Direct Energy gives extra month to change water-tank policy

Under public pressure, Direct Energy has extended its deadline regarding changes to water heater rental contracts.

Customers will now have until May 1, instead of April 2, to decide if they want to stay with their existing agreement.

Direct Energy was swamped with calls from angry customers on Wednesday.

The company is changing its rental water heater contracts to make it more difficult to buy a tank instead of renting, or to switch to another company.

As CTV's Pat Foran reported, a hotline set up by Direct Energy is so jammed with callers that there is a constant busy signal. At times, the hotline even seems to crash. The company said it was experiencing technical difficulties.

Currently, if a heater is rented from Direct Energy, it can be removed at no cost, or for a small fee. But on May 1, that will change.

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

The change affects 600,000 customers.

It affects homeowners with water heaters older than seven to eight years. If a heater is newer, it will not be affected. If customers signed up with Direct Energy after September, 2010, they're already in the new contract.

"We've changed our cancellation options. So if customers want to end their rental agreement they will pay a buy-out fee at which time they will own the equipment. Returning the used equipment to us is no longer an option," said Len Diplock, vice president of water heater and rental services at Direct Energy.

The company says most people who continue to rent from them will not see any additional charges. However, if a customer wants to stay with their old agreement they must contact Direct Energy. If they don't call or email, they will automatically be signed up with the new contract.

Some have compared the new contract system to negative-option billing. Direct Energy said it's doing its best to notify customers.

They're also offering incentives to get customers to agree to the new rental contract. Direct Energy offers a service guarantee to have hot water within 24 hours or the next month is free, and a promise not to rise rates more quickly than inflation.

To reach Direct Energy about the new contracts, call 1-866-202-1120, or email [e-mail]