COMMERCE ENERGY GROUP INC
EXHIBIT 10.16
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>7
<FILENAME>a02510exv10w16.txt
<DESCRIPTION>EXHIBIT 10.16
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.16


                            INDEMNIFICATION AGREEMENT

      THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into
and is effective as of November 1, 2000, by and between COMMONWEALTH ENERGY
CORPORATION, a California corporation (the "Corporation"), and IAN B. CARTER, an
individual ("Indemnitee").

                                    RECITALS:

      A.    Indemnitee performs a valuable service to the Corporation in his
capacity as an officer and a director of the corporation.

      B.    The shareholders of the Corporation have adopted Bylaws (the
"Bylaws") providing for the indemnification of the officers, directors,
employees and other agents of the Corporation as authorized by the California
Corporations Code, as amended (the "Code").

      C.    The Bylaws and the Code; by their non-exclusive nature, permit
contracts between the Corporation and its directors, officers, employees and
other agents with respect to indemnification of such persons.

      D.    In accordance with the authorization provided by the Bylaws and the
Code, the Corporation is entitled to purchase a policy or policies of Directors'
and Officers' Liability Insurance ("Insurance") covering certain liabilities
which may be incurred by its directors and officers in the performance of their
duties to the Corporation.

      E.    As a result of developments affecting the terms, scope and
availability of Insurance, there exists general uncertainty as to the extent of
protection afforded such persons by such Insurance and by statutory and bylaw
indemnification provisions.

      F.    In order to induce Indemnitee to continue to serve as an officer of
the Corporation, the Corporation has determined and agreed to enter into this
Agreement with Indemnitee.

NOW, THEREFORE, the parties hereto agree as follows:

      1.    Services to the Corporation. Indemnitee will serve, at the will of
the Corporation or under separate contract, if any such contract exists, as an
officer of the Corporation or as a director, officer or other fiduciary of the
Corporation or an affiliate of the Corporation (including any employee benefit
plan of the Corporation) faithfully and to the best of his ability so long as he
is duly elected and qualified in accordance with the provisions of the Bylaws,
other applicable constitutive documents of the Corporation or such affiliate, or
other separate contract, if any such contract exists; provided, however, that
Indemnitee may at any time and for any reason resign from such position (subject
to any contractual obligation that Indemnitee may have assumed apart from this
Agreement) and that the Corporation or any affiliate shall have no obligation
under this Agreement to continue Indemnitee in any such position.

      2.    Indemnity of Indemnitee. The Corporation shall hold harmless,
indemnify and advance expenses to Indemnitee as provided in this Agreement and
to the fullest extent authorized, permitted or required by the provisions of the
Bylaws and the Code, as the same may be amended from time to time (but, only to
the extent that such amendment permits the Corporation to provide broader
indemnification rights than were permitted by the Bylaws or the Code prior to
adoption of such amendment), The rights of Indemnitee provided under the
preceding sentence shall include, but shall not be limited to, the rights set
forth in the other sections of this Agreement.

      3.    Additional Indemnity. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Indemnitee:

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            (a)   Against any and all expenses (including reasonable attorneys'
fees), witness fees, damages, judgments, fines and amounts paid in settlement
and any other amounts that Indemnitee becomes legally obligated to pay because
of any claim or claims made against or by him in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
arbitrative, administrative or investigative (including an action by or in the
right of the Corporation) to which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that
Indemnitee is, was or at any time becomes a director, officer, employee or other
agent of the Corporation, or is or was serving or at arty time serves at the
request of the Corporation as a director, officer, employee or other agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise; and

            (b)   Otherwise to the fullest extent as may be provided to
Indemnitee by the Corporation under the non-exclusivity provisions of the Code,

      4.    Limitations on Additional Indemnity. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:

            (a)   On account of any claim against Indemnitee for an accounting
of profits made from the purchase or sale by Indemnitee of securities of the
Corporation pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;

            (b)   On account of Indemnitee's conduct that was knowingly
fraudulent or deliberately dishonest, or that constituted willful misconduct;

            (c)   On account of Indemnitee's conduct that constituted a breach
of Indemnitee's duty of loyalty to the Corporation or resulted in any personal
profit or advantage to which Indemnitee was not legally entitled;

            (d)   For which payment has actually been made to Indemnitee under a
valid and collectible insurance policy or under a valid and enforceable
indemnity clause, bylaw or agreement, except in respect of any excess beyond
payment under such insurance, clause, bylaw or agreement;

            (e)   If indemnification is not lawful (and, in this respect, both
the Corporation and Indemnitee have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication) or is prohibited by any applicable state
securities laws with respect to any violation of applicable federal or state
securities laws; or

            (f)   In connection with any proceeding (or part thereof) initiated
by Indemnitee, or any proceeding by Indemnitee against the Corporation or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the Corporation, (iii) such indemnification is
provided by the Corporation, in its sole discretion, pursuant to the powers
vested in the Corporation under the Code, or (iv) the proceeding is initiated
pursuant to Section 9 hereof.

      5.    Continuation of Indemnity. All agreements and obligations of the
Corporation contained herein shall continue during the period Indemnitee is a
director, officer, employee or other agent of the Corporation (or is or was
severing at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrative,
administrative or investigative, by reason of the fact that Indemnitee was a
director of the Corporation or serving in any other capacity referred to herein.

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      6.    Partial Indemnification. Indemnitee shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Indemnitee becomes legally
obligated to pay in connection with any action, suit or proceeding referred to
in Section 3 hereof even if not entitled hereunder to indemnification for the
total amount thereof, and the Corporation shall indemnity Indemnitee for the
portion thereof to which Indemnitee is entitled.

