01/20/2012 10:05 EST | Updated 03/21/2012 05:12 EDT

Direct Energy cuts 500 jobs as it moves headquarters from Toronto

Direct Energy is cutting 500 jobs in Canada as the company shifts its headquarters to Houston from Toronto in order to concentrate on key growth markets in the northeastern United States and Texas.

Direct Energy spokeswoman Hillary Marshall said Friday the regulatory environment in Ontario was too restrictive and the company's opportunity to grow in the province too limited.

"We are a business that needs further deregulation in the energy markets — more competition if you will — in order to keep growing and we're just not seeing it here," Marshall said.

"We are however seeing it in the United States."

A subsidiary of British company Centrica, Direct Energy has been growing its retail business in the U.S., especially Texas and the U.S. Northeast.

"We have been focusing our growth on those markets and that's where we are going to continue to focus it," Marshall said.

The company's Canadian headquarters will be closed over the next 12 to 18 months while the company completes the move to Texas, where Direct Energy plans to add about 300 people.

Ontario Energy Minister Chris Bentley said Friday the province has taken significant steps in recent years to make the province a more attractive for business.

"Our government believes that a regulated electricity system is necessary to protect consumers and business from price volatility by providing stable and predictable electricity prices for ratepayers," Bentley said.

"The previous Conservative government's failed experiment with deregulating Ontario’s electricity market led to unpredictable price increases for families and businesses. Ontario's hybrid electricity system includes both private retailers and municipally and provincially owned distributors."

In total, Direct Energy, one of North America's largest energy and energy-related services providers, will still have about 2,000 employees in Ontario and roughly 6,000 across North America.

The company, which has operations across Canada, also operates approximately 4,600 producing gas wells in Alberta as well as three natural gas fired power plants in Texas.

"Direct Energy has a growth strategy that is largely built on expansion of our residential business, our commodity sales business and also in our upstream business where we produce natural gas and generate electricity," Marshall said.

"We've done just over a $1 billion in acquisitions over the last 18 months and there is a stated strategy to invest billions more in North America, but we want to do it in markets where there is healthy competition, where it is open to competition, and not utility dominated and we just don't see that in Ontario."

Earlier this month, the company announced the acquisition of Indiana-based natural gas retailer Vectren Source, a wholly owned subsidiary of Vectren Corp. (NYSE:VVC), for US$39 million.

Vectren Source supplies natural gas to about 280,000 residential and small business customers in Ohio, Indiana and New York.

Last year, Direct Energy entered 22 new residential markets in the northeastern United States.

The company also recently acquired First Choice Power in Texas and Gateway Energy Services in the U.S. Northeast.