehensiveShares


Amount


Earnings


Income


Total(In thousands)Balance at July 31, 2004


30,519


$
60,540


$
13,566


$



$
74,106Exercise of stock options


102



54











54Repurchase of common shares


(120
)


(251
)










(251
)Issuance of stock


5



10











10Amortization of unearned restricted stock






256











256Issuance of stock in connection with ACN acquisition


930



2,000











2,000Net loss










(6,114
)






(6,114
)Balance at July 31, 2005


31,436



62,609



7,452







70,061Exercise of stock options


221



11











11Repurchase of common shares


(1,469
)


(2,204
)










(2,204
)Issuance of stock


10















Repurchase of dissenters rights stock


(55
)


(106
)










(106
)Issuance of restricted stock


435















Cancellation of restricted stock


(16
)














Amortization of unearned share based compensation






386











386Amortization of unearned restricted stock






153











153Cancellation of stock in connection with ACN acquisition


(930
)


(2,000
)










(2,000
)Comprehensive income










(2,239
)


2,271



32Balance at July 31, 2006


29,632



58,849



5,213



2,271



66,333Exercise of stock options


535



1,196











1,196Issuance of restricted stock


230















Cancellation of restricted stock


(14
)














Amortization of unearned share based compensation






213











213Amortization of unearned restricted stock






341











341Comprehensive income










5,531



(3,094
)


2,437Balance at July 31, 2007


30,383


$
60,599


$
10,744


$
(823
)

$
70,520    F-5




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Fiscal Years Ended July 31,2007


2006


2005(In thousands)Cash Flows From Operating ActivitiesNet income (loss)

$
5,531


$
(2,239
)

$
(6,114
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation


1,736



856



1,216Amortization


1,656



1,140



888Amortization of deferred loan costs


162







Provision for doubtful accounts


4,169



2,813



2,305Stock-based compensation charge


554



539



256Deferred income tax provision










74Impairment of Summit Energy investments










5Loss on disposition of property and equipment










165Changes in operating assets and liabilities:Accounts receivable, net


(38,750
)


(5,620
)


1,096Prepaid expenses and other assets


(3,144
)


8,402



695Accounts payable


11,051



1,251



(4,952
)Accrued liabilities and other


985



(1,079
)


805Net cash provided by (used in) operating activities


(16,050
)


6,063



(3,561
)Cash Flows From Investing ActivitiesPurchase of property and equipment


(4,532
)


(4,714
)


(1,025
)Reimbursement from state on renewable energy asset










250Purchase of intangible assets


(4,453
)


(28
)


Sale of intangibles  customer contracts sold


756







Business acquisition, net of cash required










(14,525
)Sale of short-term investments










43,312Net cash provided by (used in) investing activities


(8,229
)


(4,742
)


28,012Cash Flows From Financing ActivitiesRepurchase of common stock






(2,310
)


(251
)Sale of common stock










10Credit line commitment fee


41



(530
)


Proceeds from exercises of stock options


1,196



11



54Decrease (increase) in restricted cash


6,660



(8,895
)


(1,673
)Net cash provided by (used in) financing activities


7,897



(11,724
)


(1,860
)Increase (decrease) in cash and cash equivalents


(16,382
)


(10,403
)


22,591Cash and cash equivalents at beginning of year


22,941



33,344



10,753Cash and cash equivalents at end of year

$
6,559


$
22,941


$
33,344Cash paid for:Interest

$
891


$



$
Income taxes

$



$



$
    F-6




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (In
    thousands, except per share and per kWh amounts)
  1.
    Nature of
    Business    energy-related
    2.
    Summary
    of Significant Accounting Policies  Basis
    of Consolidation
    Use of
    Estimates and Assumptions
    Reclassifications
    Non-cash
    items
   F-7




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Revenue
    and Cost Recognition
        Fiscal Years Ended July 31,2007


2006


2005Retail electricity sales

$
237,526


$
177,752


$
188,316Excess energy sales


1,535



7,627



40,061Total electricity sales


239,061



185,379



228,377Retail natural gas sales


126,028



61,701



25,476APX settlement


6,525







Net revenue

$
371,614


$
247,080


$
253,853         Major
    Customer and Suppliers
      Operating
    Expenses
   F-8




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Earnings
    (Loss) Per Common Share
  if-converted
  Stock-Based
    Compensation
  Share-Based Payments Accounting for
    Stock-Based
    Compensation Accounting for Stock Issued to Employees.
    Black-Scholes
 F-9




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal Years Ended July 31,2007


2006


2005Weighted-average risk-free interest rate


4.8
%


4.9
%


5.0
%Average expected life in years


3.8



4.9



6.0Expected dividends


None



None



NoneVolatility


72.0
%


77.2
%


82.5
%     Fiscal YearEnded July 31,2005Net loss as reported

$
(6,114
)Add: Stock-based employee compensation expense included in net
    loss, net of related tax effects


256Deduct: Total stock-based compensation expense determined under
    fair value based method for all awards, net of related tax
    effects


(2,977
)Pro forma net loss

$
(8,835
)Loss per share:Basic and diluted  as reported

$
(0.20
)Basic and diluted  pro forma

$
(0.29
)   Restricted
    Stock
      Cash
    and Cash Equivalents
   F-10




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Liquidity
    Accounts
    Receivable
    Credit
    Risk and Allowance for Doubtful Accounts
      Inventory
    Deferred
    Income Taxes
    Comprehensive
    Income (Loss)
   F-11




