EnerCare Inc.
TSX : ECI

EnerCare Inc.

November 06, 2014 17:42 ET

EnerCare Provides Voluntary Assurance to the Competition Bureau Regarding Water Heater Returns

TORONTO, ONTARIO--(Marketwired - Nov. 6, 2014) -

NOT FOR RELEASE IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES

EnerCare Inc. ("EnerCare") (TSX:ECI) and EnerCare Solutions Inc. ("EnerCare Solutions" and with EnerCare, the "Company"), one of Canada's leading providers of energy conservation products and services, is pleased to announce that EnerCare has fully resolved concerns that Canada's Competition Bureau (the "Bureau") had in respect of certain water heater return policies and practices of Direct Energy Marketing Limited ("Direct Energy"), the Ontario home and small commercial services business of which the Company acquired on October 20, 2014. This is the culmination of a co-operative process between EnerCare and the Bureau that was initiated in conjunction with the acquisition.

As noted in the Bureau's own announcement today, the Company has not engaged in any anti-competitive behaviour. However, following its acquisition of Direct Energy's water heater rental business, EnerCare voluntarily provided written assurance to the Bureau regarding the Company's water heater return policies and practices, including:

  • no longer requiring customers to obtain authorization numbers before returning a rented water heater;
  • honouring agreements whereby a new supplier can terminate a customer's account on his or her behalf and return the old water heater; and
  • opening two new return depots to facilitate the return of its water heaters.

"We are very pleased with the resolution reached with the Bureau," said John Macdonald, President and CEO of the Company. "This resolution clarifies certain basic procedures for the return of our water heaters and is good for the Company and our customers, as well as the rental water heater industry and consumers generally."

The Company is pleased that the Bureau took a practical approach to resolving its concerns. While the Company expects to implement the changes indicated in the written assurance in the near term, it does not expect that those changes will have a significant impact on its operating costs or attrition.

A copy of the Bureau's news release issued today, and related fact sheet, in respect of the written assurance provided by EnerCare is included with this press release.

Forward-Looking Statements

This news release contains forward-looking information within the meaning of applicable Canadian securities laws ("forward-looking statements"). Statements other than statements of historical fact contained in this news release may be forward-looking statements, including, without limitation, management's expectations, intentions and beliefs concerning anticipated future events, results, circumstances, economic performance or expectations with respect to the Company, including the Company's business operations, business strategy and financial condition. Forward-looking statements may include words such as "anticipates", "believes", "budgets", "could", "estimates", "expects", "goal", "intends", "may", "outlook", "plans", "strive", "target" and "will", although not all forward-looking information contains these words. These forward-looking statements are subject to change as a result of new information, future events or other circumstances in which case they will only be updated by the Company where required by law.

About EnerCare and EnerCare Solutions

The Company is one of Canada's largest home and commercial services companies with more than 900 employees. The Company provides water heaters, furnaces, air conditioners and other HVAC rental products, protection plans and related services to approximately 1.1 million customers. EnerCare also owns EnerCare Connections Inc., a leading sub-meter provider, with metering contracts for condominium and apartment suites in Ontario, Alberta and elsewhere in Canada.

Additional information regarding EnerCare and EnerCare Solutions is available on SEDAR at www.sedar.com or through EnerCare's investor relations website at www.enercareinc.com or www.enercare.ca.

Competition Bureau Strengthens Competition in Ontario's Water Heater Industry

Resolutions require Reliance to pay $5M penalty and put an end to anti-competitive conduct by Reliance and Direct Energy

November 6, 2014 - OTTAWA, ON - Competition Bureau

The Competition Bureau has reached resolutions with Reliance Comfort Limited Partnership (Reliance) and EnerCare Inc., the company that acquired Direct Energy Marketing Limited's Home and Small Commercial Services (Direct Energy) business in October, which strengthen competition and consumer choice in Ontario's residential water heater industry.

The Bureau filed applications with the Competition Tribunal against Reliance and Direct Energy in 2012 alleging that they had implemented anti-competitive water heater return policies and procedures that were aimed at preventing consumers from switching to competitors. As a result of these anti-competitive practices, many customers had little choice but to continue their rental agreements even if they wanted to purchase a new water heater or switch to another rental provider. This is an especially important issue for consumers who wish to purchase new water heaters, instead of continuing to pay rental fees, as there can be substantial savings.

Reliance Pays $5 Million Administrative Monetary Penalty

Under the terms of a consent agreement registered today with the Tribunal, Reliance will pay an administrative monetary penalty (AMP) of $5 million and contribute $500,000 to the Bureau's investigative costs. Reliance must also take certain steps to make it easier for customers to terminate their rental agreements and return their water heaters to Reliance. The consent agreement will be available on the Competition Tribunal's website shortly.

