PROTECTING CONSUMERS IN ENERGY CONTRACTS

(Below, we have reprinted with the permission of the Advocacy Centre for the Elderly an article written by one of their staff lawyers which contains very useful and practical information regarding how to protect yourself when signing energy contracts.)

Most individuals purchase gas or hydro from their local gas and hydro utility companies. Since the federal government deregulated the natural gas and hydro industry, consumers can choose to buy natural gas or hydro from different marketers.

The Advocacy Centre for the Elderly has received numerous complaints from seniors who have entered into contracts with natural gas marketers and electricity retailers without understanding what they were signing. They may not realize that the price they agreed to pay is higher than what they were previously paying. They may not realize that some contracts are locked in for a period of five years. Termination of a locked-in contract may result in a penalty of over $1000.00, or a cost per unit of hydro or gas for the balance of the contract.

In other cases, the marketers may refuse to terminate the contract. In a recent court case, there was a dispute between a hydro marketer and the owner of a multiple unit apartment building. The issue was whether a particular contract had been automatically renewed for a year. For contracts signed before July 30, 2005, contracts can be automatically renewed or extended if a renewal letter is sent by the marketer and no reply is received. The judge referred to “the presence in the Ontario electricity retail market of a common, but curious contract renewal mechanism – negative options”. In this case, the marketer charged approximately $50,000.00 more than the local hydro company would have for the relevant period of time.

New contracts that are entered into after July 30, 2005 are not subject to the automatic renewal or extension provisions. However, we have had complaints from people who have inadvertently renewed their contract by cashing a small rebate cheque. Once again, the consumer did not understand the multiple-page, small print contract.

Some marketers use door-to-door salespeople to solicit contracts. If a door-to-door sales-person asks you to sign a contract, it is a good idea to ask that a copy of the contract be left with you so that you can take your time to study it. Before you sign a contract, compare the unit price of gas and hydro that is listed on your present utility bill to what is being offered in the contract. The questions that you should consider are:

• What is the unit price of the gas or hydro?
• How does that compare to the amount you are presently being charged?
• How long is the term of the contract?
• Are there any charges or fees if you try to end the contract before the period specified in the contract?

If the door-to-door salesperson uses undue pressure to get your signature, you may be able to cancel or rescind the contract under the provisions of the Con-sumer Protection Act, 2002. Undue pressure is considered to be an “unfair practice”. A consumer who has been subjected to an “unfair practice” may cancel or rescind the contract they entered into within one year of signing the contract. Notice of cancellation may be delivered to the vendor by any means. It is best to give notice of cancellation in writing and to specify that the consumer is rescinding the contract because of an unfair practice within the meaning of the Consumer Protection Act, 2002.

The Ontario Energy Board regulates the province’s electricity and natural gas sectors. They have a web-site that contains useful information at www.oeb.gov.on.ca. The Ontario Energy Board can deal with complaints, but they cannot force a company to resolve a complaint where there has been no violation of any legal or regulatory requirement.

Locking into a five year contract can be disadvantageous for any consumer, but it can be especially
disadvantageous to seniors on a fixed income. Un-expected illness or injury, or change of circumstances, may mean that a senior has to sell his or her home. Having to pay a penalty to terminate a contract early is an expense to be avoided.

The Ontario Energy Board does not allow public utilities to make a profit on their hydro and natural gas
purchases. The price charged by the public natural gas and hydro utilities is set by the Ontario Energy Board. In contrast, the price charged by a natural gas or hydro marketer is the price set out in the contract.

The best defence is to be an educated consumer. For any contract that you are presented with, sign nothing unless you are well aware of what you are agreeing to.

To see some sample of cancellation letters, visit the Ontario Ministry of Government Services website at http://www.gov.on.ca/MGS. Then search for the term “sample cancellation letter”.

