California-based Commerce Energy has sold its 60,000 Texas retail electric customers to Dallas-based Ambit Energy for $14.8 million.
While the customers — a mix of residential and commercial — aren’t supposed to see any change in their current contracts according to the companies, it’s still a troubling sign for Texas’ deregulated electricity markets.
More than a half-dozen Texas electric retailers have either been forced out of business or sold off their customers this year. Early in the summer PNM Resources said it was seeking to sell its Texas retailer, First Choice Power. In August Texas-based Cirro Energy was acquired by Virginia-based power and natural gas giant Dominion. And just last month Reliant Energy indicated it may sell all or part of its business.
Commerce, which is a natural gas and power retailer in several states, indicated the departure from the Texas market was aimed at helping it reduce debt.
The money side of the deal is somewhat unusual: there will be an $8.5 million cash payment on closing, a second payment of $2.7 million minus customer deposits and adjusted based on a final customer counts, and $3.6 million in deferred payments over 24 months.
Commerce was represented in the deal by AEG Affiliated Energy Group. Despite the exit of so many companies, AEG Executive Vice President Rob Potosky said Texas electricity markets remain attractive.
“The disruptions to the financial markets have unquestionably changed the M&A landscape here in Texas, but deals involving quality assets are still getting done,” Potosky said in a statement. “One new emerging trend appears to be an increased reliance on direct and indirect financing from overseas markets and multinational companies, the U.K. and northern Europe in particular.”
And there’s likely more to come: AEG said in a release it “has also been retained by other Texas firms seeking to explore strategic merger and acquisition opportunities, including a mid-size Texas retail electricity provider.”