Submission to the Legislature on Bill 235 (Rebillers)

Submission to the Legislature on Bill 235 (Rebillers)

Postby CLS » Tue Feb 23, 2010 5:20 pm

In her capacity as Review Counsel and Adjunt Professor at Community Legal Services (the student legal clinic at the UWO Faculty of Law) Community Law School's Legal Education Coordinator Margaret Capes, together with articling student Faiz Hirani and the assistance of an advisory group of clinic students, have authored a written submission to the Legislative Assembly of Ontario regarding the proposed Energy Consumer Protection Act (Bill-235).

The submission is reproduced, below.

Bill 235 would grant specific rights and remedies to consumers who enter into energy rebilling agreements, as well as regulate those who engage in rebilling. It is hoped that the written submission, which recounts numerous instances of abusive practices by rebillers, will be considered by the Legislative Assembly as it finalizes the draft of Bill 235. As those working with poor, marginalized, elderly, disabled, and immigrant populations well know, energy rebilling abuses have become a plague upon those who can least afford the increased costs that rebilling contracts often foist upon them, to say nothing of the difficulty of getting a rebilling contract rescinded.

We will keep you informed of any new developments as Bill 235 works its way through the legislative process.

Kathryn M. Bullon
Associate Legal Education Coordinator,
Community Law School


Community Legal Services
Submissions to the Legislative Assembly of Ontario
Energy Consumer Protection Act (Bill-235)
EBR Registry # 010-8556


February 6, 2010

Margaret Capes, Counsel/Adjunct Professor
Faiz Hirani, Student-At-Law
Community Legal Services
The University of Western Ontario
Room 120, Faculty of Law
London, Ontario N6A 3K7
Tel: (519) 661-3352
Fax: (519) 661-3428
clsinfo@uwo.ca
http://www.law.uwo.ca/CLS/index.html

1.0) Background on CLS
Community Legal Services (CLS) is community legal clinic located at the University of Western Ontario in London, Ontario. CLS is funded and supported by Legal Aid Ontario, the Fanshawe College Student Council, the University of Western Ontario Student Council, the Faculty of Law at the University of Western Ontario, and the Law Foundation of Ontario.
Since its inception in 1970, CLS has been providing free legal advice and representation in various areas of law to members of the London community. The overarching goal of CLS is and has always been to provide access to justice to members of the community to whom it would otherwise be unavailable.

Today, our clients consist primarily of low income individuals – including recent immigrants, the elderly, individuals who receive social assistance and people with mental health challenges – as well as students enrolled at Fanshawe College and the University of Western Ontario. Furthermore, through our Public Legal Education project we provide periodic seminars on various legal topics to provide legal education and resources to a wider audience In London-Middlesex.
Through the course of our involvement with the London-Middlesex community we have assisted many less fortunate individuals who – in our opinion – have been taken advantage of due to an imbalance of power. In our experience, these power imbalances stem from economic, educational, mental health and language disadvantages.
In the next section we have outlined our experiences that inform our submissions that follow.

2.0) Our Experiences

2.1) Experiences Through the Course of File Work
Since the Ontario energy market was deregulated in 2002 many of our clients have enlisted our services to assist them in issues relating to energy rebillers. In the course of assisting these clients, we have witnessed a disturbing trend of what we consider to be unfair practices, undue influence, exploitation of consumers, unconscionable conduct, and predatory behavior on the part of some energy rebillers.
Below, we include a small selection of our clients’ experiences that we have come to know through the course of our file work. In order to preserve confidentiality as required by the Law Society of Upper Canada, we have avoided all information that may lead to the identification of our clients.

2.1.1) CLS File #162/09
In this case, our clients who are spouses, were recently landed immigrants. As recent immigrants they did not have a strong grasp of the English language. The husband was enrolled in a PhD program at the University of Western Ontario, and a result of his English based education was more proficient than his wife.

In July 2009 a representative of Summitt Energy knocked on our clients' door. The representative made representations that induced her to believe that he was collecting signatures for a petition to stabilize energy prices. She advised us that she was told that the signatures were needed to pressure the government into lowering the price of electricity. She signed the document. The act of signing that document provided Summitt Energy with evidence that our clients had contracted with it for a period of 5 years.

Ten days after the document was signed, a Summitt Energy operator contacted our clients by way of telephone. The wife answered the call and the conversed with the operator. Throughout the interaction it is clear that our client seems confused and unsure.

The operator informed our client that he required her to respond to a question with the word ‘yes’ to confirm the agreement. Our client seemed confused and so the operator asked a follow-up question that was unrelated to the agreement. She answered ‘yes’ and that was interpreted by the operator as confirmation of the agreement.
Subsequent to that conversation, our clients began receiving bills from Summitt Energy. While paying their bills in full as they were received, our clients came to us for our assistance with this matter. Through various interactions with Summitt Energy and the Ontario Energy Board we have had no success in persuading them that a contract was not formed. At present, this file is on track to be resolved by litigation through Small Claims Court.

2.1.2) CLS File # 149/09
In this case, our client is a member of the Western Ontario Therapeutic Community Hostel (WOTCH). WOTCH is an agency that provides housing and support to individuals who suffer from mental health issues. In the opinion of our client’s CLS caseworker, doubts in relation to our client’s capacity to contract would be painfully apparent to any reasonable person with whom he interacted.

Additionally, this client was receiving Ontario Disability Support Program (ODSP) payments. Although our client received utility bills for hydro and gas, those bills were automatically paid through the ODSP. Our client received copies of the bill strictly for his records.

In April 2008, a representative from Ontario Energy Savings knocked on our client’s door. The representative advised our client that he would save money on his hydro and gas bills by signing the document provided to him. He trusted the representation made to him and signed the document. The act of signing that document provided Ontario Energy Savings with evidence that our client had contracted with it for a period of 5 years.

Our client was not contacted by Ontario Energy Savings in the ensuing 60 days. Presumably this was because our client did not have a telephone at which he could be reached.

