Let’s ban automatic renewals of energy contracts

April 9 2009 by Ellen Roseman

It’s a rare day when I don’t get any complaints about energy marketers. Bad enough they push you into getting a long-term contract based on false promises of savings or mispresentation. Worse that these contracts can be rolled over automatically if you don’t take action to cancel them.

Direct Energy is the worst offender when it comes to auto-renewal. They have the nerve to charge 49.9 cents a cubic metre for a one-year natural gas contract, more than double the current utility rate. Enbridge and Union Gas are both charging about 23 cents a cubic metre (before adjustments, which bring down the cost further).

I sent four auto-renewal complaints to DE today, more than the usual amount. They’re posted below. You can see the outrage when people realize this arangement is legal in Ontario and there’s nothing they can do, other than to cancel when they get the first bill at the higher rate. Even then, they have to wait a couple more months for the changes to be made.

Why is negative option billing banned in Ontario, except for energy contracts? No one knows this. The salespeople don’t tell you that a contract can be rolled over if you fail to reply to the renewal letter. Even if they did, would you remember five years later when the contract ends?

Even my friends get ensnared. Check out writing teacher Beth’s blog, where she mentions her contract problems (near the end of her post). She’s spending five months in Paris and didn’t realize she had to cancel while she was away. If not, she would face more overpriced heating bills when she returned.

Why is this cancellation process titled in favour of the companies? Why aren’t politicians defending consumer rights to get out of contracts when they expire? I feel sorry for all the people who don’t know the rules and end up getting re-enrolled at these usurious rates.

Here’s a link to the Ontario Energy Board’s guide to what happens when an energy contract nears its end. I disagree 100 per cent with the website name, The Energy Choice is Yours.

As long as this complex system continues, the energy company has the choice of never letting you out.

26 comments

  1. AT

    Apr 9 2009

    I completed a 5 year fixed rate gas contract at the end of August 2008. I was delighted with the savings I experienced throughout that contract period.

    After 5 years of time spent on this contract, I was not aware of my expiration date, nor was I certain of the fine print details of the contract I had signed 5 years earlier.

    Direct Energy policy is to send out a renewal package for your gas contract. In the fine print of the original contract I had signed 5 years earlier, it supposedly states (I haven’t seen this yet) that if you fail to respond to the renewal package they will automatically renew you on a 1 year fixed rate contract at the current rate.

    It turns out this rate is roughly 20% higher than market rates at any given time.

    I live in a rural area and occasionally our mail will get mixed up. I have missed bills in the past and I’ve never seen them.

    I never saw or received my renewal package from Direct Energy and it has now cost me over $450 in excess heating costs throughout the winter months (beyond what the regular Enbridge floating rate would have cost).

  2. MK

    Apr 9 2009

    Our story began in January 2007, when I discovered that we were being charged an exorbitant rate for our natural gas purchases.

    We discovered that Direct Energy had done an automatic renewal on a contract that we had signed with them in 2001. They had charged us an exorbitant rate for the gas per cubic meter, as opposed to the competitive rate that we had signed for.

    After many attempts to rectify the situation, we cancelled our contract with them and paid them in full as at March 2007.

    We then discovered in December of 2008 that we were once again being billed by Direct Energy at .49 cents per cubic meter as opposed to .34 cents, which is posted on their website.

    Even though I have faxed them copies of their cancellation from March 2007, they have told me that they can do nothing for me and continue to bill me.

    We hadn’t paid our bills from December 2008 to March 2009, in hopes that we could resolve this situation. However, Enbridge has sent us a disconnect notice.

    As a gesture of goodwill, we paid $5,600 of the $7,100 total bill and were told that they are still going to disconnect our gas as of April 16, 2009.

    We have also spoken to the Ontario energy board. They are aware of our problems and trying to resolve them as well.

    When I stand back and think about what has happened with both this automatic renewal and subsequent price gouging that happened directly afterward, I am amazed that none of our politicians have not put a stop to this practice.

    I can’t help but think about a retired couple who are on a fixed income who are powerless just as I am and are held captive by this particular “company”.

  3. AW

    Apr 9 2009

    The natural gas contract I entered with Direct Energy five years ago expired on March 31, 2009.

