Who’s in your wallet? A closer look at Direct Energy
By: Nick Clark
As we touched on briefly in our first blog, Alberta’s electricity industry is rife with cases of outsourcing by some of the largest players in the game. Even our own government has wrongly outsourced jobs to companies out of the country to help them develop and manage our provincial Energy Efficiency Alberta programs (but, this is another story for another day).
The business case for outsourcing jobs overseas is simple. Lowering operating costs helps companies increase profits, and supposedly remain competitive against others in the market. Sadly, as our core industries outsource more and more, the intellectual knowledge, software code, and experts in the market are being lost and gravitating to countries overseas. If Alberta wants to be a player in the Information Technology market, we should put a stop to exporting our knowledge and focus on encouraging some of our existing utilities to bring jobs back to Alberta.
Our government is wisely trying to promote diversification of our economy and using tools such as the Alberta Investor and Capital Investment Tax Credit programs to drive economic growth. Yet, at the same time, the industries that they regulate are exporting jobs out of the province. Doesn’t make a lot of sense, does it?
It can be argued that the goal of most companies is to make a profit, so the outsourcing of jobs such as customer care or information technology seems inevitable. It’s just the way it is. Telus, ENMAX, Direct Energy, and ATCO are doing it so why not others?
But is it right?
Don’t get me wrong; Regulated Rate providers in Alberta are great companies managed by good people. However, when a government regulated utility ships jobs out of the province, in our mind, it is just fundamentally wrong.
But it’s not only jobs that are being lost. Earlier this year there was the major sale of an essential Alberta asset, most notably the natural gas holdings that traditionally have backed the regulated rate supply of gas to consumers in Alberta. It was sold off by Direct Energy’s corporate holding company, Centrica, to a consortium of companies in China.
Every job exported out of the province means less money being circulated in our local economy. Once the jobs are gone they won’t be easy to get back. If we are also selling off our natural resources, when all of this is said and done, what will be left for Alberta?
When Direct Energy purchased the customer base from ATCO, they ended up owning the franchised territory of all the customers on the Regulated Rate Option (RRO) serviced within ATCO’s distribution zone. As a regulated rate provider, Direct Energy is guaranteed a profit under the government’s rate setting plan. As well, Direct is being subsidized to the tune of millions of dollars paid out of the carbon tax in order keep their electricity rate capped at 6.8 cents per kWh. Ask yourself; is it right for our political leaders to turn a blind eye when the regulated rate provider’s profits are guaranteed and the company is subsidized and at the same time ships the majority of their jobs out of the province?
It is time to put an end to this silliness. Ask your MLA to consider endorsing legislation that requires a regulated rate provider to invest in the province if they want to be continued to be subsidized and guaranteed a profit through the sale of the RRO to consumers. It is time to break up the regulated utilities hold on consumers and for the government to give serious consideration in allowing local, private and independent retailers to provide the government regulated rate offered to consumers in the province.
The supply of energy could easily be provided by the Balancing Pool (which controls a large block of generation operations) and by doing so turn the Balancing Pool into a successful profit center. Let’s not forget that the government had to borrow $2 billion to bail out the Balancing Pool when the Power Purchase Agreements were cancelled. This is the perfect opportunity to turn this organization around. All that is required is for our government to think differently.
Here is a closer look at Direct Energy’s business and where your money is ACTUALLY going.
Pick up the phone and call Direct Energy at 1 (866) 420-3174. During the opening greeting you will be told that information will be processed outside Canada. Dig a little deeper and you will find that your phone call will be directed to either a call center in Guatemala or in the Philippines. The individuals don’t work for Direct Energy and are instructed not to tell you who their employer is. But, with the help from our friends at Google, the answer was just a click away.
Direct Energy bought the retail customer list off of ATCO a decade ago for about $200 million. Quietly, both ATCO and Direct Energy progressively moved jobs out of the country in order to squeeze a little more profit out of the business. From a corporate perspective, I believe Direct should have remained loyal to the customers they bought and kept the billing and customer care services here in Alberta. This transition meant hundreds of Alberta jobs were lost.
