Natural gas customers stuck with costly contracts

Thousands of B.C. residents who switched to new natural gas providers after deregulation are now paying significantly more than market rates and discovering they can't get out of multi-year contracts.

"I never signed a contract and what they've been telling me over the years is I did sign a contract. An online contract," said Samantha Badry of Chilliwack, B.C. "To me, that is not fair to any consumer."

Badry said in 2007 she inadvertently signed up with Universal Energy, after she found a flyer on her doorstepsaying she could go online and sign up to win a free TV.

"You enter your address and you enter your current gas provider. I just thought I was entering to win a free TV. So now I'm locked into this contract that I can't get out of," she said.

"I'm mad. And it's not just me that's being affected."

Badry was one of 135,000 customers who signed on with new companies after the province opened the natural gas market up to competition. Since 2007, several marketers, including Universal, have offered residential customers an alternative to the fluctuating, market-driven prices charged by B.C.'s main gas supplier, Terasen Gas.

Universal and others use door-to-door salespeople, who work on commission,to sell multi-year, fixed-rate contracts.

Paying a penalty not an option

Unlike fixed mortgages or cellphone contracts, rules set by the regulator, the B.C. Utilities Commission (BCUC), do not allow consumers the option of paying a penalty to get out of their contracts.

Customers in B.C. and Ontario have complained to regulators that they didn't realize what they were signing up for. According to Terasen Gas, 16,000 B.C. customers who signed up with new suppliers have since disputed their contracts.

In Ontario last year, Universal Energy was fined a total of $187,500 by the Ontario Energy Board for practices that included making false and misleading statements to consumers.

Badry said she didn't even realize she had a new gas provider until several months into her contract. After several abnormally high bills, she inquired and was told byTerasen that she had switched suppliers.

No matter which company a customer purchases their gas from, Terasen still delivers the gas to them.

"My gas bill kept showing up and I never thought twice about it because I am under the impression that I am with Terasen," said Badry. "All of this started with this silly door-knocker to enter to win a free TV."

Universal Energy was taken over by another gas marketer, Just Energy, last year. Spokesperson Gord Potter told CBC News Badry should have known what she was getting into, because new customers see an explanation of the contract and have to clickseveral "I agree" boxes.

"The screen requires that the customer open and view the attached document each time, under each of the 'I agree' check-boxes, before they can actually check the box and continue forward," Potter wrote in an email.

Badry insists the website had no such requirement when she entered to win the TV. Potter said new customers are also sent a confirmation email, which explains that they have 10 days to cancel their contract.Badry said she doesn't remember receiving an email.

Sales practices criticized

A review by the B.C. Utilities Commissionin 2008 concluded some of Universal's sales pitches were incomplete or contradictory.

The BCUC also found "several deficiencies within the website the online contracting process included faults. As a consequence, there may have been inadvertent electronic contracts," according toa report produced following the review.

Badry wants out now, because natural gas prices have been low for several months. Under her fixed-rate term, she has been paying double what she would have paid if she had stayed with Terasen Gas. Universal is charging her 9.880 per GJ. The current Terasen rate, whichthe company said might riseslightly in April,is 4.953 per GJ.

'I'm out $800 so far. That's a lot of money.' Universal Energy customer Samantha Bardy

"I'm out $800 so far. That's a lot of money," said Badry.

"It's not like everybody has that kind of money. I don't want to be throwing away money. And I definitely don't want to be making this company rich. I want my money back and I want out of my contract."

Badry said her gas rate increased with Universal last year, despite the company's website promotion of "guaranteed rates."

"If they are guaranteeing that the rates aren't going to go up, why did the rate go up?"

Price details online, which Badry said she didn't see, also show a built-in increase after the first year.

Badry filed a dispute with the BCUC, but the regulator ruled against her, notingshe had agreed to the terms online.

New owner wants to give customers break

Potter said Just Energy doesn't allow new customers to sign up online, as Universal did. He said the company has also asked the regulator to allow unhappy customers like Badry to get out of their contracts.

"If we were currently in a high-price cycle for energy, we would not be having this discussion. However, when market prices fall, many consumers reconsider their decision," Potter wrote.

"Some additional options/flexibility should be made available to consumers in B.C."

CBC News has learned the BCUC decided not to allow consumers to get out of their contracts because Terasen Gas objected. Terasen spokesperson Joyce Wagenaar said the reason for that was because broken contracts could mean hundreds perhaps thousands of customers would return.

Wagenaar said that would affect the company's projections and additional costs would be passed on to customers.

"Terasen buys its gas on an annual basis, so by breaking those contracts it could add to a portion of the bill," she said.

Other provinces, including Ontario, do allow consumers to break their contracts, if they pay a penalty. Potter said that's because gas companiespurchase the commodity over a shorter term in those provinces.

"Terasen believes that the gas marketers have the tools in hand to address cost issues with their specific customers, without breaking contracts. Because otherwise that could impact the gas prices of all of our customers," said Wagenaar.

Erica Hamilton, from the BCUC, said most of the unhappy customers signed up during the initial sales push by new marketers.

"Gas prices plummeted in October of 2008," said Hamilton. "An awful lot of the disputes are buyer's remorse."

The regulator expects to reconsider allowing people to break their contracts this spring.

"How is this benefiting the consumer?" asked Badry.