OpTree

Ambit Energy (OpTree Profile) has just announced that they have acquired all of the retail electric service contracts in Texas from Commerce Energy, Inc, which is the operating subsidiary of Commerce Energy Group, Inc. The deal is reportedly worth roughly $14.8 million dollars.

The purchase prices includes $8.5 million in cashed due at closing and a second payment of $2.7 million in a second payment which is the reduced price after customer deposits and final customer count. The first two payments will become due on or before November 24th, and the remaining balance will be paid over a two year period.

Commerce Energy Group will continue to provide retail electric power and natural gas in its other markets.

“This is a significant, positive step in both paying down debt as well as strengthening the core platform of the company,” said Commerce chief operating officer, Michael Fallquist. “We found a buyer in Ambit that shares our commitment to great technology, products and customer service. Ambit has agreed to preserve the terms and conditions of the customer contracts and this transaction will be seamless to all our customers.”

Popularity: 2% [?]

Ignite, the direct selling arm of the Dallas based energy company, Stream Energy has just announced that they have been received their coveted acceptance into the Direct Selling Association.  Their membership was approved last week after a rigorous approval process. The Direct Selling Association is of course the leading organization for the network marketing/direct selling industry.

Following the deregulation of energy in the State of the Texas in 2005, Stream Energy, Ignite’s parent company, received a Retail Electric Provider permit from the Texas Public Utility Commission. Ignite was formed and recruited over 100,000 independent sales agents to market electricity to new customers. Stream and Ignite has just received permission to expand into Georgia and is looking forward to expanding further over the next year into other states where electricity has been deregulated.

Ignite is the first direct sales company in the energy trade business to become an active member of the Association. Ignite had to go through the obligatory one year review before being accepted into the Association. The DSA requires all companies to go through this to ensure that each company is in full compliance with the high ethical standards of the DSA’s Code of Ethics.

“The members of the Direct Selling Association pride themselves in their commitment to the highest standards of business ethics,” said DSA President Neil Offen. “By applying for membership in the association and going through a rigorous approval process, these companies are saying they take their ethical obligations to their field sales force and customers seriously and are willing to make a public pledge to that effect.”  It is this “rigorous approval process” that we have questioned given the fact that other members who have gone out of business (Weekenders) or are being sued by various government regulatory groups (YTB)

“We are very pleased that the Direct Selling Association has accepted our application for membership,” said Chris Domhoff, a founder of Stream Energy and Ignite. “The DSA truly sets the benchmark for business ethics in direct marketing. And that has been our goal from the very outset.”

The DSA claims that its Code of Ethics gives the industry the strongest self-regulatory codes in the direct selling business. The DSA claims that those codes help ensure that each company remains honest about its business practices and is honest about the efficacy of its products. The DSA also investigates any claims made against any member companies.

There are now 265 active and pending members of the DSA who have all promised to “comply with the strict rules and guidelines set forth by the company” - something which we at OpTree have put to question.

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Ambit Energy (OpTree Profile) the direct sales alternative energy provider, made an appearance in the New York Times this weekend as the highly regarded paper profiled the company in an article about the pros and many cons of many of these Alternative Energy Service Companies or ESCO’s as they are otherwise known.

Ambit which set up shop in New York only a year ago, has held several meetings in the New York area, one of their fastest growing markets, and throngs have turned out to listen to the Ambit opportunity and learn how they can convince their friends to sign up, save money and maybe even earn money. But there seem to be some glitches in the way the message is being interpreted.

Apparently, Ambit, like other alternative energy companies profits in two ways- one- off of their “independent distributors” who pay a fee to sell energy, and by charging flat fees and requiring a contract. Ambit charges an initial $399 plus $25 extra bucks a month for a personalized web site. Ambit promises that distributors can earn this money back by signing up just 30 people in 12 weeks.

Ambit has recently been getting attention from state regulators who say that sales representatives who are poorly trained are taking advantage of many people by confusing them about savings, inflating savings and misrepresenting contracts and figures. Those who are especially at risk of being taken advantage of are the elderly and those who do not speak English and are on a tight budget.

Con Edison, the largest provider of energy in New York, estimates rates on each month’s bill and later reconciles them based on actual prices that fluctuate daily. Alternative energy companies will generally only offer one flat rate along with a contract, ignoring the fluctuating market. These alternative companies post ‘average rates” on public service websites, which may confuse some people about actual costs of energy.

In the last year, since Ambit has been in business in New York, the Public Service commission has received over 3,000 complaints about the 50 or so ESCO’s operating throughout the state. 34 of those complaints have been about Ambit just this year which is a bit startling but compared to Con Ed, isn’t actually that much.

But reviews aren’t all bad as several New Yorkers claim to not only have saved with Ambit, but have also made money as representatives. Currently, Ambit only has a 1% percent share of the energy market, so there is potentially a huge opportunity out there to sell deregulated energy to the millions of people who have not signed up. As with any other company or opportunity, it is important to thoroughly investigate the opportunity. Ambit is a private company, and refuses to disclose anything regarding finances, but there is info and review out there if you’re interested in the opportunity.

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Zurvita has entered into an exclusive agreement with MXenergy, Inc. for the sale and distribution of MXenergy’s energy and energy related products.

MXenergy is a supplier of electricity and natural gas supplier in the nation”, currently selling its products in 39 utility territories and two Canadian provinces, approximately 500,000 customers.

Zurvita has already locked in exclusivity for at least three years with two year renewal periods thereafter. Five states are currently signed with another nine 9 or more being added by the end of this year. Canada and more states will be added by mid year 2009.

Although still in what is considered pre-launch, there is a bit of a buzz around Zurvita and its plans. Zurvita’s launch date is set for August 08, 2008.

Zurvita has introduced a very aggressive compensation plan that includes a coded model with lifetime residual commissions built into it. There are a number of players in this space already that are having success (Ambit Energy: OpTree Profile) and others so we will see how Zurvita does with Mxenergy.

Popularity: 2% [?]