      7.    Notification and Defense of Claim. Not later than thirty (30) days
after receipt by Indemnitee of notice of the commencement of any action, suit or
proceeding, Indemnitee will, if a claim in respect thereto is to be made against
the Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which is may have to Indemnitee otherwise than under this
Agreement. With respect to any such action, suit or proceeding as to which
Indemnitee notifies the Corporation of the commencement thereof:

            (a)   The Corporation will be -entitled to participate therein at
its own expense;

            (b)   Except as otherwise provided below, the Corporation may, at
its option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee. After notice from the Corporation to
Indemnitee of its election to assume the defense thereof, the Corporation will
not be liable to Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by Indemnitee in connection with the defense thereof
except for reasonable costs of investigation or otherwise as provided below.
Indemnitee shall have the right to employ separate counsel in such action, suit
or proceeding but the fees and expenses of such counsel incurred after notice
from the Corporation of its assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of counsel by Indemnitee has
been authorized by the Corporation, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Corporation and
Indemnitee in the conduct of the defense of such action, or (iii) the
Corporation shall not in fact have employed counsel to assume the defense of
such action, in each of which cases the fees and expenses of indemnitee's
separate counsel shall beat the expense of the Corporation. The Corporation
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Corporation or as to which Indemnitee shall have
made the conclusion provided for in (ii) above; and

            (c)   The Corporation shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written consent which may be given
or withheld in Indemnitee's sole discretion.

      8.    Expenses. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Indemnitee in connection with such proceeding upon receipt of an
undertaking by or on behalf of Indemnitee to repay said amounts it if shall be
determined ultimately that Indemnitee is not entitled to be indemnified under
the provisions of this Agreement, the Bylaws, the Code or otherwise.

      9.    Enforcement. Any right to indemnification or advances granted by
this Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee
in any court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim is
made within ninety (90) days of request therefor. Indemnitee, in such
enforcement action, if successful in whole or in part, shall be entitled to be
paid also the expense of prosecuting his claim. It shall be a defense to any
action for which a claim for indemnification is made under Section 3 hereof
(other than an action brought to enforce a claim for advancement of expenses
pursuant to Section 8 hereof, provided that the required undertaking has been
tendered to the Corporation) that Indemnitee is not entitled to indemnification
because of the limitations set forth in Section 4 hereof, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or its shareholders) to have made
a determination prior to the commencement of such enforcement action that
indemnification of Indemnitee is proper in the circumstances, nor an actual
determination by the Corporation (including its Board of Directors or its
shareholders) that such indemnification is improper, shall be

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a defense to the action or create a presumption that Indemnitee is not entitled
to indemnification under this Agreement or otherwise.

      10.   Subrogation. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.

      11.   Non-Exclusivity of Rights. The rights conferred on Indemnitee by
this Agreement shall not be exclusive of any other right which Indemnitee may
have or hereafter acquire under any statute, provision of the Articles of
Incorporation, the Bylaws, agreement, vote of shareholders or directors or
otherwise, both as to action in his/her official capacity and as to action in
another capacity while holding office.

      12.   Survival of Rights.

            (a)   The rights conferred on Indemnitee by this Agreement shall
continue after Indemnitee has ceased to be a director, officer, employee or
other agent of the Corporation or to serve at the request of the Corporation as
a director, officer, employee or other agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise and
shall inure to the benefit of Indemnitee's heirs, executors and administrators.

            (b)   The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business Or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.

      13.   Separability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify
Indemnitee to the fullest extent provided by the Bylaws, the Code or any other
applicable law.

      14.   Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California.

      15.   Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.

      16.   Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to bean
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need he produced to evidence the existence
of this Agreement.

      17.   Headings. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.

      18.   Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to toe party to whom such notice or other
communication shall have been directed, or (ii) if mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:

            (a)   If to Indemnitee, to:

                  Mr. Ian B. Carter
                  19392 Lemon Hill Drive
                  Santa Ana, CA 92705

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            (b)   If to the Corporation, to:

                  Commonwealth Energy Corporation
                  15901 Redhill Avenue
                  Tustin, CA 92780
                  Attn: Chairman of the Board

or to such other address(es) as may have been furnished to/by Indemnitee to/by
the Corporation.

      IN WITNESS WHEREOF, the parties hereto have duly executed this
Indemnification Agreement as of the day and year first above written.

                                   CORPORATION

                                   COMMONWEAL THENERGY CORPORATION, a
                                   California corporation

                                   By: /s/ JOHN A. BARTHROP
                                      ------------------------------------------
                                       John A. Barthrop, Secretary to the
                                       Board and General Counsel to the
                                       Corporation

                                   INDEMNITEE

                                   /s/ IAN B. CARTER
                                   ---------------------------------------------
                                   Ian B. Carter

                                       5
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                           SCHEDULE TO EXHIBIT 10.16

      Commonwealth Energy Corporation entered into Indemnification Agreements
with several officers and directors, each substantially identical to Exhibit
10.16 except that the Indemnitee and the date of the other Indemnification
Agreements are as follows:

<Table>
<Caption>
Indemnitee                          Date of Agreement
__________                          _________________
<S>                                 <C>
Robert C. Perkins                   November 1, 2000
John A. Barthrop                    November 1, 2000
Mark S. Juergensen                  May 9, 2003
Kenneth L. Robinson                 March 16, 2004
Craig G. Goodman                    January 1, 2002
</Table>

</TEXT>
</DOCUMENT>