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal Years Ended2007


2006


2005Net income (loss)

$
5,531


$
(2,239
)

$
(6,114
)Changes in fair value of cash flow hedges


(3,094
)


2,271



0Comprehensive income

$
2,437


$
32


$
(6,114
)     Restricted
    Cash and Energy Deposits
    Property
    and Equipment
      Goodwill
          GoodwillBalance at July 31, 2005

$
6,801Return of ACN shares held in escrow


(2,000
)Balance at July 31, 2006


4,801Sale of natural gas customers


(554
)Balance at July 31, 2007

$
4,247  F-12




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    Intangible Assets
        Fiscal Year Ended July 31, 2007Useful Life


Gross Carrying


Accumulated(Years)


Amount


Amortization


NetCustomer lists


3-15


$
6,340


$
1,800


$
4,540Software


2-5



1,810



1,435



375Licenses


Indefinite



759







759Other intangibles


1-20



1,828



1,117



711$
10,737


$
4,352


$
6,385   Fiscal Year Ended July 31, 2006Useful Life


Gross Carrying


Accumulated(Years)


Amount


Amortization


NetCustomer lists


3-15


$
2,000


$
607


$
1,393Software


2-5



1,810



1,214



596Licenses


Indefinite



923







923Other intangibles


1-20



1,828



950



878$
6,561


$
2,771


$
3,790     Fiscal Year Ending July 31,2008

$
1,5992009


1,3932010


1,3172011


3142012 and beyond


1,003$
5,626   Impairment
    of Long-Lived Assets
   F-13




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value of Financial Instruments
    Segment
    Reporting
    Accounting
    for Derivatives Instruments and Hedging Activities
         F-14




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    July 31,


July 31,2007


2006Current assets

$



$
1,817Current liabilities


(671
)


(362
)Deferred gains/(losses)


(152
)


816Hedge ineffectiveness






Accumulated other comprehensive income/(loss)

$
(823
)

$
2,271       Recent
    Accounting Pronouncements
  The Fair Value Option for Financial Assets and
    Financial Liabilities Including an Amendment of FASB Statement
    No. 115
  Considering the Effects of Prior
    Year Misstatements when Quantifying Misstatements in Current
    Year Financial Statements
  Fair Value Measurements
  Accounting
    for Uncertainty in Income Taxes Accounting for Income
    Taxes
 F-15




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    3.
    Acquisitions  ACN
    Utility Services, Inc.
    gas-and-electricity
    Category of intangible assets:Intangible assets subject to amortization:Customer list

$
860Software


750Total

$
1,610Intangible asset not subject to amortization:Licenses

$
900       Purchase price

$
16,525Amount assigned to the net assets acquired


8,209Amount assigned to intangible assets


2,510Goodwill created (excluding $408 of acquisition costs)

$
5,806    F-16




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Houston
    Energy Services Company, LLC
    4.
    Credit
    Facility and Supply Agreements  Wachovia
    Capital Finance Corporation (Western)
      and/or
  Tenaska
    Power Services Co.
   F-17




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Pacific
    Summit Energy LLC.
    5.
    Market
    and Regulatory    Electricity
           F-18




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Natural
    Gas
    6.
    Interest
    Income and Expense    7.
    Income
    Taxes    Fiscal Years Ended July 31,2007


2006


2005Current income taxes:Federal

$
101


$



$
74State


21







Total


122







74Deferred income taxes:Federal










(74
)State










Total










(74
)Provision for income taxes

$
122


$



$
       Fiscal Years Ended July 31,2007


2006


2005Federal statutory income tax rate


35.0
%


(35.0
)%


(35.0
)%State income taxes, net of federal benefit


2.9







Increase (decrease) in valuation allowance


(37.0
)


30.6



38.3Permanent item


(.9
)






Tax-exempt interest






6.2



(3.6
)Other


2.2



(1.8
)


0.3Effective income tax rate


2.2
%



%



%  F-19




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    July 31,2007


2006Deferred income tax assets:Stock options

$
760


$
586Reserves and accruals


1,031



598Net operating loss carryforwards


5,293



7,901Allowance for doubtful accounts


1,991



2,025Capital losses


730



730Unrealized losses


2,529



1,056AMT tax credit


348



226Total deferred income tax assets


12,682



13,122Valuation allowance


(8,647
)


(9,578
)Total deferred income tax assets, net


4,035



3,544Deferred tax liabilities:Depreciation and amortization


(2,832
)


(2,017
)State income taxes


(738
)


(946
)Acquired intangibles


(465
)


(581
)Total deferred income tax liabilities


(4,035
)


(3,544
)Net deferred income tax asset

$



$
       8.
    Income
    (Loss) Per Common Share    Fiscal Years Ended July 31,2007


2006


2005Numerator:Net income (loss)

$
5,531


$
(2,239
)

$
(6,114
)Net income (loss)  Basic and Diluted

$
5,531


$
(2,239
)

