Direct Energy

From Wikipedia, the free encyclopedia

Direct Energy is a retailer of energy and energy solutions. The company was founded in 1986. With over 5 million customers in Canada and the United States, it is the largest energy and home services retailer in North America. The current Chairman and Chief Executive Officer of the company is Deryk King.

In 2000, the company was acquired by Centrica. Centrica acquired Energy America in the same year, and Enbridge two years later.

Within the United States, Direct Energy is a major participant in the Texas power market insofar as it owns both of West Texas Utitlies Retail Energy as well as Central Power & Light Retail Energy, the retail energy divisions of two of the state's former incumbent utilities. Beginning in January of 2002, the state of Texas deregulated the electric market and Direct Energy competes against other energy companies in its home market such as TXU Energy, Reliant Energy, Stream Energy, Gexa Energy and Cirro Energy.

In January 2003, Direct Energy launched Home Services in Ontario and Texas. Two months later, they began offering home services across Canada. The company acquired and bought many companies during 2004, including Quintana Minerals Canada Investments Corporation, Luced Heating Contractors, Residential Services Group, BASE Controls Limited, and the Frontera Energy Center.

[edit] Controversies

In 2003, Direct Energy was fined $157,500 after investigators discovered 21 forged contracts trapping customers into long-term energy deals. According to Paul Massara, then the president of the company, the forgeries took place between June 2001 and April 2002. Both Direct Energy and its U.S. affiliate Energy America have been charged with employing unethical business practices, with Energy America being fined over $500,000 in penalties for enrolling customers without permission and using deceptive sales pitches. The companies have been caught using such unethical business practices in Michigan, Georgia, Texas, Ontario and Manitoba.

In 2004, in Alberta, Direct Energy purchased the retail operations of ATCO Gas and ATCO Electric as part of the province's move to deregulate the retail energy industry. Some consumer groups objected to the sale, citing Direct Energy's past record. However, after many public hearings, the sale was approved by the Alberta Energy & Utilities Board (AEUB). In May 2004, Direct Energy Regulated Services took over the retail gas and electric operations from ATCO Gas and ATCO Electric, selling gas and electricity at rates approved by the AEUB; these "regulated rates" are largely determined by market forces. (Meanwhile, the ATCO companies still own and operate the infrascructure that delivers gas or electricity in their service territories.)

Adding to the confusion in Alberta is the fact that a second Direct Energy company, "Direct Energy Essential Services", also operates in the province. This second company sells fixed-price contracts for gas and electricity, where the price of the utilities are fixed through the life of the contract (typically three or five years), and are not subject to market forces like the "Regulated Rate". Although Direct Energy Essential Services and Direct Energy Regulated Services are two separate companies, consumers often confuse the two, not realizing that they are, in fact, two different companies.