In August 2008 the representative returned to our client’s residence. The representative handed our client a cellular phone and instructed him to call the Ontario Energy Saving’s office and provide authorization to go forward with his hydro and gas rebilling contracts. Our client did as instructed.

In February 2009, our client noticed that his hydro and gas bills were significantly higher than usual and he submitted the bills to his WOTCH caseworker. Our client was ultimately relieved of obligations under the alleged contract after his WOTCH caseworker contacted Ontario Energy Savings and explained that our client lacked capacity to enter into a contract.
However, prior to the cancellation, in order to facilitate the increased bills, and to prevent a disconnection of utilities, our client was forced to authorize ODSP to use its Community Start-Up and Maintenance Benefits (CSUMB) to pay the bills. As there is a mandatory two year wait period before eligibility for the CSUMB is renewed, our client did not have the benefit of that fund when he moved in May 2009. As a result, our client had to personally incur the moving costs associated with relocation.

2.1.3) CLS File #: 600/09
In this case our clients, who are spouses, are recently landed immigrants. They have a very weak grasp of the English language. In our meetings with our clients, they have often required the assistance of a translator.

In December 2007, a representative of Summitt Energy knocked on our clients’ door. The wife answered and the representative attempted to engage her in conversation. The wife did not substantially understand what was being said to her, and could not interpret the document that was presented to her by the representative. As a result, the wife did not understand the significance of the document she eventually signed. The act of signing that document provided Summitt Energy with evidence that our clients had contracted with it for a period of 5 years.

Our clients have no recollection of any follow-up telephone conversation during which the agreement with Summitt Energy was affirmed. When our clients noticed a significant increase in their hydro bill, the wife contacted Summitt Energy and requested that the alleged contract be cancelled. She was subsequently advised by letter that there was a $1,300 fee associated with cancellation. At present, this file is on track to be resolved by litigation.

2.1.4) CLS File # 050/09
In this case our client was a recent immigrant and a graduate student at the University of Western Ontario. As a recent immigrant he had a very weak grasp of the English language. In May 2008, a representative from the Universal Energy Corporation knocked our client’s door. By chance, the representative happened to be from the same ethnic background as our client As our client was not fluent in English the representative engaged him in a conversation in his native language.
The representative advised him, in his native language, that he would save money on his energy bill by signing the document with which he was presented. The representative also advised him that it would be a good idea to sign the documents because London Hydro would be increasing its energy fees in the near future. Furthermore, the representative advised our client that he could cancel the any contract made with Universal Energy during the term of the contract without incurring a penalty fee.

Our client has advised us that he trusted the representative because he was his fellow countryman. Our client relied on the representations made by the representative and signed the documents. The act of signing that document provided Summitt Energy with evidence that our clients had contracted with it for a period of 5 years.
After receiving his first bill, our client made various attempts to persuade Summitt Energy that due to misrepresentations and a lack of understanding a contract was not formed. However, ultimately he was told that there would be a $1,600 fee associated with cancellation. Our client came to us in February 2009 and we are currently assisting him and expecting the file to proceed to litigation.

2.1.5) CLS File # 221/09
In this case our client was a recently landed immigrant without a strong grasp of the English language. In November 2008, a representative from Summitt Energy knocked on our client’s door. The representative did not identify himself as an employee of Summitt Energy. The representative requested that our client provide him with his most recent London Hydro and Union Gas bills. Our client did so. The representative presented our client with a document and advised him that he should sign it. He also advised our client that he would be contacted in two or three weeks to inquire as to whether he accepted the terms. Our client signed the document. The act of signing that document provided Ontario Energy Savings with evidence that our client had contracted with it for a period of 5 years.

After ten days had passed, there were numerous telephone calls by Summitt Energy to our client. During those phone calls he made representations that he did not accept the terms outlined in the document and made inquiries about the terms. Despite these representations, he was repeatedly contacted by Summitt Energy for the purpose of encouraging him to affirm the alleged contract.

The ‘affirmation’ telephone call initiated by Summitt Energy was disclosed to our office by Summitt Energy upon our request. The telephone call was about fifteen minutes in length. It is unclear when, in the sequence of telephone calls subsequent to interaction at the door, this telephone call took place.

During the conversation, our client explicitly inquires about the advantage of agreeing to Summitt Energy’s terms because his current rates are lower than the rates stipulated in the document he received. At that point, the operator offered him an intermediary rate. The rate was higher than his current rate, but lower than the original rate reflected by the document. Our client was not given any time to review the new proposed terms.

Despite that reduced rate, our client was still unsure about the terms of the contract. The operator attempted to persuade our client to agree by presenting him with speculation regarding energy prices in 2009 after the introduction of smart meters. Eventually, the operator advised our client that he needed to respond with the word ‘yes’ to affirm the contract, and our client did so but continued to make inquiries and exhibit doubt. It is clear from the recording that our client did not know the significance of uttering the word ‘yes’.

Our client later received a letter from Summitt Energy advising him that there would be a $642.10 penalty should he wish to cancel the alleged contract. At present, this file is on track to be resolved by litigation.

2.2) Experiences Through the Course of Public Legal Education Seminars
The purpose of our Public Legal Education project is to raise awareness among the members of the London-Middlesex community regarding their legal rights, responsibilities, and the effect of the legal system on them and those that are important to them. We frequently conduct seminars on legal topics at various locations throughout London. The seminars are generally led by one of our Student Supervisors and function under the guidance of Margaret Capes.

We have included a small selection of the experiences of our Student Supervisors in conducting Public Legal Education seminars on topics relating to energy rebillers below.

2.2.1) Western Ontario Therapeutic Community Hostel
In October 2009, one of our Student Supervisors, Pamela Vlasic, attended the Western Ontario Therapeutic Community Hostel (WOTCH) to lead a seminar on Consumer Protection Law and Energy Rebillers as part of our Public Legal Education project. The audience included upwards of twenty WOTCH caseworkers.