The Internet Technologies firm HCL Technologies bagged a contract from Direct Energy (Centrica) to implement and manage residential billing and customer care operations in the Alberta market. Who is HCL? You will find them trading on the Bombay Stock Exchange and their corporate headquarters are located in Noida, India.
For those that don’t know, Direct Energy is a division of Centrica PLC which is principally focused on the supply of electricity and gas to businesses and consumers in the United Kingdom and North America, with back-office functions located in India and South Africa. Don’t get us wrong this is an amazing company, we visited the Calgary office recently, it is a state-of-the-art world class energy trading house which employs a number of young traders and three customer problem resolution representatives that are dedicated to dealing with customer billing errors. They also have a small number of employees in their Edmonton office, two of which are also focused on dealing with customer billing errors and the rest of which are regulatory and marketing staff.
According to the customer service representative we spoke to in the Philippines, the actual customer invoices are processed out of the Texas office and they use a post office box in Calgary to mail them out. When we called back to ask a follow-up question, the telephone routing sent us to a different representative in a call center in Guatemala. During this call we found that the official billing address for Direct Energy is P.O Box 1520 Station M, Calgary. That’s right, it is a post office box.
In their latest move, earlier this year Direct Energy sold off all of their Alberta gas holdings to a consortium from China. As Alberta’s major regulated rate gas supplier in the province; maybe the question that should be asked is, should the largest government regulated natural gas utility been allowed to sell off all their gas holdings? The new owners: a joint partnership including Mercuria (HQ Geneva), Can-China Global Resource Fund (in part, funded by China Exim Bank), MIE Holdings Corporation (HQ Hong Kong) acquired Direct Energy’s foothold in the province for $722 million.
If you dig a little deeper and look at their stock prices – it may help explain what is behind the divestitures. Did the slump in share value precipitate the cutting costs and selling off of assets? Sadly, Alberta was put on the chopping block.
So back to the question we asked earlier. Why is the government supporting a company with Alberta Carbon Tax dollars if their jobs and profits are being shipped out of the province? We should be spending Carbon Tax dollars on environmental initiatives.
Obviously, a lot of companies use outsourcing services to cut costs, so why pick on Direct Energy? Actually, we aren’t and in our next few blogs we will explore ATCO, who sold off their information technology business for $200 million, and who, under a 10-year outsourcing program, WIPRO will net over $1.2 Billion of jobs lost to Alberta. Also, let’s not forget ENMAX who relies on the TATA Group for programming services. HCL, Wipro and Tata are all rooted in India.
The truth is that between the new Chinese Consortium that bought Direct’s gas business, HCL, Centrica, TATA, and WIPRO combined they now have a very large block of controlled influence over one of the most important aspects of the Alberta energy industry; “the Alberta Consumer”.
The reality is that we foolishly let the fox into the hen house and future good paying jobs are now lost. Our kids will be looking for jobs one day and they will be gone. They are not coming back, unless we have a strong government that is willing to say enough is enough and supports Alberta made businesses.
Why are we allowing companies to ship profits out of the country which in turn further erodes our tax base? If our MLAs are not going to do anything – maybe the consumer should take control and simply switch off of the RRO.
The list goes on. As we continue to expand, it is local companies like those who are part of the People’s Utility Network that will be around to hire the workers of the future.
I hope this has shed some light to help you understand what is going on. I encourage you to check your options. Here is a list of over 20 Energy Marketers – all Located in Alberta and all with guaranteed retail prices below the RRO.
The business case for outsourcing jobs overseas is simple. Lowering operating costs helps companies increase profits, and supposedly remain competitive against others in the market. Sadly, as our core industries outsource more and more, the intellectual knowledge, software code, and experts in the market are being lost and gravitating to countries overseas. If Alberta wants to be a player in the Information Technology market, we should put a stop to exporting our knowledge and focus on encouraging some of our existing utilities to bring jobs back to Alberta.
