Direct Energy backs down on water tank contract changes

Rob Comstock, senior vice president of Canadian services for Direct Energy, speaks to CTV Toronto on Thursday, March 15, 2012.

Under public pressure, Direct Energy has cancelled proposed changes to water heater rental contracts.

In a statement issued late Thursday afternoon, the utility company said it will not change "terms and conditions of our water heater contracts" at this time.

"I apologize wholeheartedly for the confusion this has caused to our customers," Rob Comstock, senior vice president of Canadian services, said in the statement.

"We have not communicated this initiative as well as we could have."

The company was swamped with calls from customers looking to avoid costly changes.

"I also want to say sorry to those who had difficulty getting through to us during a period of unprecedented call volumes. Please accept my apologies," Comstock said.

As CTV Toronto's Pat Foran reported earlier this week, Direct Energy was planning to change its rental water heater contracts to make it more difficult to buy a tank instead of renting, or to switch to another company.

Currently, if a heater is rented from Direct Energy, it can be removed at no cost, or for a small fee.

Under the proposed agreement, if a contract was cancelled, the renter would have had to pay a buy-out fee of between $200 and $3,000, depending on the size and year of the tank.

The change would have affected 600,000 customers with water heaters older than seven to eight years.

If a customer wanted to stay with their old agreement, Direct Energy asked them to call or email. Othewises, they would be automatically signed up with the new contract.

Some compared the new contract system to negative-option billing.

Customers who signed up with Direct Energy after September 2010 are already on the new contract.