Among the audience members, at least two of the WOTCH caseworkers had personally signed documents provided to them by energy rebillers at their door. Each of those WOTCH caseworkers advised that at the time they signed the documents, they did not understand the totality of the terms to which they could be bound. Each of them advised Ms. Vlasic that their lack of understanding could be attributed to the lack of honest communication from the representative at their door.

More importantly, more than half the WOTCH Caseworkers had concerns because their clients had signed a document provided by an energy rebiller representative who attended their places of residence. The WOTCH Caseworkers were interested in advice and techniques that they could impart to their clients so that their clients would be able to avoid being pressured or manipulated.

Furthermore, the WOTCH Caseworkers made inquiries about the capacity of a person to contract. That inquiry was made primarily because a significant number WOTCH’s clients are heavily medicated, have substance abuse problems, or have some type of mental health issue. The WOTCH Caseworkers were interested in the legal enforceability of alleged contracts made under such conditions.

2.2.2) Glencarin Community Resource Centre
In November 2009, one of our Student Supervisors, Fraser McCrackin, attended the Glencarin Community Resource Centre to lead a seminar on Consumer Protection Law and Energy Rebillers as part of our Public Legal Education project. The audience included upwards of 55 seniors living on limited incomes.

At the session, the audience shared personal anecdotes about their interactions with representatives from the energy rebillers. Their anecdotes included aggressive sales tactics; confusion about the affiliation of the representatives with the hydro companies; a lack of identification by the representative; and untruthful sales tactics.
2.2.3) London Public Library – Beacock Branch

On January 28, 2010 two of our students, Fraser McCrackin and Faiz Hirani, conducted a seminar at the Beacock Branch of the London Public Library for the London Intercommunity Health Centre. The audience consisted of 11 people including recent immigrants, senior citizens, and many low to average income individuals. The topic of the seminar was Consumer Protection Law and Energy Rebillers.

Nine of the 11 individuals in the audience confirmed having been approached by energy rebillers at their door. During the discussion period at the end of the seminar, 4 people recounted events whereby they were induced into signing documents with an energy rebiller, and complained about the increase in their utility bills. Two of the individuals had particularly disturbing encounters and their experiences are outlined below.

2.2.3.1) Case One
There was a middle-aged woman [‘the consumer’] who has been attempting to acquire assistance from the ODSP as she suffers from several mental disorders. Her part-time job is her only source of income.

In 2006, a young woman who she later learned was a representative of Universal Power, approached her at her door. The representative told the consumer that she was from ‘the hydro company’ and advised the consumer that she should sign up for the price protection plan. The representative did not identify herself or her employer. The representative advised the consumer that her neighbours had signed up for the price protection plan. The representative presented the consumer with a document for her signature, which was provided. A copy of the document was not left with the consumer.

After approximately ten days the consumer received a telephone call in which the operator confirmed that the interaction with the representative had taken place. The consumer confirmed that the interaction had taken place, and the operator accepted that as confirmation that the consumer wanted to be bound in accordance with the document that she signed.
Later that month, the consumer contacted London Hydro to inquire into budgeting for the payment of her hydro bill. London Hydro advised her that it could not discuss her bills with her because she had contracted with Universal Power. The consumer was confused, and the London Hydro operator explained the nature of the alleged contract, and decrypted the interaction that had earlier occurred at the consumer’s door.

The consumer subsequently contacted Universal Power and informed it that she did not intend on entering into any such contract and requested that it be cancelled. The consumer was told to send a letter to that effect. She did so.

After a couple weeks, the consumer received a response from Universal Power advising her that there would be an $800 fee associated with cancellation. Due to her financial circumstances, the consumer could not afford such a fee and as a result continued to pay bills issued by Universal Power.

The consumer advised us that her residence is a 1 bedroom apartment and that her average hydro bill is $80-$100. She further advised us that the monthly deviation in the amount is very low, even between winter and summer months. She presumes that this is because she abstains from air conditioning during the summer months as she cannot afford it.
She has not yet received a copy of the document she signed at the door in 2006.

2.2.3.2) Case Two
Also in the audience was a middle-aged gentleman who was a recently landed immigrant [‘the consumer’]. He spoke with a thick accent and in the course of interacting with him, both Fraser and Faiz recognized that at least some language barrier existed.

He advised that on January 28, 2009 a representative of Summit Energy knocked on his door. He conversed with the representative and was told that the representative was conducting a survey regarding energy prices, and that the consumer should sign the survey if he believed energy prices were too high. The representative presented the consumer with a document which the consumer signed.

A copy of the document was subsequently delivered to the consumer by way of Canada Post. The documents were accompanied by an advertisement flyer, a copy of which has been included as Appendix A.

2.2.3.3) Flyer
The flyer displays a pair of bar graphs and claims that the graphs show a 345% rise in natural gas rates from 1998 to 2008, and a 70% rise in electricity rates 2001 to 2009. Our caseworkers examined the bar graphs to determine if they supported the percentages claimed in the flyer. It should be noted that a large red line that has been painted on the graphs introduces a margin of error.

The Natural Gas bar graph shows that the rate of Natural Gas in 1998 was 7-9 ¢/m3. The rate in 2008 appears to be 27-29 ¢/m3. Using the intermediary numbers (ie. 8 ¢/m3 in 1998, and 28 ¢/m3 in 2008), we calculated that the 2008 rate is 350% of the rate in 1998. As the rate in 1998 was 100% of the rate in 1998, the increase in rate between 1998-2008 is 250%. Thus, the proper assertions are: a) the 2008 rate is 350% of the 1998 rate; or b) the rate has risen 250% from 1998 to 2008. Although we acknowledge that the incorrect assertion that the rate has risen 350% from 1998 to 2008 may be attributed to poor statisticians in Summitt Energy’s employ, we believe that the electricity graph is determinative of Summitt Energy’s intention in relation to the flyer.

