Tuesday, June 15, 2010

Direct Energy natural gas contract refunds - the basics

Much has been written about the behaviour of Direct Energy in Ontario.  In particular, many customers have run into problems concerning natural gas supply contracts, which locked them into paying a fixed price for a long period of time, made them subject to significant early termination fees, and may have been renewed without their consent.

The purpose of this site is not, regrettably, to obtain redress for all of Direct Energy's aggrieved customers.  It can, however, help certain individuals who originally entered into natural gas supply contracts with Enbridge Home Services (which was acquired by Direct Energy), and whose contracts were automatically renewed without their express consent.

Unfortunately the Ontario government, under the auspices of the Ontario Energy Board, has condoned the practice of automatically renewing energy supply contracts even if customers don't respond to a renewal notice.  Most energy supply contracts now contain language allowing them to be renewed automatically, for a one-year term, at a price to be determined by the supplier.

However, certain natural gas supply contracts entered into in 2002, and possibly other years, do not contain these terms.  Direct Energy was not legally allowed to renew these contracts without the consent of the customer.  Nevertheless, Direct Energy in certain cases purported to renew these contracts for successive one-year terms at fixed high prices (such as $0.499 per cubic meter), and charge termination fees when the customer attempted to cancel these illegitimate renewal contracts.

If you originally entered into a natural gas supply contract with Direct Energy / Enbridge Home Services which did not contain automatic renewal provisions but nevertheless was renewed without your consent, you may potentially be entitled to thousands of dollars in refunds from Direct Energy.  Your refund amount is the difference between the price charged to you by Direct Energy and the 'commodity price' (which varies from month to month, but has recently been down to below $0.15 per cubic meter) during the term of the renewal contract(s), plus any administration or termination fees you had to pay to cancel the renewal contract.

The following pages will show you how to determine what type of contract you are under, whether your contract was wrongfully renewed, and how to submit a claim for a refund.