An Alberta judge has certified a class action lawsuit against Direct Energy Regulated Services, alleging the company’s late payment practice sometimes violates the Criminal Code and Canada’s Interest Act.

The lawsuit was filed on behalf of Debby Allen, a grandmother and property manager, who was charged a late payment penalty of $1.30 on an $86.82 gas bill that she paid eight days after the due date.

The lawsuit alleges the effective annual interest rate is 91 per cent, much higher that what is allowable under Canadian law.

"The money wasn't ever the issue," said Allen. "I just hope that people would question when they get a bill, instead of just paying the $1.30."

In an email Monday, a Direct Energy Regulated Services spokesperson wrote that the Alberta Utilities Commission approved the late payment penalties.

"None of the allegations have been proven in court and Direct Energy denies the allegations. Direct Energy will be defending the case on its merits at the time of hearing."

Customers who paid penalty already included

The class action was filed on behalf of gas and electric customers who paid one or more late payment penalties between May 4, 2004, and March 2, 2014.

Lawyers are asking for the money back, plus interest and costs. All Alberta customers who paid the late fees are already included in the lawsuit and must “opt out” if they don’t want to participate by contacting the law firm Docken Klym.

"Consumers get how many bills in a month? If they had to go over every bill with a microscope, they wouldn't have a life. This is why you have class actions," said Allen's lawyer Bill Klym. "Just because the amounts may be too small for individual consumers to argue about, that is no free pass to a corporation."

The value of the claim is $60 million and if they win the lawsuit, the funds might go to a worthy cause, he said.

An actuary has reviewed Allen's bill and the $1.30 she was charged was wrong for two reasons, Klym alleges.

"If they were charging interest, which is what they had authority to charge, they should have prorated it because interest accrues on a daily basis," he said.

"What violates section 347 (of the Criminal Codes) is the fact that it is too high, provided somebody pays within the first 11 days. They can charge 59 per cent, the equivalent rate of interest, and that's fine. It's still high and exorbitant, but it's not unlawful."

BBB complaints

Direct Energy Regulated Services is a division of Direct Energy Marketing Ltd. The company, headquartered in Houston,  has 770,000 customers in Alberta alone. 

The Better Business Bureau in Canada has closed 319 complaints about Direct Energy Marketing Limited in the past three years, of which 139 had to do with billing and collection issues.

"Any business that's generating … hundreds of complaints in a three-year reporting period is something that the BBB would hope not only would be addressed, but maybe a business could look at the underlying pattern of those complaints and see if that's something that could be addressed in terms of avoiding those situations in the future," said spokesperson Ron Mycholuk.