The Electricity bar graph shows that the rate of electricity in 2001 was 3.5-4 ¢/kw•h. The rate in 2009 appears to be 5.9-6.2 ¢/kw•h. Those numbers correspond closely to a 70% increase in rates between 2001 and 2009 as claimed. However, the claim is supported by a citation reference to http://www.ieso.ca.
We navigated to that site and found the following spreadsheet: http://www.ieso.ca/imoweb/siteShared/mo ... asp?sid=ic. The spreadsheet has been attached as Appendix B. The numbers reflected on the spreadsheet are quite different than those presented in the bar graph, and more importantly they don’t appear to show any trend. We were unable to find any support of the bar graph as presented.


Furthermore, it is unclear whether the bar graph uses the wholesale or regulated price of electricity in its data set. However, the regulated prices of electricity since 2002 have been published by the Ontario Energy Board at http://www.oeb.gov.on.ca/OEB/Consumers/ ... ity+Prices. A copy of that website has been attached as Appendix C.
The OEB’s regulated price data exhibits a price range of 4.3-5.8 ¢/kw•h with only small fluctuations about 5.4 ¢/kw•h since April 1, 2005. The data is markedly different than the alleged data of which the Electricity bar graph is a representation.

2.2.3.2) Case Two Continued
Approximately 10 days later, the consumer received a telephone call from Summitt Energy confirming the interaction at the door. The consumer confirmed that interaction and that was taken as affirmation that he wanted to be contractually bound to Summitt Energy.

When the consumer received his first energy bill subject to rebilling he realized that it was significantly inflated compared to his previous bills. He contacted Summitt Energy and attempted to persuade them that no contract had been formed because the Summitt Energy representative did not properly inform him at his door. He was informed that there was a $1,300 fee associated with cancellation.

He has since been speaking to various public officials and Ontario Energy Board representatives attempting to discover a recourse that will allow him to rescind the alleged contract that Summitt Energy has claimed was formed.

2.3) Other experiences

2.3.1) CLS Support Staff
During the month of January, CLS does not open files for new clients.

Our support staff, Vivian McPhee and Lynn Thomas, who have been alerted to our intention to create these submissions, have kept a count of potential clients who have contacted our office during January 2010 to set up appointments for February 2010. They report that they have been contacted by at least 15 individuals who need assistance with disputes related to energy rebilling.

2.3.2) A Third Party
Although we have attempted to restrict this section to experiences that have been communicated to us directly from a person who has interacted with an energy rebiller, we would not be able to forgive ourselves if the following anecdote was not included.

This interaction was communicated to one of our Student Supervisors, Pamela Vlasic.

The individual advised Ms. Vlasic that she lives with a roommate. On a particular day, when she was absent from her place of residence, a representative from one of the energy rebillers knocked on the door. Her roommate answered the door and conversed with the representative.

The content of that conversation is unclear. However, at some point, the representative entered the residence in order to indulge in some marijuana with the roommate. While the roommate was inebriated from the marijuana, the representative convinced the roommate that she would save money by entering into the price protection plan. The roommate signed the document she was presented with by the representative.

Both the individual and the roommate now find themselves in a situation whereby the energy rebiller has alleged a 5 year contract exists. Neither the individual, nor the roommate, intended to consent to paying the inflated prices reflected on their bills.

2.3.3) Other Sources
Although our involvement generally does not extend beyond London, Ontario, we believe that the problem of energy rebillers is systemic throughout the province. To illustrate this point we invite you to consult http://www.ellenroseman.com/?p=378. Ellen Roseman is a personal finance and consumer affairs columnist with the Toronto Star. The above article was written in April 2009, and was motivated by Ms. Roseman’s “[anger at] the sheer volume of complaints I get about deception at the door”.

The website also allows readers to participate by leaving comments on articles, and the comments section includes 112 comments the majority of which are anecdotes similar to the experiences outlined in the previous sections.
Also, Margaret Capes conducted a webinar on November 30, 2009 in her role as Coordinator of the Community Law School (Sarnia-Lambton) program. The webinar, co-facilitated by CLEONet, focused on Energy Rebillers. Fourteen caseworkers from community legal clinics across Ontario discussed client problems with re-billers and ways to assist clients with contract terminations and waiver of cancellation fees. The recording of the webinar can be found at http://www.cleonet.ca.

3.0) Legal Aspect
It is our submission that there is a consistent thread in our experiences, and the other experiences outlined above. This thread is the lack of formation of a contract.

A contract is a legal concept that creates obligations that must be discharged by the parties involved. When a contract has been formed the courts will enforce it against any party that fails to discharge its obligations. A contract is formed when there is an agreement between parties. The courts have described it as a ‘meeting of the minds’. Such a ‘meeting of the minds’ requires that the parties to the contract come to the same determination. This definition of a contract is well known at common law, and was succinctly articulated by the Alberta Court of Queens Bench in the case of Lupul v. Carlson.
In order to form a contract, the courts have also required that the communications surrounding that determination must be free from vitiating factors, such as: mistakes; misrepresentations; exertion of undue influence; duress; unfair practice; and unconscionable conduct.

Moreover, it is very important to note, that in traditional contract disputes, the onus is placed on the Plaintiff to prove: a) the existence of a contract that binds the Defendant; and b) that the Defendant breached an obligation created by that contract. In cases involving energy rebillers, that onus is effectively reversed.

When an energy rebiller claims that a contract exists between it and a consumer, it acquires a plausible justification for depriving them of a vital service if the consumer refuses to pay. For that reason, an individual who disputes the existence of a contract must be the one to bring the dispute before the courts as Plaintiff.

As previously outlined, the communication surrounding the alleged formation of contracts with energy rebillers is not free from the vitiating factors outlined above. Furthermore, there is a significant power imbalance between energy rebillers and consumers as the former have the advantage of control over a vital service. As such, we have formulated the following recommendations in relation to Bill-235.

