Zoe Alvarez
Direct Energy, one of North America's largest energy and energy-related services providers, used to rent hot water heaters in Ontario. In 2014, Direct Energy sold its water heater rental business in Ontario to EnerCare for $550 million (CAD). Direct Energy has since exited the market for water heater rentals in Ontario, and EnerCare has committed to not continuing Direct Energy's alleged anti-competitive policies and practices. While some customers have expressed satisfaction with Direct Energy's water heater rental service, others have reported issues with the company's refusal to upgrade old water heaters. It is important for homeowners to consider their options and research energy-efficient models that can help reduce energy costs.
| Characteristics | Values |
|---|---|
| Company | Direct Energy |
| Location | Ontario |
| Product | Hot Water Heaters |
| Business Model | Rental |
| Exit from Market | 2014 |
| Sale of Business | EnerCare for $550 million (CAD) |
| Rental Cost | Approx. $30+tax a month |
| Customer Service | Poor |
| Competition | Summitt Energy, DeMark Home Ontario, Enercare |
| Energy Efficiency | ENERGY STAR approved models available |
| Cost Savings | Up to 50% savings on water heater bills |
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What You'll Learn
Direct Energy's anti-competitive practices in Ontario
In 2012, the Competition Bureau of Canada filed an application with the Competition Tribunal against Direct Energy, alleging that the company had implemented anti-competitive water heater return policies in Ontario. The Bureau alleged that these practices prevented consumers from switching to competitors, leaving them with no choice but to continue their rental agreements. In 2014, Direct Energy exited the market for water heater rentals in Ontario, and the Bureau obtained commitments from EnerCare Inc., the company that acquired Direct Energy's water heater rental business, to end the alleged anti-competitive policies.
The Competition Tribunal ruled that the Commissioner could pursue an order against Direct Energy despite its exit from the market. As a result, Direct Energy was required to pay a $1 million penalty and establish a corporate compliance program if it re-entered the residential water heater market in Ontario within the next ten years.
The resolution with the Competition Bureau addressed concerns that Direct Energy restricted competition and limited consumer choice in Ontario's residential water heater industry. The Bureau continues to investigate alleged deceptive door-to-door marketing practices by other water heater providers to strengthen competition and protect Canadians.
In addition to Direct Energy, the Competition Bureau also took action against other companies in the Ontario water heater industry. In November 2014, the Bureau cleared Reliance's acquisition of National and announced that Reliance had agreed to pay a $5 million penalty and contribute $500,000 to investigative costs. Reliance also agreed to take steps to make it easier for customers to terminate their rental agreements and return their water heaters.
The rulings and agreements reached by the Competition Bureau and the Competition Tribunal in Ontario have helped to strengthen competition and consumer choice in the province's water heater industry. These actions ensure that consumers have more options to purchase a water heater or switch to a different rental provider, enhancing fair practices in the market.
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Direct Energy's exit from the Ontario water heater market
Direct Energy's exit from the market was followed by a consent agreement with the Competition Bureau, which addressed concerns about the company's past conduct in the water heater industry. The Bureau alleged that Direct Energy had implemented anti-competitive water heater return policies aimed at preventing consumers from switching to competitors. As a result, Direct Energy was required to pay an administrative monetary penalty of $1 million and establish a corporate compliance program if it were to re-enter the residential water heater market in Ontario in the next ten years.
In the years leading up to its exit, Direct Energy faced criticism from customers for its water heater rental practices. Customers reported issues with the company's refusal to upgrade or replace old water heaters, even when they were leaking or had low pressure. Some customers also felt that the company's rental fees were too high and chose to switch to other suppliers.
Following Direct Energy's exit, the Competition Bureau continued to investigate alleged deceptive door-to-door marketing practices by other water heater providers in Ontario. The Bureau has taken a number of enforcement actions to ensure that businesses comply with the Competition Act and strengthen competition in the residential water heater market.
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Direct Energy's water heater rental costs
Direct Energy exited the water heater rental market in Ontario in 2014. The company sold its Ontario home services business to EnerCare for $550 million (CAD). EnerCare has since offered a wide variety of electric and gas-powered water heaters for rent, with rental costs starting at $17 to $67 per month, depending on the water heater's type and size.