$
(6,114
)Denominator:Weighted-average outstanding common shares  Basic


29,906



30,419



30,946Weighted-average of all diluted stock options after repurchase


138







Weighted-average outstanding common shares  Diluted


30,044



30,419



30,946  F-20




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    9.  Accounts
    Receivable, Net
    July 31,2007


2006Billed

$
44,693


$
21,768Unbilled


24,963



13,38269,656



35,150Less allowance for doubtful accounts


(4,425
)


(4,500
)Accounts receivable, net

$
65,231


$
30,650     Fiscal Years Ended July 31,2007


2006


2005Balance, beginning of year

$
4,500


$
5,498


$
3,193Provisions charged to operations


4,169



2,813



3,092Write-offs


(4,244
)


(3,811
)


(787
)Balance, end of year

$
4,425


$
4,500


$
5,498     10.
    Restricted
    Cash and Energy Deposits    July 31,2007


2006Restricted cash investments pledged as collateral for letters of
    credit to secure the purchase of energy and operating performance

$
10,457


$
17,117Energy deposits pledged as collateral to secure the purchase of
    energy


3,472



3,852Total restricted cash, cash equivalents and energy deposits

$
13,929


$
20,969    F-21




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    Investments    12.
    Property
    and Equipment, Net    July 31,2007


2006Information technology equipment, systems and software

$
11,662


$
4,965Office furniture and equipment


1,342



1,056Renewable energy assets


249



249Leasehold improvements


317



14113,570



6,411Less: accumulated depreciation


(6,145
)


(4,417
)Property and equipment, net


7,425



1,994Projects in progress (primarily technology systems and software)


1,237



3,872Total fixed assets

$
8,662


$
5,866     13.
    Accrued
    Liabilities    July 31,2007


2006Accrued legal expense

$
677


$
1,035Energy taxes payable


1,319



688Accrued energy related fees


843



1,759Accrued compensation related expenses


2,455



665Accrued audit fees


405



543Other


2,431



1,177Total accrued liabilities

$
8,130


$
5,867   14.
    Stock
    Options     F-22




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Options OutstandingWeighted-AverageWeighted-


Fair Value ofNumber of


Exercise Price


Average


CommonShares


per Share


Exercise Price


StockBalance at July 31, 2004


10,307


$
0.05 - $3.75


$
2.26Options granted(1)


850



1.92 - 3.50



2.43


$
2.43Options exercised


(102
)


0.50 - 1.92



1.92Options cancelled


(1,881
)


1.92 - 2.50



2.18Options expired


(302
)


1.86 - 2.75



2.18Balance at July 31, 2005


8,872


$
0.05 - $3.75


$
2.24Options granted(2)


570



1.17 - 1.80



1.65


$
1.65Options exercised


(221
)


0.05



0.05Options forfeited


(50
)


3.50



3.50Options expired


(1,427
)


1.00 - 2.08



1.91Balance at July 31, 2006


7,744


$
1.00 - $3.75


$
2.32Options granted(3)


45



2.56



2.56


$
2.56Options exercised


(535
)


1.86 - 2.75



2.24Options cancelled


(171
)


1.68 - 3.75



2.59Options expired


(100
)


2.50



2.50Balance at July 31, 2007


6,983


$
1.00 - $3.75


$
2.33     (1)
    
    Options were granted with exercise prices greater than the fair
    value of the Common Stock at respective dates of grant.(2)
    
    150 options were granted with exercise prices equal to, and 420
    options were granted with exercise prices greater than, the fair
    value of the Common Stock at respective dates of grant.(3)
    
    Options were granted with exercise price equal to the fair value
    of the Common Stock at the date of grant.    AverageNumber of


Remaining





WeightedShares


Contractual


Shares


AverageRange of Exercise Prices

Outstanding


Life (Years)


Exercisable


Exercise Price$1.00 - $2.08


2,635



6.2



2,535


$
1.85$2.50 - $2.50


2,700



2.4



2,700



2.50$2.56 - $3.75


1,648



2.2



1,603



2.81Total


6,983



3.8



6,838


$
2.33  F-23




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Options Granted to the Companys Former Chairman and Chief
    Executive Officer
    15.
    Commitments
    and Contingencies  Commitments
  Employment
    Contract Commitments
  Form 10-K 12-month
  Form 10-K 6-month
   F-24




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Purchase
    Commitments
    Letters
    of Credit and Surety Bonds
    Operating
    Leases
      Fiscal Year Ending July 31,2008

$
1,2892009


4452010 and after


171$
1,905   Employee
    Benefit Plan
    Employee
    Stock Purchase Plan
   F-25




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006
    Stock Incentive Plan
    Regulatory
    Proceedings
        Litigation
    ACN
   F-26




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        California
    Refund Case
  No. EL00-95;
         F-27




---



##### Table of Contents



COMMERCE
    ENERGY GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Lawrence
    Clayton, Jr.
  litigation-related
    16.
    Quarterly
    Financial Information (Unaudited)    Fiscal Year


July 31


April 30


January 31


October 31Year ended July 31, 2007:Net revenue

$
371,614


$
107,888


$
100,575


$
92,644


$
70,507Direct energy costs


314,371



92,862



82,946



78,112



60,451Gross profit


57,243



15,026



17,629



14,532



10,056Net income


5,531



1,065



1,543



2,539



384Net income per common share:Basic


0.18



0.04



0.05



0.09



0.01Diluted


0.18



0.03



0.05



0.09



0.01Year ended July 31, 2006:Net revenue

$
247,080


$
52,303


$
57,755


$
72,654


$
64,368Direct energy costs


218,289



43,626



49,643



68,892



56,128Gross profit


28,791



8,677



8,112



3,762



8,240Net income (loss)


