TheStar.com - Business - A checklist for energy con tactics
May 10, 2009
Ellen Roseman
Ontario isn't doing enough to protect consumers from deceptive tactics used by door-to-door energy sellers.
The province opened its doors to competition in natural gas in 1997 and to electricity in 2002.
Today, there's an army of agents cajoling, pushing and often tricking you into buying a long-term contract for your energy supply.
If you say yes at the door – and later on the phone when the company calls to confirm – you will be locked into a fixed price that may be far higher than the local utility's rate. To get out before the contract expires, you will have to pay hundreds or thousands of dollars to win your release.
Ontario tried to jump-start energy competition, but ignored the way that competitors built their market share, says Michael Janigan, executive director of the Public Interest Advocacy Centre.
"The benefits associated with having this stuff going on are dwarfed by the problems associated with it," he says.
The Ontario Energy Board is falling behind on the job of policing the conduct of energy sellers.
The board received 2,126 complaints about marketers in the first quarter of this year – up from a quarterly average of 1,500 last year – but rarely lays charges.
It fined two retailers this year for failing to follow market rules. This was the first penalty since 2003.
Last week, it ordered Direct Energy Marketing Ltd. to pay $15,000 for misrepresentation exposed in a hidden camera investigation by CBC's Marketplace.
The abuses should have abated soon after Ontario's energy market was opened to choice. Instead, they're getting worse. It's time for the government to act.
A private member's bill by Liberal MPP David Ramsay passed second reading, but is stalled in the Legislature until next fall.
So, what would I propose? Here's a checklist.
• Drop the rule that marketers must call customers 10 days to two months after an agent's visit to reaffirm the purchase. This is too late to be effective.
• Set up a third-party verification system, such as exists in British Columbia for gas sales, where an independent company calls people the same day an agent comes to their home.
• Write a standard script for all verification calls. Make sure customers understand who they're dealing with and the terms of the deal, including the cancellation penalties.
• Don't allow agents to carry anything that has the name or logo of a utility (such as Enbridge Gas or Toronto Hydro). This helps create false impressions about their identity.
• Ban the use of terms such as savings, low prices or guarantees. The only thing that marketers can promise is a stable price.
• Let customers cancel once they see what they're paying. Give them the legal right to opt out of a contract within 30 days of receiving their first bill at the new rate.
• Eliminate automatic renewals of gas contracts for one year if customers don't cancel in writing before the expiry date. Allow contracts to be renewed on a month-to-month basis at the existing price, not a higher price.
• Stop letting marketers recruit each other's customers mid-contract. This leads to confusion and two sets of cancellation penalties. Deals signed at the door should be void if the customer is already bound to another company.
Next week, how to retrofit your home to save energy.
eroseman@thestar.ca