8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 13, 2008

COMMERCE ENERGY GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-32239	20-0501090
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

600 Anton Blvd., Suite 2000 Costa Mesa, California	92626
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (714) 259-2500

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02               Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

As previously reported, on June 12, 2008, Commerce Energy Group, Inc. (the “Company”) presented to Thomas L. Ulry, the Company’s former Senior Vice President, Sales and Marketing, a Severance Agreement and General Release (the “Severance Agreement”).  The material terms of the Severance Agreement were described in Part II, Item 5 of the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended April 30, 2008, filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 12, 2008.

On June 13, 2008, Mr. Ulry’s last day of employment with the Company, the Company presented him with a new Severance Agreement and General Release (the “Modified Severance Agreement”).  The Modified Severance Agreement contained one change from the Severance Agreement; namely, it limited the scope of the customer non-solicitation provision to customers of the Company with annual volumes of more than 600,000 KWh/yr or 18,000 DTh/yr.  All of the other provisions of the Severance Agreement remained the same.  The Modified Severance Agreement superseded the Severance Agreement.  Also, on June 13, 2008, the Company and Mr. Ulry signed the Modified Severance Agreement.

The Modified Severance Agreement will become effective on June 21, 2008 (the “Effective Date”); the eighth day after Mr. Ulry signed the Modified Severance Agreement unless it is revoked by Mr. Ulry before that date. Pursuant to the Modified Severance Agreement, Mr. Ulry would be entitled to a severance payment of $84,330 payable as follows: $42,165 on the first business day after the Effective Date; $21,082 on August 29, 2008; and $21,082 on October 31, 2008, in each case, less customary payroll deductions required by law.  The aggregate severance payment to be paid under the Modified Severance Agreement is referred to herein as the Severance Benefit.

If Mr. Ulry does not revoke the Modified Severance Agreement and it becomes effective, Mr. Ulry would agree not to solicit the Company’s employees or contractors or certain customers (set forth above) for a period of twelve (12) months after June 13, 2008.  The Modified Severance Agreement includes provisions which would require Mr. Ulry to protect the Company’s proprietary information and contains a general release by Mr. Ulry of all of the claims against the Company and its affiliates and representatives.  The Modified Severance Agreement also contains other customary provisions including Mr. Ulry’s statutory rights under the Older Workers Benefit Protection Act which permits him to revoke portions of the Modified Severance Agreement within a seven day period after he signs it.

If Mr. Ulry elected to revoke portions of the Modified Severance Agreement, he would not be entitled to the Severance Benefit.  Mr. Ulry would then be entitled to the severance benefits set forth in a letter agreement dated May 31, 2005 between the Company and Mr. Ulry (the “May 2005 Letter Agreement”).  Pursuant to the May 2005 Letter Agreement, the Company would be obligated to pay Mr. Ulry his monthly salary, less customary payroll deductions required by law, for a period of up to six months or until Mr. Ulry finds alternative employment.  The aggregate amount of six months of Mr. Ulry’s salary, prior to applicable payroll deductions, equals $126,495.

The foregoing descriptions of the Modified Severance Agreement and the May 2005 Letter Agreement are only summaries, are not complete and are qualified in their entirety to the actual agreements, which are attached as Exhibits 99.1 and 99.2, respectively, and are each incorporated herein by reference.

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Item 9.01.              Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Confidential Severance Agreement and General Release dated June 13, 2008 by and between Commerce Energy Group, Inc. and Thomas L. Ulry.
99.2	Employment Offer Letter Agreement between Commerce Energy Group, Inc. and Thomas L. 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 reference.
99.3	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.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Commerce Energy Group, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	COMMERCE ENERGY GROUP, INC.
	a Delaware corporation
Date: June 18, 2008
	By:	/s/ C. DOUGLAS MITCHELL
			C. Douglas Mitchell
			Interim Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Confidential Severance Agreement and General Release dated June 13, 2008 by and between Commerce Energy Group, Inc. and Thomas L. Ulry.
99.2	Employment Offer Letter Agreement between Commerce Energy Group, Inc. and Thomas L. 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 reference.
99.3	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.

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EX-99.1

Exhibit 99.1

CONFIDENTIAL SEVERANCE AGREEMENT AND GENERAL RELEASE

Commerce Energy Group, Inc. (“Company”) and Thomas L. Ulry (“Employee”) hereby agree to end their employment relationship on the following basis:

1.Employee’s employment with the Company will end or ended on June 13, 2008 (“Release Date”).  On the Release Date, Employee will be or was paid his/her regular base salary through that date, and for any earned but unused vacation days.  Employee will cooperate fully with an amicable and professional transition of accounts and/or responsibilities.  In addition, Employee represents that he/she has returned to the Company all files, records, credit cards, keys, equipment, and any other Company property or documents maintained by him/her for the Company’s use or benefit.

2.Employee represents that he/she is signing this Agreement voluntarily and with a full understanding of and agreement with its terms, for the purpose of receiving severance pay from the Company that is not required by Company policy.

3.In reliance on Employee’s promises and releases in this Agreement, the Company will make a severance payment to Employee in the sum of $84,330.13, less deductions required by law (“Severance Pay”).  The Severance Pay will be paid in three payments as follows: (a) $42,165.07 mailed to Employee on the first business day after the Effective Date (defined below) of this Agreement; (b) $21,082.53 mailed to Employee on August 29, 2008; and (c) $21,082.53 mailed to Employee on October 31, 2008.