(2,239
)


651



1,002



(4,112
)


220Net income (loss) per common share:Basic and diluted


(0.07
)


0.02



0.03



(0.13
)


0.01Year ended July 31, 2005:Net revenue

$
253,853


$
65,831


$
68,478


$
61,048


$
58,496Direct energy costs


225,671



60,930



60,767



52,639



51,335Gross profit


28,182



4,901



7,711



8,409



7,161Net loss


(6,114
)


(2,405
)


(1,319
)


(2,342
)


(48
)Net loss per common share:Basic and diluted


(0.20
)


(0.08
)


(0.04
)


(0.08
)


(0.00
)  F-28




---



##### Table of Contents



EXHIBIT INDEX
  Exhibit

Description3
.1

Amended and Restated Certificate of Incorporation of Commerce
    Energy Group, Inc., previously filed with the SEC on
    July 6, 2004 as Exhibit 3.3 to Commerce Energy Group,
    Inc.s Registration Statement on
    Form 8-A
    and incorporated herein by reference.3
.2

Certificate of Designation of Series A Junior Participating
    Preferred Stock of Commerce Energy Group, Inc. dated
    July 1, 2004, previously filed with the SEC on July 6,
    2004 as Exhibit 3.4 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form 8-A
    and incorporated herein by reference.3
.3

Amended and Restated Bylaws of Commerce Energy Group, Inc.,
    previously filed with the SEC on July 6, 2004 as
    Exhibit 3.6 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form 8-A
    and incorporated herein by reference.4
.1

Rights Agreement, dated as of July 1, 2004, entered into
    between Commerce Energy Group, Inc. and Computershare
    Trust Company, as rights agent, previously filed with the
    SEC on July 6, 2004 as Exhibit 10.1 to Commerce Energy
    Group, Inc.s Registration Statement on
    Form 8-A
    and incorporated herein by reference.4
.2

Form of Rights Certificate, previously filed with the SEC on
    July 6, 2004 as Exhibit 10.2 to Commerce Energy Group,
    Inc.s Registration Statement on
    Form 8-A
    and incorporated herein by reference.Material Contracts Relating to Management Compensation Plans
    or Arrangements10
.1

Commonwealth Energy Corporation 1999 Equity Incentive Plan,
    previously filed with the SEC on October 8, 2003 as
    Exhibit 4.1 to Commonwealth Energy Corporations
    Registration Statement on
    Form S-8
    and incorporated herein by reference.10
.2

Form of Stock Option Agreement pursuant to Commonwealth Energy
    Corporation 1999 Equity Incentive Plan, previously filed with
    the SEC on November 15, 2004 as Exhibit 10.9 to
    Commerce Energy Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.3

Commerce Energy Group, Inc. 2006 Stock Incentive Plan,
    previously filed with the SEC on February 1, 2006 as
    Exhibit 99.2 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.4

Form of a Stock Option Award Agreement for U.S. Employees
    pursuant to the Commerce Energy Group, Inc. 2006 Stock Incentive
    Plan, previously filed with the SEC on April 20, 2006 as
    Exhibit 4.10 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.5

Form of a Non-Qualified Stock Option Agreement for Non-Employee
    Directors pursuant to the Commerce Energy Group, Inc. 2006 Stock
    Incentive Plan, previously filed with the SEC on April 20,
    2006 as Exhibit 4.11 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.6

Form of a Restricted Share Award Agreement for U.S. Employees
    pursuant to the Commerce Energy Group, Inc. 2006 Stock Incentive
    Plan, previously filed with the SEC on April 20, 2006 as
    Exhibit 4.12 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.7

Form of a Restricted Share Unit Award Agreement pursuant to the
    Commerce Energy Group, Inc. 2006 Stock Incentive Plan,
    previously filed with the SEC on April 20, 2006 as
    Exhibit 4.14 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.8

Form of a SAR Award Agreement pursuant to the Commerce Energy
    Group, Inc. 2006 Stock Incentive Plan, previously filed with the
    SEC on April 20, 2006 as Exhibit 4.15 to Commerce
    Energy Group, Inc.s Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.9

Form of Performance Unit and Performance Stock Award pursuant to
    the Commerce Energy Group, Inc. 2006 Stock Incentive Plan,
    previously filed with the SEC on April 20, 2006 as
    Exhibit 4.16 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.10

Form of Deferral Election Agreement for Deferred Share Units to
    the Commerce Energy Group, Inc. pursuant to the Commerce Energy
    Group, Inc. 2006 Stock Incentive Plan, previously filed with the
    SEC on April 20, 2006 as Exhibit 4.17 to Commerce
    Energy Group, Inc.s Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.