    I received a renewal agreement about 2 months ago. I did not act on it, as I have no intention to enter a new one.

    Today, I received an Enbridge invoice and noticed my gas charge is 0.49.9 cents per cubic meter vs. Enbridge’s current rate of 23 cents per cubic meter.

    I contacted Direct Energy and a supervisor told me because I did not return the renewal cancellation form, automatic renewal for one year kicks in.

    He explained to me that is company policy and in compliance with the Consumer Proctection Act, 2002. I find it very absurd. I wonder how many of their customers fall into their trap by not returning the cancellation form.

    I read the excerpt provided with the agreement and did not find any section in the Consumer Proctect Act, 2002 that gives the company the right to unilaterally renew an agreement upon conclusion of the prior agreement. Their business practice is downright unethical.

    I requested that the new agreement be voided back dated to April 1, 2009. I was told that it will take one to two billing cycles to complete the process.

    In the meantime, I will be stuck with the current contract price of .499 per cubic meter and I won’t get a refund.

    I would very much like to challenge Direct Energy for this unjust act.

  4. RR

    Apr 9 2009

    On February 7, 2003, I entered into an agreement for five years with Direct Energy to be my natural gas provider.

    Sometime around May or June 2008, I recall receiving correspondence from Direct Energy indicating that my contract was about to expire and I needed to contact them to ensure my service wasn’t discontinued.

    I recall contacting them by phone and questioning the mail that I had received. The person I spoke with indicated that nothing had to be done as they had not received regulatory approval to enact the natural gas contracts and that nothing further was required.

    It was my intent at that time not to renew any contract and revert back to Enbridge Gas as a supplier, simply because natural gas rates hadn’t fluctuated.

    As a result of the information received from the phone call, I assumed that my gas supplier would revert back to Enbridge effective September 2008.

    I received my Enbridge Gas bill for December and it was just above $400. I looked at the rate and noticed it to be 44.9 cents per cubic meter.

    In December 2008, I was conversing with some neighbours about gas rates and had noticed that my rate was 44.9 cents per cubic meter in comparison with theirs at about 30 cents per cubic meter.

    On Jan. 20, 2009, I contacted Enbridge Gas to inquire why my rate was at 44.9 cents and was advised that they could not assist me as I was under contract with Direct Energy. I argued that I wasn’t, but they insisted that I contact Direct Energy for details. To this point in time, I did not have a copy of any current contract with Direct Energy.

    On Jan. 23, 2009, I contacted Direct Energy Customer Service to enquire about my rate. I spoke with a woman there but I had a hard time understanding her due to her accent. Four times I asked to speak with someone I could understand and she kept telling me that she would explain it again. I told her that I couldn’t understand her and finally in frustration I hung up.

    A couple of hours later I tried calling back, hoping to get someone I could understand. Again, I got a male with an accent that I couldn’t understand and requested to speak with someone that I could understand. He told me to call back and perhaps I would get someone that I could understand.

    On Jan. 26, 2009, I e-mailed Direct Energy Customer Service to enquire about my gas rate. I requested that someone contact me and provided my account number and a telephone number. I specifically requested that whoever contacted me not have an accent, as I couldn’t understand them.

    On Jan. 26, 2009, at 1:50 pm, I contacted Customer Service and spoke with a woman named Caroline. I enquired about the alleged contract and she said she would send a copy to me and it should arrive in 10 days.

    I asked to speak with her supervisor, but she told me he was on another call. I said I would wait until he was available and to place me on hold until he could take my call. I was on hold from 1:58 pm until 2:58 pm and no one answered. I hung up in frustration.

    On Jan. 27, 2009, Customer Service contacted me and advised that they could not find a contract for Natural Gas for me and requested additional information (first, last name, account #, address, phone #).

    On Jan. 27, 2009, I contacted Customer Service by phone and spoke with a woman about the 44.9 cent rate. She said she could adjust it to 39.9 cents. I felt this was a quick fix while the whole problem got worked out.

    On Jan. 28, 2009, in the early morning, I called back to Customer Service and spoke with a guy about the rate and advised that the woman had changed it the day before and I wanted to cancel the change. He provided me with cancellation number.