Before exiting the market, Direct Energy was criticised for its alleged anti-competitive policies and practices. Customers complained about the company's refusal to replace old water heaters, even in cases where the appliances were over ten years old and malfunctioning.
If you are looking for alternatives to Direct Energy, DeMark Home Ontario is a popular choice for water heater rentals in the province. The company offers reasonable rates, clear documentation, and excellent customer service. Summitt Energy is another option that some former Direct Energy customers have switched to.
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Direct Energy's refusal to replace old water heaters
Direct Energy has faced criticism for its refusal to replace old water heaters in Ontario, with some customers reporting that the company has engaged in anti-competitive practices and deceptive marketing. In 2014, the Competition Bureau in Canada investigated Direct Energy for its water heater return policies, which allegedly prevented consumers from switching to competitors. As a result, Direct Energy exited the market for water heater rentals in Ontario and paid a $1 million penalty.
Despite this, many customers have continued to express frustration with Direct Energy's refusal to replace their old water heaters. Some customers have reported that Direct Energy has refused to install a new water heater, even in cases where the old unit was over 10 years old and experiencing issues such as low pressure and leaking. Direct Energy has told customers that their units are “good to go" for another 5 years, even though these customers are unhappy with the performance of their old water heaters.
In response to Direct Energy's refusal to replace old water heaters, some customers have chosen to switch to other suppliers, such as Summitt Energy, who have offered free replacements and cheaper rental fees. Other customers have opted to buy their own water heaters outright, rather than continuing to rent from Direct Energy. However, terminating a rental contract with Direct Energy can be complicated, as the company may charge a fee for retrieving the old water heater, and there may be additional costs associated with buying out the contract.
Overall, Direct Energy's refusal to replace old water heaters in Ontario has led to dissatisfaction among customers, who feel that the company is not providing adequate service or value. As a result, many customers have chosen to explore alternative options, either by switching to competitors or by purchasing their own water heaters.
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Direct Energy's sale of its Ontario business to EnerCare
Direct Energy, one of North America's largest energy and energy-related services providers, announced an agreement with EnerCare for the sale of its Direct Energy-branded home and small commercial services business in Ontario to EnerCare for $550 million (CAD) in 2014. This acquisition was financed through a combination of debt and equity, including approximately $317 million from the net proceeds of EnerCare's offering of subscription receipts, $124 million from debt facilities, and $100 million from the private placement of EnerCare common shares to Direct Energy.
Prior to the acquisition, EnerCare and Direct Energy jointly served more than one million home services and water heater rental customers in Ontario for over 12 years. Direct Energy provided services and managed customer relationships, while EnerCare owned the water heater assets. The acquisition combined these two parts of the business into a single entity, wholly-owned and managed by EnerCare, enhancing the overall customer proposition.
Following the acquisition, EnerCare became one of Canada's largest home and commercial services companies, providing water heaters, furnaces, air conditioners, and other HVAC rental products, protection plans, and related services to approximately 1.1 million customers. EnerCare also committed to discontinuing Direct Energy's alleged anti-competitive policies and practices in the Ontario water heater market.
The sale of its Ontario business allowed Direct Energy to focus its attention on opportunities in other parts of North America, offering innovative products and services. This included combined energy and services offerings, as their activities in Ontario no longer formed a material part of their business.
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Frequently asked questions
No, Direct Energy exited the market for water heater rentals in Ontario in 2014. Direct Energy sold its Ontario home and small commercial services business to EnerCare for $550 million (CAD).
Yes, Direct Energy previously rented hot water heaters in Ontario. In 2002, Direct Energy acquired Consumers Gas' hot water heaters, which were transferred under the new renamed company Enbridge Home Services in late 1990.
In 2014, EnerCare Inc. acquired Direct Energy's water heater rental business in Ontario.
Some alternatives to Direct Energy for water heater rentals in Ontario include Enercare, DeMark Home Ontario, Summitt Energy, and Reliance Home Comfort.
If you purchased a home in Ontario with a water heater rented from Direct Energy, you may have inherited the contract. Check your real estate purchase form and review the section on rental items. Contact Direct Energy to discuss your options and be cautious of implicitly taking over the previous owner's obligations.
