Peggy Revell
Consumer caution is being urged as energy retailers continue to knock on doors across the district.
“It is virtually impossible to save money with an energy retailer that sells you electricity,” stressed Sarah Campbell, who has been helping constituents of Kenora-Rainy River riding deal with energy retailers—both for electricity and natural gas—since she began working for local MPP Howard Hampton back in 2005.
It was standing-room only as more than 30 people turned out for an information session on energy retailers which Campbell organized at the Super 8 Motel here last Thursday afternoon, with many coming with their own energy bills, worries, and questions.
There currently are half-a-dozen energy retailers operating in the district, Campbell noted.
Unlike public utilities—such as the Fort Frances Power Corp. and Hydro One—these retailers are “private options” and aren’t regulated by the Ontario Energy Board (OEB) when it comes to charging a fair, at-price cost, she explained.
Campbell said the pitch these companies try to sell is “peace of mind” over fluctuating energy prices and how these prices are going to go through the roof.
“We all know that energy prices are going to go up. They’re going to go up about 46 percent in the next five years,” she conceded, but stressed that however much energy costs will rise through the public utilities, it’s more than likely that for-profit retailers also will raise their prices.
For example, if the going rate is five cents per kilowatt hour, these companies will say they’ll lock a person in at seven cents a kW/h for five years. So even though the person will be paying more than the five cents per kW/h, they’ll have the “peace of mind” knowing that should the going rate go up, they will be saving money.
But for electricity, this doesn’t factor in what’s known as “global adjustment”—an amount which increases or decreases in response to energy demands and rates.
“It’s something that’s included in your regulated price plan with FFPC and with Hydro One, but it’s only when you’re signed up with an energy retailer that it appears as a separate line item on your bill,” said Campbell, noting these retailers are very good at “explaining away the differences.”
Meanwhile, natural gas rates often have tripled with energy retailers, Campbell said. While it is possible to save money with a natural gas retailer, it depends on various factors—and you’d be “very lucky” if you could, she stressed.
It’s not just individual residents at risk, but also businesses, Campbell warned, citing an example of one medium-sized Dryden business that signed on with an energy retailer instead of Union Gas and now is paying nearly $2,300 more per month—with a loss of $100,000 estimated for the five-year contract.
Signing on with an energy retailer also makes those in Fort Frances ineligible for the historic mill agreement which sees a reduction in their monthly hydro bill, noted Lori Cain, cost and regulatory analyst for the FFPC, who attended last Thursday’s info session along with FFPC president and CEO Joerg Ruppenstein.
Using an example bill for the “small amount” of 500 kW/h, Cain demonstrated how once these factors such as global adjustment and the historical mill agreement are calculated in, a bill of $56.20 with the FFPC could soar to $103.52 through an energy retailer.
“This is a 500 kW/h bill,” Cain added. “Most residential customers use between 800 and 1,000 kW/h a month.
“So if a very small consumer pays an extra $47 a month, can you imagine someone with electric heat?”
Cain added that due to how the FFPC is structured, it doesn’t profit or lose money if people sign up with a retailer.
She also noted that even if customers switch over to a energy retailer, it’s still the FFPC maintaining the lines, reading the meters, and even doing all the billing functions.
Energy retailers will canvas and sign people up, then these contracts will be remitted to their head office where it goes through an enrolment system, Cain explained.
“As a utility, we just find that our customer has become ‘enrolled,’” she noted. “We don’t see your contract, we have no concept of what the terms of your contract are.
“But as a distribution company, we are told that we . . . charge you whatever rate that [the retailer] has asked us to do.”
This is why those signed on with energy retailers still appear to be receiving a bill from the FFPC or Hydro One. The utilities will bill and collect payment from the customer, then pass along a correct portion of the funds to the retailers.
People who are signed up with an energy retailer will find said retailer’s name either on the first or second page of their bill.
“I don’t like it, but at the end of the day we’re the collection agency,” said Ruppenstein.
“You pay 100 percent of your bill to us and then we divvy up that bill to all the stakeholders,” he explained, noting this includes taxes, the generators, the FFPC, Hydro One as the transmission company, and the retailers themselves.