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##### Table of Contents



Exhibit

Description10
.11

Amended and Restated Form of Non-Qualified Stock Option Award
    Agreement (for Non-Employee Directors) pursuant to the Commerce
    Energy Group, Inc. 2006 Stock Incentive Plan, previously filed
    with the SEC on May 18, 2006 as Exhibit 99.2 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.12

Form of Restricted Share Award Agreement (for Non-Employee
    Directors) pursuant to the Commerce Energy Group, Inc. 2006
    Stock Incentive Plan, previously filed with the SEC on
    April 20, 2006 as Exhibit 4.13 to Commerce Energy
    Group, Inc.s Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    filed with the SEC on April 20, 2006 and incorporated
    herein by reference.10
.13

Form of Restricted Share Award Agreement (for Non-Employee
    Directors) pursuant to the Commerce Energy Group, Inc. 2006
    Stock Incentive Plan, Initial Grant, previously filed with the
    SEC on May 18, 2006 as Exhibit 99.4 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.14

Commerce Energy Group, Inc. Amended and Restated 2005 Employee
    Stock Purchase Plan, previously filed with the SEC on
    February 1, 2006 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.15

Form of Subscription Agreement for the Commerce Energy Group,
    Inc. Amended and Restated 2005 Employee Stock Purchase Plan,
    previously filed with the SEC on April 20, 2006 as
    Exhibit 4.7 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference.10
.16

Form of Notice of Withdrawal for the Commerce Energy Group, Inc.
    Amended and Restated 2005 Employee Stock Purchase Plan,
    previously filed with the SEC on April 20, 2006 as
    Exhibit 4.8 to Commerce Energy Group, Inc.s
    Registration Statement on
    Form S-8
    (File
    No. 333-133442)
    and incorporated herein by reference10
.17

Commerce Energy Group, Inc. Bonus Program, effective
    January 25, 2007, previously filed with the SEC on
    January 31, 2007 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.18

Commerce Energy Group, Inc. Bonus Program as amended by first
    amendment, effective March 27, 2007, previously filed with
    the SEC on June 14, 2007 as Exhibit 10.7 to Commerce
    Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.19

Commerce Energy Group, Inc. Amended and Restated Non-Employee
    Director Compensation Policy, effective January 27, 2006,
    previously filed with the SEC on February 1, 2006 as
    Exhibit 99.3 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.20

Commerce Energy Group, Inc. Amended and Restated Non-Employee
    Director Compensation Policy, effective May 12, 2006,
    previously filed with the SEC on May 18, 2006 as
    Exhibit 99.1 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.21

Commerce Energy Group, Inc. Amended and Restated Non-Employee
    Director Compensation Policy, effective January 25, 2007,
    previously filed with the SEC on January 31, 2007 as
    Exhibit 99.6 to Commerce Energy Group Inc.s Current Report
    on Form 8-K
    and incorporated herein by reference.10
.22

Stock Option Agreement dated as of August 29, 2003 between
    Robert C. Perkins and Commonwealth Energy Corporation,
    previously filed with the SEC on November 15, 2004 as
    Exhibit 10.13 to Commerce Energy Group, Inc.s Annual
    Report on
    Form 10-K
    and incorporated herein by reference.10
.23

Stock Option Agreement dated as of August 29, 2003 between
    Robert C. Perkins and Commonwealth Energy Corporation,
    previously filed with the SEC on November 15, 2004 as
    Exhibit 10.14 to Commerce Energy Group, Inc.s Annual
    Report on
    Form 10-K
    and incorporated herein by reference.10
.24

Indemnification Agreement dated as of November 1, 2000
    between Commonwealth Energy Corporation and Ian B. Carter, with
    Schedule attached thereto of other substantially identical
    Indemnification Agreements, which differ only in the respects
    set forth in such Schedule, previously filed with the SEC on
    November 15, 2004 as Exhibit 10.16 to Commerce Energy
    Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.25

Indemnification Agreement dated as of July 1, 2004 between
    Commerce Energy Group, Inc. and Ian Carter, with Schedule
    attached thereto of other substantially identical
    Indemnification Agreements, which differ only in the respects
    set forth in such Schedule, previously filed with the SEC on
    November 15, 2004 as Exhibit 10.17 to Commerce Energy
    Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.




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##### Table of Contents



Exhibit

Description10
.26

Confidential Settlement Agreement and General Release dated as
    of April 21, 2005 by and among Ian B. Carter, Commerce
    Energy, Inc. and Commerce Energy Group, Inc., previously filed
    with the SEC on April 22, 2005 as Exhibit 10.1 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.27

Stock Option Agreement dated April 29, 2005 by and between
    Ian B. Carter and Commerce Energy Group, Inc., previously filed
    with the SEC on October 31, 2005 as Exhibit 10.33 to
    Commerce Energy Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.28

Executive Employment Agreement dated April 1, 2004 between
    Commonwealth Energy Corporation, Commerce Energy Group, Inc. and
    Peter Weigand, previously filed with the SEC on April 5,
    2004 as Exhibit 10.6 to Amendment No. 3 to Commerce
    Energy Groups Registrants Statement on
    Form S-4
    and incorporated herein by reference.10
.29

Amendment No. 1 to Executive Employment Agreement dated
    November 17, 2005, by and among Commerce Energy Group,
    Inc., Commerce Energy, Inc. and Peter Weigand, previously filed
    with the SEC on November 23, 2005 as Exhibit 99.4 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.30

Settlement Agreement and General Release dated November 17,
    2005 by and among Peter Weigand, Commerce Energy Group, Inc. and
    Commerce Energy, Inc., previously filed with the SEC on
    November 23, 2005 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.31

