Direct Energy Fined Over Forgeries

Direct Energy, the gas and electricity retailer that's been touted as the answer to sparse competition in Alberta's utility market, was fined $157,500 recently for misleading customers in Ontario.

The company, a subsidiary of British energy giant Centrica PLC, was fined by the Ontario Energy Board after its agents were found to have forged customer signatures on contracts to switch utility service.

The board fined Direct $7,500 for each forged contract.

Another company, Ontario Energy Savings Corp., must pay $75,000 for attempting to pass 10 false signatures.

Under the rules of the open market, energy retailers must get written permission from consumers to switch their electricity or natural gas supplier.

"The signatures on the contracts purporting to be that of consumers have now been determined to be forgeries," the Ontario regulator said in a statement.

Paul Massara, president of Canadian operations at Direct Energy, said the company does not support questionable tactics by its agents and has a zero-tolerance policy for such actions.

"We are very disappointed about these fines," Massara said in an interview.

"We've done an awful lot of work to correct these issues . . . we will terminate those people and report them to the police if it happens," he said.

The findings have raised consumer concerns, particularly in Alberta where door-to-door competition for utility service is set to increase in the next year.

The deregulation of Alberta's electricity market two years ago has paved the way for companies to begin competing for consumers.

Calgary-based Enmax and Edmonton-based Epcor are already offering contracts.

Direct Energy purchased ATCO Ltd.'s natural gas retail operation last year and plans to begin pitching utility contracts this fall, once the deal gets regulatory approval. Customers are already being approached by the firm to sign up in advance.

Provincial Energy Minister Murray Smith said last week that Albertans need to start considering signing energy contracts as a way to stabilize home energy bills. However, consumer advocates urge caution.

Jim Wachowich, spokesman for the Consumers' Coalition of Alberta, said the board's investigation is a "red flag" for consumers to be vigilant in the deregulated marketplace.

"This isn't company-specific . . . the changes to the marketplace make this kind of thing a possibility," said Wachowich.

"Ten years ago you didn't have a salesman knocking on your door asking you to sign a utility contract. Now you will."

Massara said the Direct Energy infractions occurred two years ago and several steps have been taken by the company to prevent future problems.

Salaries of the company's sales agents have been restructured, reducing the amount of pay incentives in favour of base wages, he added.

As well, Massara said the company now employs more rigorous audits on its contracts, including checking with new customers afterwards to ensure they want their service switched.

In Alberta, the company will be using predominantly its own staff, rather than contracting out the jobs, Massara said.

Consumer advocates say homeowners shouldn't sign contracts if they don't understand the terms or sales pitches seem too aggressive.

Homeowners are also warned against signing papers and showing their power bill to sales agents if they don't want to switch companies.

Utility bills contain sensitive information that can be used, along with a forged signature, to switch a customer to another firm without the person knowing.