Our government is wisely trying to promote diversification of our economy and using tools such as the Alberta Investor and Capital Investment Tax Credit programs to drive economic growth. Yet, at the same time, the industries that they regulate are exporting jobs out of the province. Doesn’t make a lot of sense, does it?
It can be argued that the goal of most companies is to make a profit, so the outsourcing of jobs such as customer care or information technology seems inevitable. It’s just the way it is. Telus, ENMAX, Direct Energy, and ATCO are doing it so why not others?
But is it right?
Don’t get me wrong; Regulated Rate providers in Alberta are great companies managed by good people. However, when a government regulated utility ships jobs out of the province, in our mind, it is just fundamentally wrong.
But it’s not only jobs that are being lost. Earlier this year there was the major sale of an essential Alberta asset, most notably the natural gas holdings that traditionally have backed the regulated rate supply of gas to consumers in Alberta. It was sold off by Direct Energy’s corporate holding company, Centrica, to a consortium of companies in China.
Every job exported out of the province means less money being circulated in our local economy. Once the jobs are gone they won’t be easy to get back. If we are also selling off our natural resources, when all of this is said and done, what will be left for Alberta?
A Closer Look at Direct Energy as a RRO Utility Provider in Alberta
Is your energy provider guilty of outsourcing? If you currently get either your electricity or natural gas from Direct Energy, then the answer is yes.When Direct Energy purchased the customer base from ATCO, they ended up owning the franchised territory of all the customers on the Regulated Rate Option (RRO) serviced within ATCO’s distribution zone. As a regulated rate provider, Direct Energy is guaranteed a profit under the government’s rate setting plan. As well, Direct is being subsidized to the tune of millions of dollars paid out of the carbon tax in order keep their electricity rate capped at 6.8 cents per kWh. Ask yourself; is it right for our political leaders to turn a blind eye when the regulated rate provider’s profits are guaranteed and the company is subsidized and at the same time ships the majority of their jobs out of the province?
It is time to put an end to this silliness. Ask your MLA to consider endorsing legislation that requires a regulated rate provider to invest in the province if they want to be continued to be subsidized and guaranteed a profit through the sale of the RRO to consumers. It is time to break up the regulated utilities hold on consumers and for the government to give serious consideration in allowing local, private and independent retailers to provide the government regulated rate offered to consumers in the province.
The supply of energy could easily be provided by the Balancing Pool (which controls a large block of generation operations) and by doing so turn the Balancing Pool into a successful profit center. Let’s not forget that the government had to borrow $2 billion to bail out the Balancing Pool when the Power Purchase Agreements were cancelled. This is the perfect opportunity to turn this organization around. All that is required is for our government to think differently.
Here is a closer look at Direct Energy’s business and where your money is ACTUALLY going.
Pick up the phone and call Direct Energy at 1 (866) 420-3174. During the opening greeting you will be told that information will be processed outside Canada. Dig a little deeper and you will find that your phone call will be directed to either a call center in Guatemala or in the Philippines. The individuals don’t work for Direct Energy and are instructed not to tell you who their employer is. But, with the help from our friends at Google, the answer was just a click away.
Direct Energy bought the retail customer list off of ATCO a decade ago for about $200 million. Quietly, both ATCO and Direct Energy progressively moved jobs out of the country in order to squeeze a little more profit out of the business. From a corporate perspective, I believe Direct should have remained loyal to the customers they bought and kept the billing and customer care services here in Alberta. This transition meant hundreds of Alberta jobs were lost.
Where Were the Jobs & Profits Outsourced to?
For those that don’t know, Direct Energy is a division of Centrica PLC which is principally focused on the supply of electricity and gas to businesses and consumers in the United Kingdom and North America, with back-office functions located in India and South Africa. Don’t get us wrong this is an amazing company, we visited the Calgary office recently, it is a state-of-the-art world class energy trading house which employs a number of young traders and three customer problem resolution representatives that are dedicated to dealing with customer billing errors. They also have a small number of employees in their Edmonton office, two of which are also focused on dealing with customer billing errors and the rest of which are regulatory and marketing staff.