    On Jan. 28, 2009, I contacted Customer Service by email and confirmed that I did not have a contract with them and provided the address information as requested by them on Jan. 27.

    On Jan. 29, 2009, Customer Service emailed me and advised that a copy of my contract had been ordered and I could expect to receive it in 15 – 30 days.

    Things went quiet for a while.

    On Friday, Feb. 6, 2009, I received a contract in the mail from Direct Energy. It does not have a rate, a contract number or anything on it other than a cover letter and an Information document (appears to be a NEW contract dated Jan. 28, 2009).

    On Feb. 9, 2009, I dispatched an email to Clinton Roeder of Direct Energy and outlined what had happened to date. I said I did not want them as a gas supplier and to make immediate arrangements with Enbridge Gas to transfer my account.

    I also requested that he contact me and I provided a number at which to reach me (I placed a “Read” notification on the email). Six persons opened the email including Roeder and no one called me.

    On Feb. 12, 2009, I “Hand Delivered” notification to Direct Energy at 2225 Sheppard Ave., E., Toronto, notification to transfer my gas service to Enbridge. A signature of receipt was obtained from Reception.

    On Feb. 15, 2009, I received a copy of the original agreement that I signed with Direct Energy in 2003. The cover letter was dated Feb. 13, 2009.

    On Feb. 17, 2009, I emailed Enbridge Customer Service and advised them that I did not have a contract with Direct Energy and that I wanted them (Enbridge) as a gas supplier.

    On March 9, 2009, a woman by the name of Eunice Stephen from the President’s office of Direct Energy called to speak with me. I wasn’t available.

    I emailed her and asked for her to call me on March 10 around 9 am, which she did. I made enquiries regarding the alleged contract, saying that it had expired on Aug. 31, 2008 and that I had not renewed it.

    I asked for her to provide me with a signed contract authorizing an extension. She said that I had just renewed it and I said that I hadn’t and that I had only agreed to a reduced rate and that I had cancelled that the next day.

    She was of no assistance and continued to argue that I couldn’t get out of the contract and that I would have to pay an early exit fee and I had no right to cancel the contract. I hung up in frustration again.

    On April 6, 2009, I received a letter from Direct Energy indicating that if I wanted out of my contract, I had to pay them a $184 administration fee, $1,518.87 lost income and $85.14 GST, for a total of $1,788.01.

    Direct Energy is out of control. I do not have a signed contract with them, nor have I had since Aug. 31, 2008.

    All I want to do is get away from them. I’m hoping that you will have success and free me from this company.

    Each and every time I suggest their termination, they say it will take up to 2 months for it to happen. Gives them a little more time to suck some more money out of you, I guess.

    If you go on their web site and sign up, they offer a rate of 37.9 cents per cubic meter. Why am I being gouged at 44.9 cents?

  5. hankhill

    Apr 9 2009

    hey Ellen, i just stumbled on your blog. I think it’s great.
    My friend jim would appreciate it, i shall send him through to you. He’ shares many of the same environmental positions as you
    Say hey to him if you have a chance.
    http://jimfairthorne.wordpress.com/

  6. Hillary Marshall, Direct Energy spokeswoman

    Apr 9 2009

    Auto-renewals aren’t uncommon in different industries.

    The price on a one year term is a tough one due to the complexity of calculating out where the commodity might be in 12 months.

    Taking 2008 as an example, it would have been hard to predict that the bottom would fall out as it did.

    You have suggested that renewal packages should be sent by registered mail. We can show that the renewal packages were sent through Canada Post. What other sectors have to prove their materials made it to the customer?

    When you sign up for a cell phone or even a credit card company, what extra steps do they take to explain what will happen at the end of the term?

    In the case of a credit card, your rates go up without much warning….

  7. David Goldsmith

    Apr 13 2009

    Not an auto renewal, but I’ve been having cancellation problems of my own, with Superior rather than Direct.

    In August, my sister accidentally agreed to a gas and electricity contract with Superior at ridiculous rates.

    When I got my first bill in January (they started billing in December, 4 months later), I set about getting the contract cancelled. I was told a final bill would be sent with a cancellation fee.

    Got a regular bill in February, paid it, and thought done, I’d wait for the cancellation bill. March came and I got another inflated bill for February. I called them up, explained and was told that another cancellation bill would be sent.

