TORONTO, ONTARIO–(Marketwire – Feb. 3, 2010) – The Consumers' Waterheater Income Fund ("Fund") (TSX:CWI.UN) and The Consumers' Waterheater Operating Trust ("Trust") are providing this business update in order to outline developments in their operations.
The Fund and Direct Energy Marketing Limited ("DE") launched a series of customer communications and marketing programs in 2009 aimed at providing customers with information regarding the services they receive under the water heater rentals program ("Rentals business"), including that service calls and repairs are provided without additional charge, our customers have 24/7 service support, and there are no punitive exit fees. The objective is to ensure customers make the best possible decision on their preferred supplier. The Fund provided approximately $500,000 of financial support towards DE's programs in the fourth quarter of 2009.
Although preliminary, initial indications suggest that the level of attrition experienced by the Fund in the fourth quarter of 2009 is modestly lower than that experienced in the third quarter of 2009. DE and the Fund intend to increase significantly their investment in customer marketing, communications and retention programs through 2010, and will assess their effectiveness on an ongoing basis. In January of each year, the Fund advises customers of the rates charged on the monthly rental of water heaters. The 2010 price increase was set at a c ompetitive level, with the relevant factors considered including impact on customer relationships, the cost of the equipment and servicing, and competitors' pricing levels. Management estimates that revenues for the Fund's Rentals business for the first quarter of 2010 will be slightly higher than the first quarter of 2009, reflecting mainly the rental rate increase and estimated attrition on the portfolio. The number of water heater additions and exchanges in the fourth quarter of 2009 was essentially in line with the third quarter of 2009.
In December 2009 the Ontario Energy Board approved the billing arrangements under a new open bill access agreement ("OBA") and proceeds transfer and trust agreement ("PTTA") negotiated by the Fund, DE and other billers and interested parties with Enbridge Gas Distribution Inc. ("EGD"). The OBA and PTTA substantially preserve the major financial terms and protections of the current billing arrangements with EGD, and have an initial term ending in March 2012. It is currently anticipated that the OBA and PTTA will be entered into by early February 2010.
During the fourth quarter of 2009, primarily as a result of regulatory developments in Ontario and Alberta, Stratacon Inc. ("Stratacon") received notices of termination from property managers representing approximately 3,000 billable sub-metering units. In the fourth quarter of 2009, the Government of Alberta passed regulations providing, among other things, that landlords are not allowed to use a heat sub-meter to bill tenants unless the heat sub-meter is certified by Measurement Canada. The standards for certification have not yet been established. The Fund estimates fourth quarter 2009 non-cash asset impairment charges of approximately $4 million. In the third quarter of 2009, revenues from the Sub-metering business, excluding commodity charges that are passed through to Stratacon's customers on a cost basis, amounte d to less than 2% of the Fund's revenues.
About The Consumers' Waterheater Income Fund
The Fund owns a portfolio of approximately 1.3 million installed water heaters and other assets, rented primarily to residential customers in Ontario. The Fund also operates Stratacon Inc., a leading "smart" sub-metering business, with sub-metering contracts for condominium and apartment suites in Ontario, Alberta and elsewhere in Canada.
Additional information regarding the Fund, including its current Annual Information Form is available on SEDAR at www.sedar.com. Additional information on the sub-metering business is available at www.stratacon.ca.
Certain statements in this news release are forward-looking statements, which reflect management's expectation regarding the Fund's and Trust's growth, results of operations, performance, revenues business prospects and opportunities. Such forward-looking information reflects management's current beliefs and is based on information available to them and/or assumptions management believes are reasonable. Many factors could cause results to differ materially from the results discussed in the forward-looking information. Although the forward-looking information is based on what management believes to be reasonable assumptions, neither the Fund nor the Trust can assure investors that actual results will be consistent with this forward-looking information. Except as required by applicable securities laws, neither the Fund nor the Trust intend or assume any obligation to update or revise the forward-looking information, whether as a result of new information, future events or otherwise. These forward-looking statements are made as of the date of this press release.
For further information: The Consumers’ Waterheater Inc
ome Fund and
The Consumers’ Waterheater Operating Trust
R. Stephen Bower, FCA
+1 905 943.6292 or +1 877 877.0142