Duane Hicks
The fact the Fort Frances Power Corp. (FFPC) has the lowest electricity prices in the province is reason enough for residents to think twice about signing up with an independent electricity retailer who comes knocking at their doors.
But if they need any more convincing, the Northwest Community Legal Clinic is cautioning the public that agreements with electricity retailers are never as beneficial as staying a customer of the FFPC.
“We have had a number of people come to our office looking for help to get out of electricity retailer contracts they have signed at the door. In most cases these contracts are binding for five years and can be extremely difficult, if not impossible, to get out of,” said community legal worker Tammy Noble.
“The agents who go door-to-door trying to sign you up with an energy retailer are working for large commissions and can be very aggressive. They do not want to leave without getting your signature on a contract. Every signature they collect is money in their pocket,” she added. “Some agents will even make false or misleading statements to get you to sign.
“For example, they might tell you that you can cancel the contract at any time. What they will not tell you is that in most cases there is a hefty ‘exit fee’ to do so,” said Noble.
FFPC rates, which rates are based on the Regulated Price Plan, are 5.7 cents per KWh up to 1,000 KWh (600 KWh during the summer months) and 6.6 cents thereafter.
FFPC customers also benefit from the historic power agreement and receive what is referred to as a Power Agreement Credit of 1.5 cents per KWh.
After applying the credit, which is done automatically each month, you actually end up paying 4.2 cents per KWh for the first 1,000 hours, explained Noble.
Another thing to consider is that customers enrolled with a retailer, are considered to be paying “spot market” prices and are billed monthly for a “Provincial Benefit” adjustment.
This benefit can be a credit or a charge but for the month of July 2009, for example, the Provincial Benefit was a charge of an additional 3.7 cents per kWh, she added.
“Based on what we have seen coming into the legal clinic over the past few years, a Fort Frances Power Corporation customer never wins when signing on with an energy retailer,” said Noble.
For example, Noble said a current client of the Northwest Community Legal Clinic, and a customer of Universal Energy Corporation (now Just Energy), is paying a fixed rate of 7.99 cents per KWh to Universal Energy. That is almost twice as much FFPC customers pay (4.2 cents).
“We have seen rates from independent retailers as high as 9.89 cents. Our client’s hydro bill has increased significantly since signing on with Universal Energy and he is now locked in at this rate for five years,” noted Noble.
FFPC CEO Joerg Ruppenstein said that the energy market is an open, free market and customers can choose to do as they please, but he does caution them to consider several important facts before signing the dotted line.
“The biggest thing to keep in mind is we are unique in Fort Frances in that we have a historic power agreement. If anyone signs up with a retailer, the power agreement is null and void. In other words, they don’t qualify for the power agreement rebate any more,” he stressed.
“That alone represents almost 25 percent of your bill that is paid for you. So right off the get-go, if you sign with a retailer, even if they charge the same rates as we would—which none of them do to the best of my knowledge—you would be paying 25 percent more right off the bat,” added Ruppenstein.
He noted that most retailers are not aware of this unique power agreement, and thus will not even mention it when they interact with potential customers.
Another reason is electricity prices have plummeted over the past five months due to the state of the economy and decreased demand. But if someone is locked in a a certain rate with an independent electricity retailer, they won’t benefit.
“You can compare retailer contacts to mortgages. If you stay away from the retailer, you float with the market where the Ontario Energy Board sets the rate. If you sign with a retailer, you’re locked. They take the fixed rate no matter what the market does. Sometimes in addition to that, they might have clauses that say, due to market conditions, you actually pay more,” explained Ruppenstein.
He estimated that 99 percent of people who sign up with retailers here only do so because they don’t understand what the contract really means.
As reported in the Thursday, Aug.27 edition of the Bulletin, a bill comparison of all the electrical utilities in Ontario shows the FFPC has the lowest bills in Ontario.
According to the most recent bill comparison posted by the Ontario Energy Board on its website (www.oeb.gov.on.ca), the estimated bill for FFPC customers in November, 2008 was $101.17.
Not only is that lower than the provincial average ($115), but the difference is even greater once the rebate resulting from the historic power agreement is applied, which lowers the $101.17 amount to only about $85.
Noble offered several tips to keep in mind if an independent electricity retailer comes to your door.
•Don’t be pressured into signing any kind of contract at the door. Take your time. Read the fine print.
•Shop around and compare.
•Don’t show your electricity bill to salespeople who come to your door. Treat it like credit card information.
•Remember, if the service offered is good, a reputable company should have no problem leaving their materials with you to review and get advice if necessary.
For more information about your rights contact the Northwest Community Legal Clinic at 807-274-5327 or toll free 1-800-799-2485
