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Regulator Recommends Banning Door-to-Door Sales, Prohibition on Commission-Based Compensation

June 18, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

The Ontario Energy Board has recommended that door-to-door retail energy sales be banned for residential customers

"[P]reventing contracts from being signed at the door would provide the most effective protection for residential consumers," OEB said in a report concerning the Energy Consumer Protection Act of 2010

OEB said that while the ECPA attempted to legislate good behavior at the door, "complaints and inappropriate conduct remain, and are particularly difficult to monitor."

"Consumers do not generally go looking for an energy contract, but are more often approached by an energy retailer at the door. When approached in this way, consumers are often unhappy with the experience. And when consumers do enter into contracts, one or more of three things can tend to happen. First, a third of them do not even realize that they have a retail contract. Second, in almost 60 per cent of the cases where verification is required, the consumer opts out of the contract at the verification stage. And third, residential consumers are often ultimately dissatisfied and leave their contracts due to the high cost," OEB said.

"Entering into a retail energy contract is a complex decision, with potentially expensive financial consequences. Consumers would be better served by making that decision at their own pace, with the benefit of additional time and distance to consider an offer and consult additional sources of information. Consumers like choice, but the doorstep is not a place where they can exercise that choice in a meaningful way," OEB said

"It is hard to disagree with the conclusion reached in the United Kingdom, where large energy retailers voluntarily suspended door-to-door sales because the channel was 'irreparably broken,'" OEB said.

OEB also recommended that sales agents must be employees of the company they represent, and that commission-based wages should be prohibited, "since they can incent more aggressive sales behaviour."

OEB further recommended that auto-renewal of all retail contracts should be eliminated, and that the cancellation period should be extended from one to two billing cycles

OEB recommended that a "consumer beware" list be published

"Consumers should have ready access to information that allows them to understand who they are buying from and to easily compare the 'track record' of different energy retailers. In addition, publication of company-specific information on complaints and compliance can be a strong incentive for good behaviour by energy retailers," OEB said.

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