4.0) Recommendations

4.1) Prohibition of Door to Door Solicitation

4.1.1) The Purpose of Door to Door Solicitation
As discussed in the previous two sections, the most common complaint has been – as Ms. Roseman put it – ‘deception at the door’. As discussed above, our experiences with energy rebiller clients who have signed contracts in response to material misrepresentations, a lack of understanding of the documents presented and a lack of clarification from the representative, the exertion of undue influence, and other dishonest tactics undertaken by representatives of energy rebiller corporations.

Through our experiences, it has become apparent that the purpose underlying an energy rebiller’s behaviour at the door is not to facilitate the formation of a contract. Instead, it appears that the purpose of such interactions is to gather evidence that a contract was formed regardless of whether there was a meeting of the minds. The specific piece of evidence being sought by the representative at the door is a signature on a document that purports to be the terms of a contract.

This is supported by the number of our clients who were told they were signing a petition to decrease energy prices. It is also supported by the number our clients who were told unequivocally that they would save money on their energy bills by signing the documents provided. Furthermore, it is supported by the number of our clients who were told they could cancel the agreement any time without penalty.

Additionally, it is supported by the many anecdotes we have heard through the course of our Public Legal Education seminars. And lastly, it is further supported by the tone of the article written by Ellen Roseman, and the significant response to her article.

These types of misrepresentations are further aggravated when the person with whom the representative is interacting is not fully capable of understanding the nature of the conversation due to a language barrier, mental illness, or unsophisticated nature. In our experience, no energy rebiller has taken precautions to ensure that the party with whom it is interacting is capable of understanding the nature of the conversation. In fact, our experience indicates that an energy rebiller would prefer to remain willfully blind to such a lack of capacity to understand.

The above has led us to the conclusion that the primary concern of the energy rebillers is to gather evidence such that the position that a contract exists is a plausible one. The plausibility of that position allows them to coerce the consumer to continue its relationship with the energy rebiller, or alternatively be subjected to a large cancellation fee.

4.1.2) Our Position on Door to Door Solicitation
It is our position that the behavior of the energy rebillers in relation to door to door solicitation is repulsive.

The law of contract did not develop in feudal England to be twisted in such a way that large scale corporations can gather evidence of the formation of a contract by creating a haze of uncertainty designed to confuse a consumer; use that evidence to plausibly justify threatening to deprive the consumer of a vital service for breach of alleged contract; coerce the consumer into continuing to discharge alleged obligations or pay a cancellation fee; and leave the consumer with only the recourse of navigating the legal system to appear before a court to seek relief.

As such, although we are aware of the licensing and educational requirements stipulated by Bill-235, it is our position that the activity of door to door solicitation by energy rebillers is beyond regulation.

We recommend that door to door solicitation by energy rebillers be prohibited by Bill-235. We believe that our recommendation is supported by prevailing public opinion and other frontline agencies serving vulnerable populations.

4.2) Bill Specific Recommendations

4.2.1) Cooling Off Period
We appreciate the inclusion of the ‘cooling off period’ stipulated by s. 19(1) of the Bill. We believe that this is especially beneficial as our experience shows consumers do not fully appreciate the nature of the agreement during their interaction with representatives that are soliciting at their door.

However, we do not believe that the ‘cooling off period’ has been effectively structured as it appears in Bill-235. The current wording of the section allows cancellation ‘until 10 days after receiving a text-based copy of the contract and acknowledging its delivery…’

In our experience, a consumer does not appreciate the magnitude of the agreement until after the first energy bill (subject to rebilling) is received. It is at that point that abstract related rates such as 10.2 ¢/kw•h and 50 ¢/m3 are presented in the understandable format of a final price.

For that reason, we recommend that the cooling off period be 30 days as of receipt of the first energy bill subject to rebilling.

Furthermore, in our experience, consumers cannot be expected to be aware of obscure sections of legislation such as the ‘cooling off period’. Thus, we recommend that the consumer be advised of the existence of that section in large print font on the first bill subject to rebilling issued.

4.2.2) Prohibition of Unfair Practices
As a legal aid clinic we are saddened by the necessity of s. 10(1) prohibiting ‘unfair practices’. However, we understand the need for such a section. Our concern is that although the section prohibits ‘unfair practices’, it fails to define that phrase.
We would like to bring ss. 14, and 15 of the Consumer Protection Act, 2002 to your attention. Section 14(1) defines ‘unfair practice’ as it relates to misrepresentations, and s. 14(2) lists examples of such an ‘unfair practice’. Section 15(1) defines ‘unfair practice’ as it relates to unconscionable representations, and s. 15(2) lists examples of such an ‘unfair practice’.

We recommend that ss. 14 and 15 of the Consumer Protection Act, 2002 be adopted by reference in Bill-235.
Sections 14, and 15 of the Consumer Protection Act, 2002 have been attached as Appendix C.

4.2.3) Exceptions to Third Party Verification and Contracts Deemed Void
We fail to see the utility of s. 17(1) of Bill-235. The subsection has three clauses each of which exempt an energy rebiller from the requirement of supplying the consumer with a text-based copy of the terms of contract and the requirement of third party verification that a contract was formed. The conditions of the exemption are if:

1. The consumer contacts the energy rebiller without temporally proximate solicitation;
2. The consumer responds to a direct mail solicitation from the rebiller; or
3. The consumer has entered into an internet agreement that complies with the Consumer Protection Act.

With respect to the first two of the exemptions, it is our position that any consumer that is to enter into a contract, especially one for which there is a 5 year term, should be given a chance to review the terms of that contract and make an informed decision after that review. This can be easily accomplished by requiring the energy rebiller to supply the consumer with a text-based copy of the terms of contract, and require third party verification that the consumer intends to be bound by those terms. The mere fact that the communication surrounding the contract has been initiated by the consumer, or is a response to a direct mail solicitation should not have any bearing on those requirements.

