January’s sky high energy prices claimed its first casualty Friday as green energy retailer Clean Currents abruptly suspended service, returning its customers to their distribution utilities.
“The recent extreme weather, which sent the wholesale electricity market into unchartered territories, has fatally compromised our ability to continue to serve customers,” the company said in a notice on its website.
Clean Currents had 6,000 residential and 2,000 commercial customers in Maryland, Pennsylvania and the District of Columbia. Based in Silver Spring, MD, the company had 19 employees.
The company was headed by CEO Charles Segerman, a lawyer and engineer who had worked in green real estate development, and President Gary Skulnik, a former Sierra Club lobbyist and CNN writer. Its board included two executives with SolarCity, a leader in residential solar power.
“This all happened very rapidly,” Skulnik told the Baltimore Sun. “Obviously this is not the way we would have hoped things would have happened, but this polar vortex and extended cold weather sent the electricity market into an extreme situation. Prices were through the roof and beyond anything we could afford to cover.”
The company’s former customers will revert to their distribution utilities’ Standard Offer Service until they choose an alternative retailer. Clean Currents said it was waiving any advanced notice requirement or early termination fees.
Could this be the first of a string of defaults?
“There is some concern that other electric or gas suppliers may do the same thing, so we will monitor this situation closely,” Maryland People’s Counsel Paula Carmody said in an email. “I also will be monitoring, to the extent we can get the information, price increases with variable price contracts, as we suspect consumers with see significant increases in their supplier bills as a result.”
Tom Matzzie, CEO of competitor Ethical Electric, mourned Clean Currents on Twitter as “pioneers,” but in a bullish sentiment quickly added that he would consider hiring its former employees.
PJM’s bills for energy purchased during the cold snap will be due this Friday, Matzzie said. “It’s probably going to be a bloodbath,” he said in an interview.
Many retailers likely received calls from PJM last week to provide more collateral due to the high prices — a demand Clean Currents apparently was unable to honor.
Matzzie said his company will survive despite excess energy costs “in the seven figures” because it hedged the day ahead market and will be able to pass along some of the costs to customers with variable price contracts. The company has a credit support “sleeve” backed by a bank. “You’re naked without that sort of credit support,” he said.
“The PJM uniform clearing price model is not suited for emergency events, which allows for tremendous windfalls for some parties and tremendous losses for other parties during emergencies,” Matzzie said. “The [$1,000] price cap is already too high. There should be a different set of rules for emergency events. The problem is the generators all get made whole. The suppliers and customers are left holding the bag.”
For his part, Skulnik claimed not to regret his failed venture. “We showed there was a demand for clean energy,” he told the Sun. “People want a solution for climate change.”