Canada Child Tax Benefit

You may be eligible to get the Canada Child Tax Benefit (CCTB) if you are low-income and have children under 18 years old. The CCTB is a non-taxable amount paid monthly to help low-income families with the cost of raising children. The CCTB may include the Child Disability Benefit (CDB), a monthly benefit for qualified families caring for children with severe and prolonged mental or physical impairments; the National Child Benefit Supplement (NCBS), a monthly benefit for low-income families with children.

To get the CCTB, you must meet all the following conditions:

 You must live with the child in Canada and the child must be under the age of 18;
 you must be the person who is primarily responsible for the care and upbringing of the child (benefits usually be paid to the female parent who lives with the child. However, if the male parent is primarily responsible, he can apply if he attaches a signed note from the female parent to Canada Child Benefits Application, which states that the male parent is primarily responsible for all of the children in the household).

• you must be a resident of Canada for income tax purpose; and
• you or your spouse or common-law partner must be a Canadian citizen, a permanent resident, a protected person, or a temporary resident who has lived in Canada for over 18 months
• you or your spouse or common-law partner must file income tax every year even if there is no income to report unless you are separated.

Generally, you should apply for the CCTB as soon as possible after:

• your child is born;
• a child starts to live with you; or
• you become a resident of Canada.

You should not delay in applying as retroative payment can only back date 11 months. The benefit entitlement will be calculated every July based on the family net income for the previous year. The amount of benefit is based on the age and number of children, the province where you reside and the family income.

There is some information that may affect the CCTC benefit amount and so you must report the following changes to Revenue Canada:

Change of address:

If you move, be sure to report your new address to avoid a stoppage in payments which may occur even if you use direct deposit and your bank account doesn’t change.

The number of children in your care changes:

If you have a newborn child or a child starts to live with you, you will need to apply for the CCTB for that child. If a child for whom you are receiving the CCTB is no longer in your care, stops living with you, or dies, you must report as soon as possible to avoid getting an over-payment.

Your marital status has changed:

Report as soon as possible if you are just married or after you have been living common-law for at least 12 continuous months. You can download the form on the Revenue Canada website or write a letter to report your date of marriage or the date you started living together. You must include your spouse or common-law partner’s name, address, and social insurance number. Be sure that both you and your spouse sign the form or letter.

You must report if you are widowed, divorced or separated. If you are separated, you should report after you had lived separate and apart from your spouse or common-law partner for a period of 90 days or more due to a breakdown in your relationship and you have not reconciled. Separation of less than 90 days is not considered a separation for the purpose of Child and Family Benefits. Separation under the same roof (you and your spouse/partner still living together in the same household after break up) is not recognized by Revenue Canada. The effective day of your separated status is the day you started living separate and apart.

If you and your separated share custody of your children and a child lives more or less equally with two separate individuals (whether 4 days with one parent and 3 days with the other or one week with one parent and the next week with the other parent or some other similar rotation), and each individual is primarily responsible for the child’s care and upbringing when the child resides with them, the CCTB will be split equallly on a 6 months on, 6 months off rotation cycle for each parent for the same child. The same split rule applies even if you have a court order stating that you share custody but you are the one to receive the CCTB.

You or your spouse or common-law partner’s immigration or residency status has changed:

You can report these changes by filing a form which can be downloaded on the Revenue Canada website, or send a letter to notify them about the changes.

You should review your CCTB notice as it shows how your CCTB payment was calculated. Make sure the information on the notice is correct. If there is an error in the information used in the calculation, then the amount of your payment may be wrong too. Contact Revenue Canada as soon as possible to report any errors.

Revenue Canada some time sent out a validation letter or validation questionaire to get up to date information about your marital status, child information, residency and immigration status to compare information on their data base for accuracy or inconsistence. You may be requested to further provide proof if they do not believe the information you provided. You may be requested to provide proof that you and your spouse/partner has been living separate and apart, it could be affidavits from 3rd parties such as landord, friend or relative to verify your separation situation, bank information, rental lease, bills, chilld’s school records or child care information . Based on the information provided, Revenue Canada will review and recalculation the benefit if necessary which could result overpayment in which you have to pay back.