Direct Energy

TORONTO, ONTARIO--(Marketwire - Dec. 4, 2008) - Direct Energy, one of North America's leading integrated energy companies, launched a pilot project this week to test an additional consumer protection measure aimed at addressing the confusion sometimes experienced by Ontarians who sign up for energy contracts.

Known as third-party verification, the process is required by law in a number of successful retail energy markets across North America, and is often used voluntarily by retailers in markets where it is not required. It is widely recognized as reducing the risk that a customer will enrol in an agreement they don't understand.

"Direct Energy uses third-party verification in every jurisdiction where we sell energy plans door-to-door except Ontario, because current regulations here discourage it," said Clinton Roeder, Senior Vice President of Direct Energy. "We've seen first-hand how successful this process has been in other markets, and have decided to invest in a trial to help determine if it might be a viable option for Ontario."

During a six-month trial period, Direct Energy will have new customers complete a brief phone call to answer a series of questions designed to ensure they understand the agreement they're signing before they are enrolled. The process will be used for each customer who buys a contract when approached by a door-to-door or telephone sales agent. The conversation takes place at the time a customer decides to purchase an energy contract and while the sales agent is still present. If the verification is not completed successfully, the contract is not enrolled. Results of the trial will be shared with the Ontario Ministry of Energy and the Ontario Energy Board.

Third-party verification differs from Ontario's current reaffirmation process, because it takes place at the time of the sale rather than weeks or sometimes months later. It provides an immediate way for the retailer to assess whether the customer was given what they need to make an informed decision. It quickly identifies training issues with sales agents or deficiencies in the information they're providing so these issues can be addressed before other consumers are affected. This process also helps consumers by providing an immediate review of key terms of the agreement and other important information provided at the time of sale.

"This year alone Direct Energy has made more than 320,000 third-party verification calls in markets across North America, so we've seen first-hand the advantages it delivers to consumers," said Roeder. "It is a best-in-class practice, and we think it will help address consumer confusion in Ontario."

This pilot project is the latest in a number of steps Direct Energy has undertaken to help improve the experience of Ontario's energy consumers. In June, Direct Energy launched an information brochure shared with consumers at the door to help address common points of confusion. The company also re-tooled the way it pays sales agents to encourage the highest level of customer service, and stepped up sales quality measures such as random audits of new contracts to help identify and address issues quickly.

About Direct Energy

Direct Energy is one of North America's largest energy and energy-related services providers with over 5 million residential and commercial customer relationships. Direct Energy provides customers with choice and support in managing their energy costs through a portfolio of innovative products and services. A subsidiary of Centrica plc (LSE:CNA), one of the world's leading integrated energy companies, Direct Energy operates in 22 states plus DC and 10 provinces in Canada. To learn more about Direct Energy, visit www.directenergy.com.

Third-Party Verification

Fact Sheet

Direct Energy is undertaking a six-month trial of third-party verification (TPV) as part of its door-to-door and telemarketing sales processes in Ontario. The project begins in December, and will run for approximately six months. While the pilot project is running, each customer who signs a new contract at the door with a sales agent or by phone with a telemarketer will be asked to complete a third-party verification call.

How it works

Third-party verification is a process where a third party speaks on the phone with every new customer who signs up when contacted by a door-to-door or telephone sales agent. The customer is asked a series of questions to make sure they understand the purchase they're making. The third party is not part of the retailer's sales force, and their compensation is not tied to sales in any way. If the call is not completed successfully, the contract is not enrolled.

Typical questions

Typical questions during a third-party verification call ensure the customer understands basic terms and conditions of the contract, that the contract is optional, and that energy retailers like Direct Energy are different than regulated utilities. Customers will also be asked if they understand that ending the contract early could trigger fees, and that if they are already on with another retailer, that provider may charge fees for cancelling.

Advantages

Third-party verification is an effective tool for consumer protection because it confirms right away that the customer understands the agreement they're signing. It also quickly identifies issues that may warrant further training of sales agents or opportunities to improve the information provided at the door.

Cooling off period

The same 10-day cooling off period still applies for door-to-door sales. During this period, a customer who signs a contract at the door can change their mind and cancel without penalty.

Reaffirmation

The current reaffirmation process will still apply during the pilot project. This process requires each retailer to contact every new customer between 10 and 60 days after they sign a contract to verify they want to proceed. If the pilot project is successful, Direct Energy would support replacing reaffirmation with a doorstep third-party verification process.

Track record

Third-party verification is required by regulation in successful energy markets across North America, including British Columbia, Texas, Ohio and New York. Direct Energy also uses it voluntarily in markets where it is not required, including Alberta, Connecticut and Michigan, because we've seen the difference it makes in ensuring customers have what they need to make informed decisions.

So far this year, Direct Energy has made more than 320,000 third-party verification calls in markets across North America.

Results

Direct Energy will share results of the pilot project with the Ontario government and regulators to help provide insight into possible future improvements to Ontario's retail energy rules that could benefit consumers.