Employee agrees that he/she is not entitled to receive, and will not claim, any right, benefit, or compensation other than what is expressly set forth in this Agreement, and hereby expressly waives any claim to any compensation, benefit, or payment which is not expressly referenced in this Agreement.

4.In exchange for the Severance Pay provided in Paragraph 3, Employee promises

a.to keep this Agreement and its contents in complete confidence and not to disclose the fact or terms of this Agreement or the fact or amount of the special payment(s) to any person, including any past, present, or prospective employee of the Company.

b.not to disparage the Company or its products, services, or management.

c.not to use or disclose any confidential information, trade secrets, or financial, personnel, or client information which he/she learned while employed by the Company.

d.for a period of twelve (12) months after this Agreement is signed, not to solicit or participate in or assist in any way in the solicitation of any Company employee to begin an employment or consulting relationship with any other employer.

e.for a period of twelve (12) months after this Agreement is signed, not to solicit or participate in or assist in any way in the solicitation of the customers of the Company with annual volumes of more than 600,000 KWh/yr or 18,000 DTh/yr to cease or decrease doing business with the Company or for the customers to begin doing business with any competitor of the Company.  This promise does not prevent Employee from going to work for a competitor of the Company as long as he/she does not violate any of his/her promises with respect to Company information, property and/or trade secrets.

5.Employee does hereby, for himself/herself and his/her heirs, successors and assigns, release, acquit and forever discharge the Company, and its officers, directors, managers, employees, representatives, related entities, successors, and assigns (the Released Parties), of and from any and all waivable claims, actions, charges, complaints, causes of action, rights, demands, debts, damages, or accountings of whatever nature, known or unknown, which he/she or his/her heirs may have against such persons or entities based on any actions or events which occurred prior to his/her Release Date, including but not limited to those related to, or arising from, Employee’s employment with the Company or the ending thereof.  This release includes any and all waivable claims for violation of any law prohibiting discrimination, for violation of any law governing payment of wages, including commissions, torts, and for breach of any express or implied contract or covenant.  This release does not apply to Employee’s right to receive the Severance Pay or to retirement benefits that have vested and accrued prior to the Release Date, or prohibit employee from participating in the investigation of an administrative charge or complaint by a federal or state agency.

In exchange for material portions of the Severance Pay provided in Paragraph 3 and in accordance with the Older Workers Benefit Protection Act, Employee hereby knowingly and voluntarily waives and releases all rights and claims, known and unknown, arising under the Age Discrimination In Employment Act of 1967, as amended, which he/she might otherwise have had against any of the Released Parties based on any act or omission which occurred on or before the date this Agreement is signed by Employee.

6.It is further understood and agreed that as a condition of this Agreement, Employee is waiving any rights he/she might have under any law designed to protect the waiver of unknown claims, such as Section 1542 of the Civil Code of the State of California, which provides as follows:

“A General Release does not extend to claims which a creditor does not know or suspect to exist in his or her favor at the time of executing the Release, which if known by him or her must have materially affected his or her settlement with the debtor.”

7.This Agreement contains all of the terms, promises, representations, and understandings made between the parties and supersedes any previous representations, understandings, or agreements, except for any agreement by Employee regarding confidentiality and/or protection of Company information, property, or trade secrets, which agreement(s) shall continue in full force and effect.  This Agreement may not be changed or modified in any way, except in a writing signed by the Chief Executive Officer of the Company and Employee.

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8.Employee understands that he/she is waiving legal rights by signing this Agreement, and has consulted with an attorney and/or other persons to the full extent he/she wanted to do so before signing this Agreement.

9.Employee is hereby advised that he/she (a) may consult with an attorney prior to signing this Agreement, and (b) has 21 days in which to consider and accept this Agreement by signing this Agreement, which should then be promptly returned to Betsy Webb at the Company.  In addition, Employee is advised that he/she has a period of 7 days following his/her signing of this Agreement in which he/she may revoke the Agreement.  If Employee timely revokes this Agreement, he/she will not receive the Severance Pay under Paragraph 3.  If Employee does not advise the Company (by a writing received by Betsy Webb at the Company within such 7-day period) of his/her intent to revoke the Agreement, the Agreement will become effective and enforceable upon the expiration of the 7 days (“Effective Date”).

10.This Agreement will be interpreted, enforced and governed by and under the laws of the State of California.  Any dispute regarding the validity or terms of this Agreement or any aspects of Employee’s employment with the Company, including termination, or any other dispute between these parties shall be resolved by an arbitrator selected in accordance with the employment arbitration rules of the Judicial Arbitration and Mediation Services (“JAMS”), or such other arbitration service to which Employee and Company may agree, as the exclusive remedy for any such dispute, and in lieu of any court action, which is hereby waived.  The only exception to this promise to arbitrate is a claim by either party for injunctive relief pending arbitration.  The arbitration will be held in the city in which Employee last worked, unless the parties agree otherwise.

This Confidential Severance Agreement and General Release is signed this 13th day of June, 2008.

“Employee”
/s/ THOMAS L. ULRY
Thomas L. Ulry
“Company”
Commerce Energy Group, Inc.
By:	/s/ MICHAEL FALLQUIST
Name		:  Michael Fallquist
Title	:    Chief Operating Officer

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