HomeMy WebLinkAboutINS-10-006 - Direct Purchase - Disclosure RequirementsREPORT TO:Community and Infrastructure Services Committee
DATE OF MEETING:
December 13, 2010
SUBMITTED BY: Pauline Houston, Deputy CAO, 2646
PREPARED BY:
Loraine Baillargeon, Manager, Asset Optimization, 2532
WARD(S) INVOLVED: All
DATE OF REPORT: December 7, 2010
REPORT NO.:
INS-10-006
SUBJECT:
DIRECT PURCHASE - DISCLOSURE REQUIREMENTS
RECOMMENDATION:
That Kitchener Utilities discontinue its business rule regarding disclosure requirements
for Agents, Brokers and Marketers soliciting customers for direct purchase
arrangements for their natural gas provisions effective January 1, 2011;
BACKGROUND:
In 1997, Agents, Brokers and Marketers (“ABMs”) were present in the City of Kitchener
marketing their sales initiatives primarily to residential consumers for the provision of natural gas
supply.
Although some ABMs involved in direct purchase activities were very reputable, others
generated customer complaints and unfavourable media reports. To address this problem,
Council passed a resolution on September 15, 1997 “That the Utilities Division immediately
implement new business rules regarding disclosure requirements for Agents, Brokers and
Marketers soliciting customers for direct purchase arrangements for their natural gas provisions
in accordance with the requirements outlined in this report”. ABMs received the two-part form
from Kitchener Utilities and after signoff by the consumer, submitted one part to Kitchener
Utilities as part of the direct purchase customer contractual enrolment process.
Kitchener Utilities was unique among other Ontario gas distributors in taking this approach,
primarily due to the fact that we are not rate-regulated by the OEB.
TheEnergyConsumer Protection Act, 2010 (“ECPA”) received Royal Assent on May 18, 2010
and will come into force on January 1, 2011. The ECPA establishes a new framework for the
regulation of the activities of licensed (by the OEB) electricity retailers and gas marketers. As a
result of the ECPA, the OEB has restated the Electricity RetailerCode of Conduct and the Code
of Conduct for Gas Marketers.
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REPORT:
In fulfilling the OEB’s role in implementing the consumer protection provisions of the ECPA, it
has mandated the use of a Disclosure Statement and Price Comparison (Appendix B) form by
all licensed marketers. These forms are similar in nature to that currently in use by Kitchener
Utilities. The purpose of the Disclosure Statement and Price Comparison is to provide the
consumer with information related to their energy purchase options as well as a clear
comparison between the pricing offered by their local utility and offers of the ABMs.
Over the years since implementation of Kitchener’s disclosure form, staff has found its use to be
helpful in providing customers with information that may not have been disclosed by the ABMs
representative. This assisted customers in making an informed decision regarding their energy
purchase options.
Staff feels it is unnecessary to require ABMs to have both our Disclosure form and that
mandated by the OEB completed by the consumer. Discontinuing this business rule will prove
to make more efficient our internal processes as well it will remove the administrative task of
maintaining an inventory of the forms as realized through the use of the OEB’s forms.
Kitchener Utilities’ role is to facilitate informed consumer choice and not to police the marketers.
The OEB licenses electric retailers and gas marketers and has the authority to take action when
these parties breach the Codes of Conduct. Evidence of the OEB exercising its authority is
administrative fines assessed since 2003 in amounts ranging from $75,000 to $299,000 with the
most recent ruling handed down in November 2010.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
N/A
FINANCIAL IMPLICATIONS:
The financial implication is that we will be eliminating the cost (approximately $2,000) of printing
and distributing the disclosure forms to Agents, Brokers and Marketers.
COMMUNITY ENGAGEMENT:
N/A
ACKNOWLEDGED BY: Pauline Houston, Deputy CAO, Infrastructure Services
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