    Now April, I got yet another inflated bill for the month of March and still no cancellation bill. I called them up and was eventually told (after being lied to about standard contract practices and policy) that while they had a record that I’d talked to someone, the cancellation bill had not, in fact, been resent. A new one would be sent, and they will not stop charging me the ridiculous rates until I pay the cancellation fee.

    What other company does that? When I asked that question of the Superior CSR, he responded Bell and Rogers. They don’t, of course. Their cancellation terms are reasonable.

    It’s especially frustrating that someone who’s name isn’t even on the mortgage can sign a contract for gas and electricity supply, but I’ve been advised that there’s no use fighting it.

    I’ve been trying for months now to get them to cancel the contract and keep getting told that they can’t. It’s ridiculous!

    Thanks for the advice, I’ll make sure to put something somewhere to remind me of this event 4 and a half years from now.

    As mad as I am now I feel like my head would explode if I found out I’d been renewed long after I’d been canceled.

  8. Jen W

    Apr 16 2009

    I’ve been living in the States for the past 5 years and have a home in London, ON that we rent out. We pay the utilities and it wasn’t until recently that I started to look at costs and how to cut back etc.

    After putting in a new high efficiency furnace, I started to look more closely at our Gas Bill and noticed that I am being charged 49.9 cents for gas. I thought this seemed to be a lot and called my dad who said they are paying only 21 cents! What the ……!!!!!!!

    Unfortunately, years ago (probably at least 10 years), before we moved, I signed up with Direct Energy on a 5 year plan. At the time their rates were better than Union Gas so I thought it was a good idea. Wrong.

    My contract has been automatically renewed for at least the past 5 years – I’m too afraid to look back on my bills from a few years ago to see how much I have been paying Direct Energy to supply my house (that I don’t even live at!!) with gas – I’m sure it would depress me to see how much money I have been giving away to them!!

    After speaking with the BBB and the OEB, they basically said I have no option but to cancel my contract when it comes up for renewal in October 2009.

    I have been in contact with Direct Energy a few times, letting them know my frustration, shock and anger at their policy of charging for “automatic renewals”. They graciously offered to lock me into another 5 year contract at a better rate and give me a $25 PetroCan gift card.

    What a joke – I basically laughed out loud and told them that I would never renew with them again and will be promptly canceling the contract as of July 4th, 2009 (the date they said I could cancel without penalty), which of course takes over 120 days to process, so will be paying 49.9 cents until October 2009!!!

    Oh forgot to mention – if I wanted to cancel today I would have to pay a penalty fee of over $450 and it would still take over 120 days to process, so I would still be paying 49.9 cents for my gas for the next 3-4 months while handing them another $450 on a silver platter as a bonus gift.

    They should not be allowed to prowl around neighbourhoods trying to trap naive consumers into the bowels of their lair. I will be spreading the word around to never sign a contract with an Energy Marketer – my first clue should have been back 10 years ago when they were selling gas door to door like a vacuum salesman!!! Lesson learned.

    Wish me luck in October 2009.

  9. Michael McNeill

    Apr 22 2009

    In response to MM’s post, their fake “return address” is just the same “fake” phone number that they give you to call within the 10 day “cooling off” period.

    Direct Energy is “acting” as a legitimate operating company, but it is just “the big bad wolf in sheep’s clothing”. How different is Direct Energy from the banks or Enron in the United States? Just plain old liars.

    Hopefully, we as consumers are seeing the light and are able to take back our rights and NOT deal with this company.

  10. Art Richardson

    May 4 2009

    I am another paying 49.9 cents and I have an emailed contract from Direct Energy which is halfway completed but Direct Energy “cannot find any record” of this contract-so far
    Stay tuned as I for one believe a contract is a contract for both parties
    I think a class action should be considered and if any one is game sign me up.

  11. Linda Wallace

    May 26 2009

    My contract with Direct Energy is up for renewal … What are the proper steps to cancel?

  12. Connie Walsh

    May 29 2009

    I knew I wanted to cancel my agreement in February. I knew that it ended in July.

    So I sent them an email in March to cancel. They said it was to early to cancel. I had to WAIT for the renewal package and then try again.

