Calgary says Direct Energy is 'bad for consumers'

- The City of Calgary is going to court to fight Direct Energy's entry into the Alberta market, arguing the British-owned electricity and natural gas giant's arrival is bad for consumers.

Direct Energy, a subsidiary of U.K.-based Centrica, was cleared by the Alberta Energy and Utilities Board last month to acquire ATCO Ltd.'s natural gas and electricity businesses, which serve close to a million customers.

The company's arrival in Alberta has been touted by the provincial government as a boost for competition in the deregulated energy sector.

But the $128-million deal sparked controversy when the EUB cleared Direct to add roughly $40 a year to gas bills and $45 a year on electric bills for ATCO customers.

The extra charges amount to nearly $40 million a year for the company.

Peter Symons, spokesman for Direct Energy, would not comment on the filing recently.

The company has said the extra fees are needed to cover the cost of operating in the province, including buying and storing natural gas and providing billing and other services.

Direct Energy's main competitor -- Enmax Corp. -- is owned by the City of Calgary.

The city's documents, filed with the Alberta Court of Appeal, say the sale "creates market imbalances" and that the board failed to consider the "marketing practices of Direct Energy affiliates."

Direct Energy and its U.S. affiliate, Energy America, have been fined in several jurisdictions, including Ontario, Georgia and Michigan, for aggressive and misleading sales tactics.

Energy America, which pulled out of the Georgia market in late-2003, has paid more than $500,000 US in sanctions in the state for signing up natural-gas customers without their permission.

In Canada, Direct was fined $157,500 in 2003 after its agents were found to have forged 21 utility contracts. The company blamed the problems on rogue agents.

Direct Energy's deal to buy ATCO's retail energy businesses makes it a major player in Alberta, with 800,000 natural gas customers and 175,000 mostly rural electricity consumers.