With respect to the third of the exemptions, although we acknowledge that the Consumer Protection Act, 2002 already requires that a text-based copy of the terms of contract be delivered to the consumer, we find the lack of third party verification to be particularly dangerous. This is because the identity of the party who has agreed to the terms of contract on the internet cannot be known. If a child were to enter accept such terms of contract when prompted on a computer screen the guardian, and probable person whom the alleged contract binds, would not become aware of the circumstances until the first energy bill subject to rebilling was received. A requirement of third party verification would significantly decrease the probability of such a misunderstanding at a very small incremental cost.

For the above reasons, it is our position that s. 17 of Bill-235 increases consumer vulnerability and is therefore counterproductive to the spirit of the Bill. We recommend that s. 17 be removed from Bill-235.

4.2.4) Complaints and Inquiries
We believe that the introduction of Bill-235 is an opportunity to address the deficiencies in the Ontario Energy Board Act with respect to inspectors. In its current incarnation, s. 37(22) amends the Ontario Energy Board Act to include s. 105 that grants the Ontario Energy Board (OEB) the power to receive complaints from consumers and conduct investigations pursuant to those complaints.

We agree that the OEB should have this power, however we do not understand the purpose of the discretionary wording of the proposed s. 105. The OEB was created primarily for the purpose of protecting the interests of consumers. To discharge that function the OEB must receive complaints from consumers and conduct investigations. As such, we recommend that the word ‘may’ in the introduction of s. 105 of the Ontario Energy Board Act amendment under s. 37(22) of Bill-235 be changed to the word ‘shall’.

Furthermore, the inflated energy bills of consumers could cause great prejudice to the consumers during lengthy inquiries by the OEB. We suggest that s. 105(3) be added as follows.

An inquiry under this section will be completed by the Board within 14 days of the date the complaint is received.
The swift and temporary involvement of the OEB will allow the consumer to initiate an action pursuant to s. 28 of Bill-235 if a favorable resolution cannot be facilitated.

4.2.5) Small Claims Court Jurisdiction
We believe that there has been a slight oversight with respects to the wording of s. 28. That section allows a consumer to commence an action in the Superior Court of Justice. The Superior Court of Justice is a court of inherent jurisdiction, and as such it enjoys both common law and equitable jurisdiction.

By contrast, the Small Claims Court, which is a branch of the Superior Court of Justice, is a court created by statute. Section 96(3) of the Courts of Justice Act reads as follows.

Only the Court of Appeal and the Superior Court of Justice, exclusive of the Small Claims Court, may grant equitable relief, unless otherwise provided.

As the monetary jurisdiction of the Small Claims Court has recently increased to $25,000, and due to the simplified procedure of that Court, we believe that majority of disputes between consumers and energy rebillers will come before that Court.

Furthermore, we anticipate that majority of the disputes will involve consumers who wish to rescind an alleged contract because of a lack of understanding at the time of formation. Rescission is an equitable remedy. As such, we recommend that the inclusion s. 28(5) as follows.

For the purpose of actions commenced under this Act, the Small Claims Court is granted full equitable jurisdiction.
Or as follows.

For the purpose of actions commenced under this Act, the Small Claims Court is granted partial equitable jurisdiction in the form of recessionary jurisdiction over contracts subject to this Act.

We recommend the former wording. Although we cannot currently conceive a situation in which the full equitable jurisdiction would be invoked beyond recessionary jurisdiction, we prefer to err on the side of caution.

4.2.6) Contract Deemed Void
Although we appreciate the inclusion of s. 16 which functions to deem a contract void if it does not meet the statutory requirements, we are concerned that consumers will not be aware of such statutory requirements. We believe that these circumstances will transform into situations where energy rebillers will attempt to coerce consumers into discharging obligations pursuant to contracts that have been avoided by way of s. 16. This will persist until such time that the consumer discovers s. 16, and there is no guarantee of such discovery.

The dynamic described above is not without precedent. As part of our file work we represent a large number of tenants in landlord and tenant disputes. Through the course of these files we have seen a large number of landlords who include provisions banning pets in their tenancy agreements. Such landlords attempt to enforce such provisions despite s. 14 of the Residential Tenancies Act that reads “A provision in a tenancy agreement prohibiting the presence of animals in or about the residential complex is void.”

To avoid this type of dynamic we recommend the inclusion of s. 16(6) as follows:

No supplier shall attempt to enforce a contract that has been avoided by the application of this subsection (1).
We believe that such a section, in conjunction with the recommendation to follow in section 4.2.8, will deter energy rebillers from attempting to enforce contracts that do not adhere to the statutory requirements on unsophisticated consumers.

4.2.7) Punitive Damages
We appreciate the recourses available to consumers in the form of actions in the Superior Court of Justice stipulated by s. 28 of Bill-235. However, in our experience, consumers do not have: a) knowledge of consumer protection laws; b) the expertise to navigate the legal system; or c) the means to bring such an action in the Superior Court of Justice.

A provision such as s. 28 will encourage energy rebillers to coerce consumers in the way that would be done in its absence, until such time that the consumer becomes aware of the section and invokes it.

To remedy this, we recommend that the s. 28(3) be reworded as follows:

In addition to any order that may be made under subsection (2), the court must order exemplary or punitive damages or such other relief as the court considers proper.

The certainty of such punitive damages will deter energy rebillers from taking advantage of the imbalance of power between them and an unsophisticated consumer. The wording also has the benefit of leaving the quantum of punitive damages entirely at the discretion of the trial judge who will be able to determine to what extent the imbalance of power was exploited and award damages accordingly.

4.2.8) Provincial Offences
Although we appreciate the inclusion of Part VII and specifically of s. 112.11(3) we believe that the inclusion of Provincial Offences would be beneficial when dealing with energy rebillers who have engaged in unfair practices.