    They told me to call back in April to cancel. I did and they told me I still couldn’t cancel till I got the package.

    I finally got the package. There was no mention of how to cancel. Apparently no one wants to. So I called back.

    They gave me a fax number, an email address and a snail mail address. The email address was wrong, the fax got lost and after I called a bunch of times they told me I was cancelled because they got the letter.

  13. Milena

    Jul 17 2009

    I moved to my new house 2 years ago and “failed” to notify Direct Energy. To my surprise, they sent me to collections because I did not notify them of my move. I owed them $1,000 for the cancellation fee.

    I fought back and they “forgave” me, but now I am stuck again with them until 2013. I just recently received a hydro bill for $738.

    When I complained to the local hydro company, they told me it is not them, it is Direct Energy. They forgot to send their cost lines to hydro and had to backcharge me for 2 months. As I was investigating my bills, I realized Direct Energy is charging me 5 cents more per kw than the hydro company.

    I complained to the Ontario Energy Board and BBB. When I signed my contract back in 2001, I was guaranteed a locked-in lower price then anyone else. Isn’t Direct Energy breaking the contract by raising the price? Where is the justice for a regular consumer here?

    Even when I move next time, my contract will follow me and Direct Energy will be extended.

    Where is the government body to regulate this company?

  14. Johanna Monckton

    Aug 24 2009

    I too have had the same thing happen. I was agast to discover I was paying 49.9 when new customers were being offered 34.13. I asked to cancel and was told my fee would be $228.36, payment up front. Can they really do this? It is unbelievable that this can happen, there is no protection for the consumer.

  15. Amit

    Oct 6 2009

    I have the same problem. My contract was renewed by Direct Energy without my consent at a rate 3 times higher than the market rate.

    On top of that, Direct Energy will still be billing for 1-2 cycles before the contract will get cancelled.

    I do not understand how the laws in Canada allow this to happen. Obviously I will not be doing business with Direct Energy again.

  16. Kathy

    Oct 10 2009

    I have just discovered that Direct Energy had us under illegal contract for the last seven years – of course, the last two were under the 49 cent automatic renewal rate.

    When we asked for a copy of the contract that we signed, they sent us someone else’s personal information and contract. They have admitted that we were wrongly put under contract.

    They refuse to release us from this non-existent contract until the end of the month – even though no contract for us ever existed.

    They have sent a letter of apology saying this is not their common practice (ya right). They offered $210 reimbursement, based on some averages etc.

    We have told them we are not satisfied with this and I will be speaking to the local police about this. I cannot believe this company is getting away with all the things they do!

    I have also sent a complaint into the Ontario Energy Board. We’ll see what happens.

  17. Don revoy

    Mar 4 2010

    You might find it interesting to check out my web site.I have been very successful in helping people in these matters.

  18. Robert

    Jun 16 2010

    I can’t assist in all cases where consumers are encountering problems with Direct Energy, but if you entered into a natural gas supply contract with Direct Energy / Enbridge Home Services in Ontario around 2002, and your contract was renewed without your consent, I’ve set up a free website (directenergyrefunds.blogspot.com) showing how you can potentially receive a very large refund from Direct Energy.

  19. lucy cerase

    Oct 28 2010

    We have not signed a renewal contract with Direct Energy. Their customer service dept (totally incompetent) has advised me that our contract has “lapsed” (Dec. 7, 2007), yet Direct Energy continues to bill us at $0.40 a cubic meter.

    I own a multi residential building, so you can imagine how much I have been overcharged over the last several yrs. My husband’s signature was forged on the previous contract.

    We contested through legal channels but got nowhere, so we decided to wait until the end of the contract and then leave Direct Energy. It’s been virtually impossible. As of today, they still appear on our Enbridge bill as our supplier.

    Having to pay twice as much as what Enbridge is charging has cost me thousands and thousands of dollars. My building has 57 units.

    Is there any way Direct Energy can be forced to pay me back? …or at the very least transfer my account to Enbridge?

    How and why has this company been able to continue with their fraudulent practices?
    Surely I must have the right “not to be their customer!!”

    Hope you can help me. I have had to remortgage this property to pay at least $100,000+ to ensure that Enbridge did not cut off the gas for my tenants.