According to the customer service representative we spoke to in the Philippines, the actual customer invoices are processed out of the Texas office and they use a post office box in Calgary to mail them out. When we called back to ask a follow-up question, the telephone routing sent us to a different representative in a call center in Guatemala. During this call we found that the official billing address for Direct Energy is P.O Box 1520 Station M, Calgary. That’s right, it is a post office box.
In their latest move, earlier this year Direct Energy sold off all of their Alberta gas holdings to a consortium from China. As Alberta’s major regulated rate gas supplier in the province; maybe the question that should be asked is, should the largest government regulated natural gas utility been allowed to sell off all their gas holdings? The new owners: a joint partnership including Mercuria (HQ Geneva), Can-China Global Resource Fund (in part, funded by China Exim Bank), MIE Holdings Corporation (HQ Hong Kong) acquired Direct Energy’s foothold in the province for $722 million.
If you dig a little deeper and look at their stock prices – it may help explain what is behind the divestitures. Did the slump in share value precipitate the cutting costs and selling off of assets? Sadly, Alberta was put on the chopping block.
 |
| Source: https://www.centrica.com/investors/announcements-tools/share-price-tools/charting-comparison |
So back to the question we asked earlier. Why is the government supporting a company with Alberta Carbon Tax dollars if their jobs and profits are being shipped out of the province? We should be spending Carbon Tax dollars on environmental initiatives.
Obviously, a lot of companies use outsourcing services to cut costs, so why pick on Direct Energy? Actually, we aren’t and in our next few blogs we will explore ATCO, who sold off their information technology business for $200 million, and who, under a 10-year outsourcing program, WIPRO will net over $1.2 Billion of jobs lost to Alberta. Also, let’s not forget ENMAX who relies on the TATA Group for programming services. HCL, Wipro and Tata are all rooted in India.
The truth is that between the new Chinese Consortium that bought Direct’s gas business, HCL, Centrica, TATA, and WIPRO combined they now have a very large block of controlled influence over one of the most important aspects of the Alberta energy industry; “the Alberta Consumer”.
Current Practices will Impact Future Workers
If we continue to close down our technology operations, we will lose the digital technologies brain trust that is needed to compete in the future on the global stage. It is already happening as Direct Energy is simply now using a black box for billing, and their customer care staff read from prepared scripts. If we lose this foothold in the future of technology solutions, we will risk becoming a have not province. If we ship call center jobs to people in South America, Asia, or the USA we will lose good paying local jobs that Albertans can perform. If we move confidential customer data out of the country, we will lose control over the privacy and confidentiality of consumer data. As the phone message from Direct Energy Regulated Services will tell you – your data is being stored outside of Canada.The reality is that we foolishly let the fox into the hen house and future good paying jobs are now lost. Our kids will be looking for jobs one day and they will be gone. They are not coming back, unless we have a strong government that is willing to say enough is enough and supports Alberta made businesses.
Why are we allowing companies to ship profits out of the country which in turn further erodes our tax base? If our MLAs are not going to do anything – maybe the consumer should take control and simply switch off of the RRO.
Choosing a Local Company
Consumers have a choice – close your eyes and accept what is happening; ask your MLA to address this issue in the legislature; or, simply switch over to a retailer who is local, has rates under the 6.8 cent artificial cap, doesn’t need to be subsidized by the carbon tax, and reinvests his profits in Alberta rather than shipping the profits out of the country. The list of differences when compared to Direct Energy’s as a regulated rate provider is significant: Low Competitive Rates, Special Rates for Seniors, Local Customer Care, Budget Billing, Pick-a-Date, Credit Card Payment Option, Green Energy Options, No Cancellation Penalties … and a long list of Community Initiatives.The list goes on. As we continue to expand, it is local companies like those who are part of the People’s Utility Network that will be around to hire the workers of the future.
I hope this has shed some light to help you understand what is going on. I encourage you to check your options. Here is a list of over 20 Energy Marketers – all Located in Alberta and all with guaranteed retail prices below the RRO.