Commitments from EnerCare

After learning of EnerCare's plans to acquire Direct Energy's water heater rental business in Ontario, the Bureau approached EnerCare in order to reach a resolution that would put an end to Direct Energy's anti-competitive policies and practices following the completion of the transaction. EnerCare was not the subject of the Bureau's application regarding Direct Energy's practices and has not engaged in any anti-competitive behaviour. However, given its acquisition of Direct Energy's water heater rental business, the Bureau has obtained written commitments from EnerCare that put an end to Direct Energy's anti-competitive behaviours.

While Reliance and EnerCare have cooperated with the Bureau, the Bureau's litigation against Direct Energy is continuing before the Tribunal. The Bureau is seeking an order that includes, among other things, an AMP of $15 million. The hearing is currently scheduled to begin on March 2, 2015.

Further information about the resolutions with Reliance and EnerCare is available in the Fact Sheet.

Quote

"Today's announcement will promote improved competition in the water heater industry in Ontario by ensuring that consumers can more easily purchase a new water heater or switch to a different rental provider. I am pleased that Reliance and EnerCare have agreed to put an end to the restrictive practices. In particular, we welcome the cooperative approach EnerCare immediately adopted to resolve our concerns. These agreements are a good demonstration of the benefits to the market place when businesses work with the Bureau to resolve competition concerns."

John Pecman,

Commissioner of Competition

Related Information

Contacts

For media enquiries, please contact:
Media Relations
Telephone: 819-994-5945
Email: media@cb-bc.gc.ca
For general enquiries, please contact:
Information Centre
Competition Bureau
Telephone: 819-997-4282
Toll free: 1-800-348-5358
TTY (hearing impaired): 1-800-642-3844

www.competitionbureau.gc.ca

Enquiries/Complaints

Stay connected

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

Competition Bureau Strengthens Competition in Ontario's Water Heater Industry

Fact Sheet

November 6, 2014

Agreement with Reliance Comfort Limited Partnership:

A consent agreement registered with the Competition Tribunal resolves the Bureau's concerns with Reliance's practices. The terms of this agreement apply in certain markets in Ontario and prohibit Reliance from:

  • requiring customers to obtain authorization before returning a rented water heater;
  • refusing to deal with other suppliers who return customers' water heaters on their behalf;
  • unreasonably restricting when and where water heaters can be returned;
  • engaging in anti-competitive retention tactics; and
  • imposing unwarranted fees and charges on customers seeking to switch to another provider or terminate their water heater rental contracts.

Reliance must also take certain steps to make it easier for customers to terminate their rental agreements and return their water heaters to Reliance. It is also required to pay an administrative monetary penalty of $5 million and contribute $500,000 to the Bureau's investigative costs.

Commitments from EnerCare Inc.:

After learning of EnerCare's plans to acquire Direct Energy's water heater rental business in Ontario, the Bureau approached EnerCare in order to reach a resolution that would put an end to Direct Energy's anti-competitive policies and practices after completion of the transaction.

It is important to note that EnerCare was not the subject of the Bureau's application regarding Direct Energy's practices and has not engaged in any anti-competitive behaviour. However, given its acquisition of Direct Energy's water heater rental business, the Bureau has obtained written commitments from EnerCare that it will not continue Direct Energy's anti-competitive practices. These commitments include:

  • no longer requiring customers to obtain an authorization number before returning a rented water heater;
  • honouring agreements whereby a new supplier can terminate a customer's account on his or her behalf and return the old water heater; and
  • opening new return depots to facilitate the return of its water heaters.

As a result of its acquisition of Direct Energy's Home and Small Commercial Services business in Ontario, EnerCare will be one of the largest providers of water heaters in certain parts of Ontario. EnerCare and EnerCare Solutions own a portfolio of approximately 1.1 million water heaters and other assets, rented primarily to residential customers in Ontario.

Areas of Operation in Ontario:

  • Direct Energy primarily operated in areas where natural gas is distributed by Enbridge Inc., which generally corresponds to the Greater Toronto Area, the Ottawa region and the Niagara Peninsula. Under the proposed acquisition of Direct Energy's water heater business by EnerCare, EnerCare would operate in the same areas.
  • Reliance primarily operates in areas where natural gas is distributed by Union Gas Limited and in certain rural markets.

Contacts

For media enquiries, please contact:
Media Relations
Telephone: 819-994-5945
Email: media@cb-bc.gc.ca
For general enquiries, please contact:
Information Centre
Competition Bureau
Telephone: 819-997-4282
Toll free: 1-800-348-5358
TTY (hearing impaired): 1-800-642-3844

www.competitionbureau.gc.ca

Enquiries/Complaints

Stay connected

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

Contact Information