We recommend that the wording of ss. 23(1) and 23(2) of the Consumer Reporting Act be adopted with necessary modifications into Bill-235. Those provisions have been attached as Appendix D. The sections impose a maximum fine of $25,000 on any individual that contravenes the provisions of the Act, and a maximum fine of $100,000 on any corporation that contravenes the provisions of the Act.

We expect that the Minister of Energy and Infrastructure will administer prosecutions under such section. However, if the Ministry fails, due to monetary constraints or any other reason, and the problem of energy rebillers becomes systemic throughout the community, we would greatly appreciate such a section under which community clinics, such as CLS, could initiate prosecutions by way of private information.

4.3 Regulations and Directives

4.3.1) Availability of Directives
There are numerous instances in Bill-235 which grant the Minister power to issue directives to the OEB. Such directives will not only be useful to the OEB to carry out its mandate, but also to members of the general public when dealing with energy rebillers.

As such, we recommend the inclusion of a provision in Bill-235 that requires the OEB to publish its directives on its website such that they can be easily accessed. We suggest that a link to the directives be available on the OEB’s online homepage.
That would avoid situations in which online visitors have to navigate a confusing series of websites before arriving at the directives.

4.3.2) Information Required in Contract
Section 12 of Bill-235 requires that a contract between a consumer and an energy rebiller meet certain prescribed requirements. We expect that these prescriptions will be done by way of regulation. We suggest the following requirements for the form of the contract.

1. A section, enclosed in a bordered box, that advises the consumer of the current regulated electricity or natural gas rate juxtaposed with the rate that the consumer will be charged for the duration of the contract.
2. The duration of the contract in bold face font designed to draw attention.
3. A section, enclosed in a bordered box, that advises of existence of, and an explanation of, the cooling off period must appear in large font designed to stand out from the rest of the text.
4. A section, that stands out from the other text, that advises the consumer of the amount of the prescribed cancellation fee and that the energy rebiller cannot attempt to impose a greater fee under any circumstances.
5. A section, that stands out from the other text, that advises the consumer of the existence of the OEB and its directives, and provides an online link to each.

4.3.3) Qualifications of Third Party
At present, telephone calls for the purpose of affirming the contract are being made by the energy rebiller. The energy rebiller has an economic interest in the contract being affirmed which results in a reasonable apprehension of bias.

We believe s. 15(1) has been included to prevent such a scenario. However, if not properly regulated and supervised, a third party may display a bias due to some other indirect economic interest. For instance, a corporation incorporated for the purpose of acting as a third party to verify such contracts would be dependent on the survival and growth of the industry.
That would make the corporation economically biased towards the energy rebillers.

To avoid the introduction of these types of biases we recommend that the party responsible for the third party verification be the OEB. Furthermore, as it is the behaviour of the energy rebillers that has rendered third party verification necessary, we recommend that this department of the OEB be funded through increased license fees payable to the OEB.

4.3.4) Audio Recording of Third Party Verification
Under the Ontario Energy Board Act a consumer by way of telephone conversation cannot reaffirm a contract unless that conversation is recorded. That requirement has been of great assistance to us in identifying whether a “meeting of the minds” occurred.

Section 15(2) of Bill-235 requires third party verification of a contract as prescribed. In the prescribed regulations we recommend that a similar requirement of an audio recording be included. We suggest the inclusion of the following section in the regulations that will accompany Bill-235.

Despite the Electric Commerce Act, 2000, notice of reaffirmation may not be given by telephone unless a voice recording of the telephone notice is made and, on request, is given to the consumer.

4.3.5) Content Third Party Verification
As discussed, the reason that disputes regarding energy rebillers arise is generally because the consumers are under the impression that they are contracting for something different than what is being provided. To prevent this we recommend that the regulations require the following inquiries during third party verification:

1. Has the consumer read the contract?
2. Does the consumer understand the contract?
3. Is the consumer aware of the duration of the contract?
4. Does the consumer understand that there is a cooling off period after receiving the first energy bill subject to rebilling (assuming that the recommendation section 4.2.1 is accepted)?
5. Does the consumer understand that cancellation after the expiry of the cooling off period may be subjected to a cancellation fee?

If each of the above questions is not answered in the affirmative then third party verification has failed.

4.3.6) Business Practices
As discussed, one of our major concerns is the behaviour of energy rebiller representatives at the door. Their goal appears to be the acquisition of a signature from the consumer. To achieve that goal they are willing to deceive, manipulate, coerce and in some cases inebriate the consumer. We hypothesize that this behaviour stems from a commission-based system being administered with respect to the compensation of such representatives.

Section 37 of Bill-235 amends the Ontario Energy Board Act. Section 37(2) introduces s. 28.7 that allows the Minister to issue directives requiring the Board to attach conditions to licenses issued to energy rebillers. Similarly, s. 37(21) introduces s. 88.1 that allows regulatory conditions attached to licenses issued to energy rebillers. Both of these sections allow the introduction of conditions relating to business practices.

We recommend the introduction of a directive and regulation prohibiting energy rebillers from compensating employees on a commission basis. Such a prohibition would significantly diminish the economic incentive that drives the deception at the door.

5.0 Conclusion
First, we applaud your effort to enact protections to compensate for the vulnerability of consumers in the wake of energy deregulation.

Second, we thank you for offering us the opportunity review Bill-235 and make these submissions for your consideration. We believe that Bill-235 is a very important piece of legislation and greatly appreciate this opportunity.

Lastly, we would be pleased to address any questions that you may have regarding these submissions.