Executive Employment Agreement dated April 1, 2004 between
    Commonwealth Energy Corporation, Commerce Energy Group, Inc. and
    Richard L. Boughrum, previously filed with the SEC on
    April 5, 2004 as Exhibit 10.7 to Amendment No. 3
    to Commerce Energy Groups Registrants Statement on
    Form S-4
    and incorporated herein by reference.10
.32

Amendment No. 1 to Executive Employment Agreement dated
    November 17, 2005, by and among Commerce Energy Group,
    Inc., Commerce Energy, Inc. and Richard L. Boughrum, previously
    filed with the SEC on November 23, 2005 as
    Exhibit 99.11 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.33

Settlement Agreement and General Release dated November 17,
    2005 by and among Richard L. Boughrum, Commerce Energy Group,
    Inc. and Commerce Energy, Inc., previously filed with the SEC on
    November 23, 2005 as Exhibit 99.8 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.34

Employment Offer Letter Agreement between Commerce Energy Group,
    Inc. and Thomas Ulry dated May 31, 2005, previously filed
    with the SEC on October 31, 2005 as Exhibit 10.30 to
    Commerce Energy Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference10
.35

Letter from Thomas Ulry to Commerce Energy Group, Inc. dated
    October 28, 2005 regarding the May 31, 2005 Employment
    Offer Letter Agreement, previously filed with the SEC on
    October 31, 2005 as Exhibit 10.31 to Commerce Energy
    Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.36

Settlement Agreement and General Release dated November 17,
    2005, by and among Commerce Energy Group, Inc., Commerce Energy,
    Inc. and Eric Alam, previously filed with the SEC on
    November 23, 2005 as Exhibit 99.13 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.37

Agreement and Release dated November 17, 2005, by and
    among, Commerce Energy Group, Inc., Commerce Energy, Inc., Paul,
    Hastings, Janofsky & Walker LLP, Eric Alam, Bruno
    Kvetinskas, Greg Lander and Peter Weigand, previously filed with
    the SEC on November 23, 2005 as Exhibit 99.7 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.38

Executive Employment Agreement dated August 1, 2005 between
    Commerce Energy Group, Inc. and Steven S. Boss, previously filed
    with the SEC on August 2, 2005 as Exhibit 10.1 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.39

Amendment No. 1 to Employment Agreement dated
    January 25, 2007 by and between Commerce Energy Group, Inc.
    and Steven S. Boss, previously filed with the SEC on
    January 31, 2007 as Exhibit 99.2 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference




---



##### Table of Contents



Exhibit

Description10
.40

Stock Option Agreement dated August 1, 2005 between
    Commerce Energy Group, Inc. and Steven S. Boss, previously filed
    with the SEC on August 2, 2005 as Exhibit 10.2 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.41

Restricted Stock Agreement dated August 1, 2005 between
    Commerce Energy Group, Inc. and Steven S. Boss, previously filed
    with the SEC on August 2, 2005 as Exhibit 10.3 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.42

Amendment No. 1 to Restricted Stock Agreement dated
    January 25, 2007 by and between Commerce Energy Group, Inc.
    and Steven S. Boss, previously filed with the SEC on
    January 31, 2007 as Exhibit 99.3 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference10
.43

Indemnification Agreement dated August 1, 2005 between
    Commerce Energy Group, Inc. and Steven S. Boss, previously filed
    with the SEC on August 2, 2005 as Exhibit 10.4 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.44

Employment Agreement dated December 1, 2005 between
    Lawrence Clayton, Jr. and Commerce Energy Group, Inc.,
    previously filed with the SEC on December 6, 2005 as
    Exhibit 99.1 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.45

Amendment No. 1 to Employment Agreement dated
    November 30, 2006, by and between Commerce Energy Group,
    Inc. and Lawrence Clayton, Jr., previously filed with the SEC on
    March 19, 2007 as Exhibit 10.1 to Commerce Energy
    Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.46

Amendment No. 2 to Employment Agreement dated
    January 25, 2007 by and between Commerce Energy Group, Inc.
    and Lawrence Clayton, Jr., previously filed with the SEC on
    January 31, 2007 as Exhibit 99.4 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.47

Stock Option Agreement dated December 1, 2005 between
    Lawrence Clayton, Jr. and Commerce Energy Group, Inc.,
    previously filed with the SEC on December 6, 2005 as
    Exhibit 99.2 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.48

Restricted Stock Agreement dated December 1, 2005 between
    Lawrence Clayton, Jr. and Commerce Energy Group, Inc.,
    previously filed with the SEC on December 6, 2005 as
    Exhibit 99.3 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.49

Amendment No. 1 to Restricted Stock Agreement dated
    January 25, 2007 by and between Commerce Energy Group, Inc.
    and Lawrence Clayton, Jr., previously filed with the SEC on
    January 31, 2007 as Exhibit 99.5 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.50

Indemnification Agreement dated December 1, 2005 between
    Lawrence Clayton, Jr. and Commerce Energy Group, Inc.,
    previously filed with the SEC on December 6, 2005 as
    Exhibit 99.4 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.51

Settlement Agreement and General Release by and among Andrew V.
    Coppola, Commerce Energy, Inc. and Commerce Energy Group, Inc.,
    previously filed with the SEC on April 18, 2006 as
    Exhibit 99.1 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.52