The FFPC is a member of the Electrical Distributor Association (EDA), added Ruppenstein, which has identified retailers as a really big issue for their business.
“They’ve worked with the OEB and put a lot of pressure on the OEB to do something about retailers, and we actually have seen an improvement over the last couple of years with codes of conduct that retailers now have to go through—but this isn’t until recently,” he stressed.
This code of conduct includes such things as retailers having to educate their customers and give them “apples to apples” comparisons, as well as to clearly identify themselves as being different from a retailer, said Ruppenstein.
“There are actually three retailers who have been handed substantial fines for basically, in an nutshell, unethical contracts,” he noted.
“[There are] all kinds of horror stories where people were enrolled with retailers without having even signed a contract, not knowing what they’re signing, misconception, all of the above.
“So we’re happy to say that it seems to be getting better, but retailers are definitely still a big issue.”
Campbell, meanwhile, urged people to be wary of anyone selling anything door-to-door or over the phone, noting that companies like Hydro One, the FFPC, and Union Gas don’t do this.
“[Energy retailers] will do anything to get you to sign these contracts,” she stressed, noting this includes things like telling people just to “try it out,” or saying that they won’t get paid if they don’t meet their quota, or asking residents to initial or sign to show that the worker has been doing their job.
While people can ask for IDs, there have been cases of misrepresentation, said Campbell.
She also stressed that copies of hydro bills should never be shown as, in a few instances, contracts have been forged using only an account number.
“It’s your right to obviously ask for time to look [any contract or information] over. And if they don’t leave, you can threaten to call the police because it’s your house,” she said.
But besides the door-to-door tactics, there are other methods these companies use to sign people up or keep them enrolled.
This includes sending cheques out to people where, if cashed or deposited, will sign up or re-enroll a person onto a contract, Campbell warned.
Similarly, companies will send out gift cards or pre-paid credit cards—and promising lower rates if they don’t renew right away.
“It says in the fine print in the bottom, just by selecting which card you’d like, you’re automatically re-enrolled,” Campbell said.
“For people that have low incomes, and people who are struggling and just scraping by [or] don’t have good credit, this seems like a godsend, frankly, to them,” she conceded, adding she’s had a number of people on social assistance come in for help because of this.
“These retailers are very well-versed in what they’re doing, They’re very wily,” commented the husband of a recently-retired Fort Frances couple who attended last Thursday’s meeting.
He and his wife were visited by a retailer misrepresenting themselves as being from Union Gas, and they now are looking to get out of the five-year contract they accidentally signed onto.
“It’s awful,” he said. “We’re semi-elderly but boy, when you look at the room here today, they really, really, really take it out on seniors and folks that don’t have money.
“And now you’re strapping them to a five-year contract that sucks them dry of whatever pension dollars that they have?
“That’s just wrong,” he stressed.
“It puts our seniors in a vulnerable position, and that’s just not right,” echoed his wife, who said the biggest thing she takes issue with is that the retailers are able to have the billing come through places like the FFPC and Union Gas so customers might not even know they’ve signed up with a retailer.
For those who have signed up but want out of their contracts, Campbell warned this depends on the company they signed up with, their individual situation, and often financial situation.
Claiming misrepresentation isn’t a guarantee of getting out of the contract, she noted, as it ends up being a case of “your word against their word.”
One option is to pay the cancellation fee—or stay until renewal time and then cancel from there, Campbell said, suggesting this demand for non-renewal should be sent by registered mail and require a signature so that it’s documented.
She also cautioned that it is possible to sign up with one retailer and then another one, as well, meaning a person would have to pay cancellation fees to the first business up to $2,500, and then still have to try and get out of the second contract, too.
In some cases, retailers can’t find the original contract, she noted, meaning they have to refund the money that they have charged over and above from the beginning of the contract.
For those in need of assistance, they can contact Campbell at Hampton’s constituency office (1-800-465-8501) as she has had “a fair bit of success” in getting people cancelled out of the contracts.