Appendix A
Summitt Energy Flyer

Appendix B
Spreadsheet: http://www.ieso.ca/imoweb/siteShared/mo ... asp?sid=ic

Appendix C
Spreadsheet: http://www.oeb.gov.on.ca/OEB/Consumers/ ... ity+Prices



Appendix D
Sections referenced from Consumer Protection Act 2002, c. 30, Sched A


Application
2. (1) Subject to this section, this Act applies in respect of all consumer transactions if the consumer or the person engaging in the transaction with the consumer is located in Ontario when the transaction takes place. 2002, c. 30, Sched. A, s. 2 (1).
Exceptions
(2) This Act does not apply in respect of,
(a) consumer transactions regulated under the Securities Act;
(b) financial services related to investment products or income securities;
(c) financial products or services regulated under the Insurance Act, the Credit Unions and Caisses Populaires Act, 1994, the Loan and Trust Corporations Act or the Mortgage Brokerages, Lenders and Administrators Act, 2006;
(d) consumer transactions regulated under the Commodity Futures Act;
(e) prescribed professional services that are regulated under a statute of Ontario;
(f) consumer transactions for the purchase, sale or lease of real property, except transactions with respect to time share agreements as defined in section 20; and
(g) consumer transactions regulated under the Residential Tenancies Act, 2006. 2002, c. 30, Sched. A, s. 2 (2); 2006, c. 17, s. 249; 2006, c. 29, s. 60.
Same
(3) This Act does not apply to the supply of a public utility or to any charge for the transmission, distribution or storage of gas as defined in the Ontario Energy Board Act, 1998 if such charge has been approved by the Ontario Energy Board. 2002, c. 30, Sched. A, s. 2 (3).
Marketers of gas, retailers of electricity
(4) Despite subsection (3), this Act applies to a transaction with,
(a) a gas marketer who is a supplier; and
(b) a retailer of electricity who is a supplier. 2002, c. 30, Sched. A, s. 2 (4).


False, misleading or deceptive representation
14. (1) It is an unfair practice for a person to make a false, misleading or deceptive representation. 2002, c. 30, Sched. A, s. 14 (1).
Examples of false, misleading or deceptive representations
(2) Without limiting the generality of what constitutes a false, misleading or deceptive representation, the following are included as false, misleading or deceptive representations:
1. A representation that the goods or services have sponsorship, approval, performance characteristics, accessories, uses, ingredients, benefits or qualities they do not have.
2. A representation that the person who is to supply the goods or services has sponsorship, approval, status, affiliation or connection the person does not have.
3. A representation that the goods or services are of a particular standard, quality, grade, style or model, if they are not.
4. A representation that the goods are new, or unused, if they are not or are reconditioned or reclaimed, but the reasonable use of goods to enable the person to service, prepare, test and deliver the goods does not result in the goods being deemed to be used for the purposes of this paragraph.
5. A representation that the goods have been used to an extent that is materially different from the fact.
6. A representation that the goods or services are available for a reason that does not exist.
7. A representation that the goods or services have been supplied in accordance with a previous representation, if they have not.
8. A representation that the goods or services or any part of them are available or can be delivered or performed when the person making the representation knows or ought to know they are not available or cannot be delivered or performed.
9. A representation that the goods or services or any part of them will be available or can be delivered or performed by a specified time when the person making the representation knows or ought to know they will not be available or cannot be delivered or performed by the specified time.
10. A representation that a service, part, replacement or repair is needed or advisable, if it is not.
11. A representation that a specific price advantage exists, if it does not.
12. A representation that misrepresents the authority of a salesperson, representative, employee or agent to negotiate the final terms of the agreement.
13. A representation that the transaction involves or does not involve rights, remedies or obligations if the representation is false, misleading or deceptive.
14. A representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or tends to deceive.
15. A representation that misrepresents the purpose or intent of any solicitation of or any communication with a consumer.
16. A representation that misrepresents the purpose of any charge or proposed charge.
17. A representation that misrepresents or exaggerates the benefits that are likely to flow to a consumer if the consumer helps a person obtain new or potential customers. 2002, c. 30, Sched. A, s. 14 (2).


Appendix D
Sections referenced from Consumer Reporting Act, R.S.O. 1990, ch. C.33


Unconscionable representation
15. (1) It is an unfair practice to make an unconscionable representation. 2002, c. 30, Sched. A, s. 15 (1).
Same
(2) Without limiting the generality of what may be taken into account in determining whether a representation is unconscionable, there may be taken into account that the person making the representation or the person’s employer or principal knows or ought to know,
(a) that the consumer is not reasonably able to protect his or her interests because of disability, ignorance, illiteracy, inability to understand the language of an agreement or similar factors;
(b) that the price grossly exceeds the price at which similar goods or services are readily available to like consumers;
(c) that the consumer is unable to receive a substantial benefit from the subject-matter of the representation;
(d) that there is no reasonable probability of payment of the obligation in full by the consumer;
(e) that the consumer transaction is excessively one-sided in favour of someone other than the consumer;
(f) that the terms of the consumer transaction are so adverse to the consumer as to be inequitable;
(g) that a statement of opinion is misleading and the consumer is likely to rely on it to his or her detriment; or
(h) that the consumer is being subjected to undue pressure to enter into a consumer transaction. 2002, c. 30, Sched. A, s. 15 (2).

Offences
23. (1) Every person who,
(a) knowingly, furnishes false information in any application under this Act or in any statement or return required to be furnished under this Act or the regulations;
(b) fails to comply with any order, direction or other requirement made under this Act; or
(c) contravenes any provision of this Act or the regulations,
and every director or officer of a corporation who knowingly concurs in such furnishing, failure or contravention is guilty of an offence and on conviction is liable to a fine of not more than $25,000 or to imprisonment for a term of not more than one year, or to both. R.S.O. 1990, c. C.33, s. 23 (1).
Corporations
(2) Where a corporation is convicted of an offence under subsection (1), the maximum penalty that may be imposed upon the corporation is $100,000 and not as provided therein. R.S.O. 1990, c. C.33, s. 23 (2).[flash=][/flash]
Kathryn M. Bullon, B.Sc., J.D., M.Ad.Ed.
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Re: Submission to the Legislature on Bill 235 (Rebillers)

Postby walterk » Wed Mar 10, 2010 10:03 am

Well done !!!
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