Utility.com turns out the lights

Just months after changing its business model, the online discount energy provider has decided to go out of business.

2 min read
Just months after changing its business model, online discount energy provider Utility.com is going out of business.

The 3-year-old company will abandon its recently adopted ASP (application service provider) business model, as well as its consumer services: energy, general Internet access and DSL, and long-distance telephone.

Utility.com General Counsel Ben Reyes said although the ASP business looked promising, the company simply racked up too much debt from the skyrocketing energy prices that have plagued Californians in recent months.

"We're the victim of the wholesale energy market supply along with being a dot-com in this climate," Reyes said. "Our bills, our indebtedness to the larger energy companies, made it so that it would be impossible to fund that (ASP) business.

"Although we didn't declare any formal bankruptcy proceedings, our finances were such that we had to start immediate action to stay the process," he added.

Utility.com, which was founded in 1998 by Chris King with funding from Idealab, originally offered consumers energy service at a 20 percent discount from standard utility charges, a discount it was able to offer because of low overhead.

The company exited this business in January however, because of rising power rates, and instead pushed forward with its ASP plans, providing software to utility companies.

In January, King, the former CEO, said Utility.com had already contracted to provide software services to Gaz de France, a French utility with 12 million customers, and EnPower, a group of cooperative utilities in Minnesota with 1.6 million customers.

But rising debt forced the company to exit all of its businesses. The staff, once a bustling 130 employees, has been whittled down to 15, and Reyes expects these final positions, including his own, will terminate in the next few weeks.

"A lot of people have put their heart and soul into building the business and it's sort of sad to see it in its end stage," Reyes said.

At its heyday, the company had 50,000 energy customers spread out between Pennsylvania, California and Massachusetts. The vast majority of these customers have already been returned to their local energy provider, Reyes said.