Why is DEML offering a one year rate in Ontario? Is it a requirement to participate in that market? Please explain?

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1 Terasen Gas Inc. Commodity Unbundling Project for Residential Customers CPCN Application dated April 13, 2005 Wednesday, June 21, 2006 Response to BCUC Retailer Group Information Request No. 1 Page 1 of 3 Request: C Reference: Stable Rate Option, p. 4, line 7-8 Does Direct Energy Marketing Ltd. ( DEML ) intend to offer a one year fixed rate option in place of the Stable Rate that is available from Terasen Gas Inc.? DEML will certainly evaluate offering a one year fixed rate option in place of the Stable Rate Option that is available from Terasen Gas Inc. (Terasen Gas) DEML believes it to be extremely unlikely that, should the Stable Rate Option be approved after residential market opening, that marketers will offer competitive products in the one year market. This is because marketers would view the incumbent utility as having a dominant position in this market term. Why is DEML offering a one year rate in Ontario? Is it a requirement to participate in that market? Please explain? DEML offers a one year rate in Ontario in response to consumers interest in that competitive offering. There is no regulatory requirement to offer this product. 2.0 Reference: Bonding Requirements, p. 6 Do you know of an unbundled marketplace in North America that has escalating bonding requirements for marketers as described in the Terasen Gas Application? The Retailer Group is not aware of escalating bonding requirements in any competitive jurisdiction in North America.

2 3.0 Reference: Code of Conduct, p. 7 It states on page 7, lines that: Terasen Gas Inc. C13-1 Commodity Unbundling Project for Residential Customers CPCN Application dated April 13, 2005 Wednesday, June 21, 2006 Response to BCUC Retailer Group Information Request No. 1 Page 2 of 3 The Retail Group submits that current legislation in British Columbia is sufficient in governing voice contracting for residential customers. Please provide the legal opinion for this statement. The Retailer Group has not obtained a formal legal opinion in this matter. DEML has contacted the Business Practices and Consumer Protection Authority on this matter and has received a response which details the requirements for telemarketing in British Columbia. A copy of this letter is attached. Upon review of the requirements, DEML has concluded from its review that there are no outstanding requirements in order for natural gas marketers to undertake voice contracting. 4.0 Reference: Appendix A, Review of Best Practices in Retail Energy Market Consumer Education Programs and Their Application in Alberta, p. 32, Table No. 9, Article 6, p Table 9 indicates that DEML spent $1.44 million of $1.67/customer for customer education in the Alberta marketplace. Please provide a breakdown of this amount showing where the money was spent, programs carried out and the effectiveness of the programs. DEML believes it is important for the Commission to understand that in Alberta, Direct Energy Regulated Services (DERS) is a regulated provider of electricity and natural gas. The spending referenced by the Commission is spending by DERS as a regulated entity. Please find attached a breakdown of the items upon which this money was spent. Effectiveness of the programs were not measured quantitatively or qualitatively.

3 Terasen Gas Inc. C13-1 Commodity Unbundling Project for Residential Customers CPCN Application dated April 13, 2005 Wednesday, June 21, 2006 Response to BCUC Retailer Group Information Request No. 1 Page 3 of What amount does DEML intend to spend in the residential unbundled marketplace in British Columbia? DEML, as a competitive natural gas marketer in B.C. will certainly build upon the consumer education efforts of Terasen Gas. DEML recognizes the value of consumer education, whether delivered by the Utility or by competitive gas marketers. At this time, DEML is unable to provide to the Commission a budget number for consumer education in B.C. 4.3 In view of the Retail Group s experience with Commercial Unbundling and the Alberta marketplace, please outline your views on the proposed consumer education program and the proposed changes that you would recommend. How would section 6 (pages 34-50), entitled Recommendations on Consumer Education in Alberta be rewritten for B.C.? DEML contracted with Navigant Consulting Ltd. in 2005 to investigate the consumer education practices of other jurisdictions open for competition in retail energy. DEML believes Terasen Gas Small Commercial Unbundling and proposed Residential Unbundling consumer education programs would rank among the best of any jurisdictions. DEML suggests that Terasen branding on consumer education materials should be removed. By retaining the branding, it emphasizes the dominant role of the incumbent utility as opposed to the residential unbundling initiative. With respect to Section 6 (pg ) of the Navigant Report being re-written for British Columbia, DEML believes it is useful to outline key differences between the two jurisdictions. In Alberta, both electricity and natural gas are open for retail competition. Consumer education is provided by natural gas and electricity distributors, regulated default supply providers of natural gas, and regulated rate providers of electricity. In addition, government agencies such as the Utilities Consumer Advocate and the Department of Energy also are involved in aspects of consumer education. Navigant considered which entity should be responsible for overall coordination of consumer education efforts in Alberta to introduce both cost efficiencies and effective message delivery. The multitude of consumer education providers in Alberta does not appear to be the case in British Columbia. However, there may be a time in the future when British Columbia must consider the same question as far as overall coordination of provincial consumer education efforts by a central agency.