Employment Agreement dated March 26, 2007 between Commerce
    Energy Group, Inc. and Erik A. Lopez, Sr., previously filed with
    the SEC on June 14, 2007 as Exhibit 10.3 to Commerce
    Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.53

Amendment No. 1 to Employment Agreement dated
    October 5, 2007 by and between Commerce Energy Group, Inc.
    and Erik A. Lopez, Sr.10
.54

Stock Option Award Agreement dated March 27, 2007 between
    Commerce Energy Group, Inc. and Erik A. Lopez, Sr., previously
    filed with the SEC on June 14, 2007 as Exhibit 10.5 to
    Commerce Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.55

Restricted Share Award Agreement dated March 27, 2007
    between Commerce Energy Group, Inc. and Erik A. Lopez, Sr.,
    previously filed with the SEC on June 14, 2007 as
    Exhibit 10.5 to Commerce Energy Group, Inc.s
    Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.56

Indemnification Agreement dated March 26, 2007 between
    Commerce Energy Group, Inc. and Erik A. Lopez, Sr., previously
    filed with the SEC on June 14, 2007 as Exhibit 10.4 to
    Commerce Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.57

Separation Agreement and General Release dated October 5,
    2007 by and between Commerce Energy Group, Inc. and Erik A.
    Lopez, Sr.




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##### Table of Contents



Exhibit

Description10
.58

Interim Executive Services Agreement by and between Commerce
    Energy Group, Inc. and Tatum, LLC regarding J. Robert Hipps
    dated July 25, 2007, previously filed with the SEC on
    July 27, 2007 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference10
.59

Indemnification Agreement between Commerce Energy Group, Inc.
    and J. Robert Hipps dated July 25, 2007, previously filed
    with the SEC on July 27, 2007 as Exhibit 99.2 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.Other Material Contracts10
.60

Registration Rights Agreement by and among Commonwealth Energy
    Corporation and the holders of Skipping Stone Inc. common stock
    dated March 29, 2004, previously filed with the SEC on
    April 5, 2004 as Exhibit 2.5 to Amendment No. 3
    to Commerce Energy Group, Inc.s Registration Statement on
    Form S-4
    and incorporated herein by reference.10
.61

Consent to Sublease and Sublease Agreement dated May 28,
    2004 between E*Trade Consumer Finance Corporation and
    Commonwealth Energy Corporation, previously filed with the SEC
    on November 15, 2004 as Exhibit 10.25 to Commerce
    Energy Group, Inc.s Annual Report on
    Form 10-K
    and incorporated herein by reference.10
.62

Agreement To Provide QSE and Marketing Services dated
    August 1, 2005 between Commerce Energy, Inc. and Tenaska
    Power Services Co.10
.63

Security Agreement dated August 1, 2005 between Commerce
    Energy, Inc. and Tenaska Power Services Co.10
.64

Blocked Account Control Agreement (with Lockbox Services) dated
    August 2005 by and among Commerce Energy, Inc., Tenaska Power
    Services Co. and U.S. Bank National Association Depository Bank.10
.65

Master Power Purchase and Sale Agreement dated August 1,
    2005 between Commerce Energy, Inc. and Tenaska Power Services Co.10
.66

Guaranty Agreement dated August 1, 2005 by Commerce Energy
    Group, Inc. in favor of Tenaska Power Services Co.10
.67

First Amendment to Security Agreement between Commerce Energy,
    Inc. and Tenaska Power Services Co., effective as of
    March 7, 2006.10
.68

Loan and Security Agreement by and among Commerce Energy, Inc.,
    as Borrower, and Commerce Energy Group, Inc., as Guarantor, and
    Wachovia Capital Finance Corporation (Western), as Agent, and
    the Lenders From Time to Time Party Thereto, as Lenders, dated
    June 8, 2006, previously filed with the SEC on
    June 12, 2006 as Exhibit 99.1 to Commerce Energy
    Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.69

Guaranty dated June 8, 2006 by Commerce Energy Group, Inc.,
    as Guarantor, to Wachovia Capital Finance Corporation (Western),
    as Agent, previously filed with the SEC on June 12, 2006 as
    Exhibit 99.2 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.70

First Amendment to Loan and Security Agreement and Waiver dated
    September 20, 2006 among Commerce Energy Group, Inc.,
    Commerce Energy, Inc., Wachovia Capital Finance Corporation
    (Western) and The CIT Group/Business Credit, Inc., previously
    filed with the SEC on September 26, 2006 as
    Exhibit 99.1 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.71

Second Amendment to Loan and Security Agreement and Waiver dated
    October 26, 2006 among Commerce Energy Group, Inc.,
    Commerce Energy, Inc., Wachovia Capital Finance Corporation
    (Western) and The CIT Group/Business Credit, Inc., previously
    filed with the SEC on October 30, 2006 as
    Exhibit 10.91 to Commerce Energy Group, Inc.s Annual
    Report on
    Form 10-K
    and incorporated herein by reference.10
.72

Third Amendment to Loan and Security Agreement and Waiver dated
    March 15, 2007 among Commerce Energy Group, Inc., Commerce
    Energy, Inc., Wachovia Capital Finance Corporation (Western) and
    The CIT Group/Business Credit, Inc., previously filed with the
    SEC on March 19, 2007 as Exhibit 10.9 to Commerce
    Energy Group, Inc.s Quarterly Report on
    Form 10-Q
    for the Quarterly Period Ended January 31, 200710
.73

Fourth Amendment to Loan and Security Agreement and Waiver dated
    June 26, 2007 among Commerce Energy Group, Inc., Commerce
    Energy, Inc., Wachovia Capital Finance Corporation (Western) and
    The CIT Group/Business Credit, Inc.




