(Part 3 of a three-part look at the
deregulation of the electricity industry and how it is affecting business.)

The power has yet to be turned on in the offices of the province’s new utilities consumer advocate, but already there are calls for Roger Jackson to jump into action.

With a targeted start date set for the first half of this month, Alberta’s first utilities advocate is scrambling to hire staff, get phone lines up and running, and most importantly, find office space.

“We’re getting letters and phone calls already,” said Eoin Kenny, spokesman for the advocate’s office. “But basically we’re not opened yet. We’re in the process of hiring and training our staff.”

Utilities consumer advocate Roger Jackson is already receiving inquiries.

The position, announced last month by the provincial government, will allow Jackson to listen to the concerns of commercial, residential and other electricity customers who utilize less than 250,000 kilowatt hours (kWh) per year, analyse the matters and provide consumers with a voice before regulatory proceedings. Natural gas will also be included in the mandate of the advocate, who will report to the minister of Government Services.

“The (deregulated) marketplace hasn’t evolved as quickly or as broadly as we have hoped,” said Kenny. “That’s why this office has been created, to deal with these consumer concerns. It’s also no secret that there have been problems with the quality of service and billing, but they may have merely been hiccups along the way rather than systemic problems.”

Jackson, who will have deputy minister status, plans to help develop educational materials to keep Albertans informed about the progress of the province’s electricity and natural gas markets. He will advise government on the development of energy policy as it relates to consumers, and utility companies on their services to consumers.

But there will not be an investigative arm to the office. “We don’t envision an investigative role – I didn’t get a bill, my meter hasn’t been read – you would talk to your utility company first. We will deal with groups of complaints, trends,” said Kenny.

Some of the apprehension that is being voiced comes from the province’s official Opposition, which is are calling on the
advocate to protect Albertans against slamming – a practice where a company switches customers to its service without their consent.

Alberta Liberal Energy critic Hugh MacDonald has called on Jackson to investigate the province’s consumer
protection laws before Direct Energy Marketing Ltd.’s entry into the Alberta utilities market.

“Direct Energy has been fined for unlawful marketing practices in several North American jurisdictions, including Ontario,” said MacDonald.

“That should raise a red flag for the Alberta government.”

Direct Energy, however, maintains they have taken a zero-tolerance policy for unethical sales behavior, and have since greatly improved customer service,
protection and sales processes.

“When some problems were identified, we took immediate action and addressed them. We put process policies in place and made sure that we are headed for world-class customer service,” said Peter Symons, media relations manager for the company’s western region.

In Ontario, Direct Energy Marketing Ltd., a wholly owned subsidiary of Centrica plc, was penalized $157,500 along with Ontario Energy Savings Corp. (OESC), which was hit with a $75,000 penalty.

The penalties were levied against Direct Energy and OESC in June 2003 for violations of section 2.1.4 of the Electricity Retailer Code of Conduct and Code of Conduct for Gas Marketers. The section requires marketers and retailers to obtain a consumer’s written
permission to switch energy suppliers.

“In the director’s opinion, the energy contracts in question did not contain the signatures of the consumers. The signatures on the contracts purporting to be that of consumers have now been determined to be forgeries,” the Ontario Energy Board said in a statement.

The board adds both companies have made significant progress in addressing the issue, including removing the agents in question from service, cancelling the contracts in dispute and contacting other customers who were signed up by the agent to confirm the validity of their contracts.

Meanwhile, the Liberals also point to another incident, this one in September 2003 in the U.S., when the Georgia Public Service Commission approved the largest assessment ever against a Georgia natural gas marketer in order to resolve 138 allegations of slamming against
natural gas marketer Energy America Company. Energy America is also a Centrica subsidiary.

The commission approved a stipulated agreement, which if accepted by Energy America, would require the company to contribute $400,000 to the Low Income Heat Energy Assistance Program (LIHEAP) plus $100 credits to each of the 138 customers slammed, for a total payment of $413,800.

In addition, Energy America would pay $5 to these customers for each day it took the gas marketer to return the customers to their preferred provider after being slammed. The commission also approved an amendment that would prevent the company from receiving a tax benefit from its LIHEAP contribution.

Direct Energy, which is licensed to operate in Alberta, is awaiting Alberta Energy and Utilities Board approval of its purchase of the rights and obligations to service ATCO gas and electric customers, before it moves forward with its plans for the marketplace.

“At this point there is nothing to
investigate (in Alberta),” said Kenny, in response to the Liberals’ request to the advocate. “We haven’t had any complaints about Direct Energy at all.”

Further, said Kenny, “the company has been told, just as every new marketer is told prior to licensing, that this market doesn’t tolerate shoddy consumer practices like slamming customers.”

Kenny also said that when Direct Energy first came in, they provided
assurances to Alberta Government Services that they would verify every contract with the consumer.

Further, when Direct Energy was licensed for natural gas and electricity in Alberta, one of the conditions was that it post bonds totalling $1.25 million, $1 million for electricity and $250,000 for natural gas. “Any consumer financially hurt by a breach of regulations (under the Fair Trading Act) could make a claim for restitution against the bond,” said Kenny.

In reference to MacDonald’s concerns, Kenny said legislation already exists to protect consumers.

The Fair Trading Act, under Section 23, makes it an offence to provide any goods or services to a consumer that they did not order. Under Section 22, a consumer is not liable to pay for goods and services they did not order unless they consent to pay for those services in writing.

Additional protection is provided by the electricity marketing regulation and the natural gas direct marketing regulation – they’re elements of the act that state consumers must sign any contract and receive a copy of it for it to be binding. Consumers also have 10 days from the day they sign their contract to cancel the contract without penalty.

Should a consumer sign a fixed-term contract, a company can’t roll it over automatically, said Kenny.

“The consumer must consent to an extension in writing.”

For its part, Direct Energy said, “we cannot stress enough that Direct Energy has a zero-tolerance policy for unethical sales behaviour.”

Since the incidents in question, Direct Energy has taken huge strides forward in improving its customer service, protection and sales processes, said Symons.

All door-to-door sales representatives employed by Direct Energy Preferred (the company’s deregulated retailer) will be Direct employees. They will have to complete an in-house training program, which includes a certification exam.

Direct also said it will establish an independent quality control team and that there will be a third-party verification system “where this company will verbally speak with the residents to verify all the information in the contract and make sure they understand it,” said Symons.

The company has also mandated agent payroll and customer enrolment processing departments to watch for contract anomalies at the point of entry and developed a rigorous process for investigation of and, as required, action on any suspicions identified, said Symons.