4 Sent: Wed, June 21, :47 PM Subject: FW: B.C. Voice Contracting Question C13-1 From: Information Sent: Wednesday, May 17, :15 AM To: MacIntyre, Glenn Subject: RE: Voice Contracting Question Dear Glenn MacIntyre, Thank you for contacting the Business Practices and Consumer Protection Authority (BPCPA). The Business Practices and Consumer Protection Authority is a not-for-profit organization which operates at arm s length from government. On July 4, 2004 the Authority assumed responsibility for the oversight of business practices and consumer protection in British Columbia, including enforcement under the Business Practices and Consumer Protection Act, the Cremation, Interment and Funeral Services Act, and regulations. As such, our mandate is limited to what is outlined in this legislation. I would recommend reviewing the Business Practices and Consumer Protection Act, specifically Division 4, which addresses Distance Sales Contracts. Definitions 17 In this Part: BUSINESS PRACTICES AND CONSUMER PROTECTION ACT Part 4 -- Consumer Contracts Division 1 -- Definitions and Application "distance sales contract" means a contract for the supply of goods or services between a supplier and a consumer that is not entered into in person and, with respect to goods, for which the consumer does not have the opportunity to inspect the goods that are the subject of the contract before the contract is entered into; Division 4 Distance Sales Contracts can be read at: If you are expecting payment, at the time of the call, you may also need a telemarketing license. 142 In this Division: telemarketer means a supplier who initiates contact with a consumer by telephone or facsimile for the purpose of conducting a consumer transaction.

5 Voice Contracting Question Page 2 of A person must not act or hold himself, herself or itself out as any of the following, unless the person is licensed for that purpose or is exempt by regulation from the requirement to be licensed: (d) telemarketer; You may also wish to consult with your own legal counsel to determine your statutory obligations. I hope you find this information helpful. Best regards, C13-1 Jody Peddle Inquiry Officer Business Practices and Consumer Protection Authority Phone: Fax: Toll Free in BC: Web: WARNING: This electronic transmission contains confidential information intended only for the person(s) named above, and is privileged. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution, or any other use of this is strictly prohibited. If you have received this transmission by error, please notify us immediately by return and destroy the original transmission immediately and all copies thereof. From: MacIntyre, Glenn [mailto:glenn.macintyre@directenergy.com] Sent: Monday, May 15, :49 AM To: Information Subject: Voice Contracting Question Importance: High Hello, I was wondering if you could answer the following question: B.C. is presently considering residential unbundling for natural gas. The Terasen Gas application is currently in front of the BCUC. Assuming the application receives approval by the BCUC, my company was wondering about using voice contracting to allow consumers to enter into contracts via the telephone. Is voice contracting permissible in B.C., and are voice signatures allowed under the Electronic Transactions Act? What regulatory requirments are there in terms of licencing, data storage are required? Could you please provide a list of regulatory requirements? Please do not hesitate to contact me if you have any questions.

6 Voice Contracting Question Page 3 of 3 C13-1 Regards, Glenn MacIntyre Director Government & Regulatory Affairs Western Region Direct Energy Marketing Limited Phone: (403) Cellular: (403) FAX: (403) glenn.macintyre@directenergy.com The information contained in or attached to this is intended only for the use of the addressee. If you are not the intended recipient of this , or a person responsible for delivering it to the intended recipient, you are strictly prohibited from disclosing, copying, distributing, or retaining this or any part of it. It may contain information which is confidential and/or covered by legal, professional or other privilege under applicable law. If you have received this in error, please notify us immediately by return . The views expressed in this are not necessarily the views of Centrica plc, nor its North American subsidiaries, and the said companies and their respective directors, officers and employees make no representation, nor accept any liability, regarding its accuracy or completeness, unless expressly stated to the contrary.

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