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##### Table of Contents



Exhibit

Description10
.74

Fifth Amendment to Loan and Security Agreement and Waiver dated
    August 1, 2007 among Commerce Energy Group, Inc., Commerce
    Energy, Inc., Wachovia Capital Finance Corporation (Western) and
    The CIT Group/Business Credit, Inc., previously filed with the
    SEC on August 2, 2007 as Exhibit 99.1 to Commerce
    Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.75

Letter Agreement, dated September 20, 2007, by and among
    Commerce Energy Group, Inc., Commerce Energy, Inc., Wachovia
    Capital Finance Corporation (Western), as Agent and Lender and
    The CIT Group/Business Credit, Inc., as Lender, previously filed
    with the SEC on September 25, 2007 as Exhibit 99.1 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.10
.76

Second Amendment to Security Agreement between Commerce Energy,
    Inc. and Tenaska Power Services Co., effective as of
    June 22, 2006.10
.77

Asset Purchase Agreement dated September 20, 2006 between
    Houston Energy Services Company, L.L.C. and Commerce Energy,
    Inc., previously filed with the SEC on September 26, 2006
    as Exhibit 2.1 to Commerce Energy Group, Inc.s
    Current Report on
    Form 8-K
    and incorporated herein by reference.10
.78

Transition Services Agreement dated September 20, 2006
    among Commerce Energy, Inc. and Houston Energy Services Company,
    L.L.C., previously filed with the SEC on September 26, 2006
    as Exhibit 2.2 to Commerce Energy Group, Inc.s
    Current Report on
    Form 8-K
    and incorporated herein by reference.10
.79

Guaranty Agreement dated September 20, 2006 among Commerce
    Energy, Inc., Thomas L. Goudie, James Bujnoch, Jr., Gary
    Hollowell, Dustin Roach, Steve Loy and Arnold Perez, previously
    filed with the SEC on September 26, 2006 as
    Exhibit 2.3 to Commerce Energy Group, Inc.s Current
    Report on
    Form 8-K
    and incorporated herein by reference.10
.80

Gas Supply Agreement dated September 20, 2006 by and among
    Pacific Summit Energy LLC and Commerce Energy, Inc. and Houston
    Energy Services Company, LLC.10
.81

Operating Agreement dated September 20, 2006 between
    Pacific Summit Energy LLC and Commerce Energy, Inc.10
.82

Security Agreement dated September 20, 2006 between Pacific
    Summit Energy LLC and Commerce Energy, Inc.10
.83

Blocked Account Control Agreement (with Lockbox Services) dated
    September 20, 2006 by and among Commerce Energy, Inc.,
    Pacific Summit Energy LLC and Wachovia Bank NA.10
.84

Base Contract for Sale and Purchase of Natural Gas dated
    September 20, 2006 between Commerce Energy, Inc. and
    Pacific Summit Energy LLC.10
.85

APX Settlement and Release of Claims Agreement dated as of
    January 5, 2007 by and among the Settling Parties,
    including Commonwealth Energy Corporation (n/k/a Commerce
    Energy, Inc.), previously filed with the SEC on March 19,
    2007 as Exhibit 10.2 to Commerce Energy Group, Inc.s
    Quarterly Report on
    Form 10-Q
    and incorporated herein by reference.10
.86

First Amendment to Master Power Purchase and Sale Agreement
    between Commerce Energy, Inc. and Tenaska Power Services, Co.
    dated May 25, 2007.10
.87

Settlement Agreement and Mutual Release dated June 11, 2007
    among Commerce Energy Group, Inc., Commerce Energy, Inc., Peter
    Weigand and American Communications Network, Inc., previously
    filed with the SEC on June 12, 2007 as Exhibit 99.1 to
    Commerce Energy Group, Inc.s Current Report on
    Form 8-K
    and incorporated herein by reference.14
.1

Commerce Energy Group, Inc. Code of Business Conduct and Ethics,
    previously filed with the SEC on November 15, 2004 as
    Exhibit 14.1 to Commerce Energy Group, Inc.s Annual
    Report on
    Form 10-K
    for the year ended July 31, 2004 and incorporated herein by
    reference.21
.1

Subsidiaries of the Registrant.23
.1

Consent of Hein & Associates LLP, independent
    registered public accounting firm.23
.2

Consent of Ernst & Young, LLP, independent registered
    public accounting firm.31
.1

Principal Executive Officer Certification required by
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934.31
.2

Principal Financial Officer Certification required by
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934.




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##### Table of Contents



Exhibit

Description32
.1

Principal Executive Officer Certification pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Principal Financial Officer Certification pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     
    
    Confidential treatment has been requested with respect to
    certain provisions of this agreement. Omitted portions have been
    filed separately with the SEC.