A Canadian joint venture between a utility and investment firm has decided to expand from the residential market to include commercial customers. The Consumers' Waterheater Income Fund (CWIF) indirectly owns a portfolio of about 1.3 million installed water heaters and other assets, rented primarily to residential customers in Ontario, Canada. In January 2005, CWIF started to install and service the water heater needs of commercial customers, including retailers, restaurants, bank branches and smaller office buildings. The commercial program will initially focus on retaining CWIF's existing commercial customer base, as their existing equipment is retired from service. This portfolio today amounts to about 17,000 installed water heaters.

CWIF is an unincorporated open-ended trust established in 2002, when it completed its initial public offering. The proceeds were used to fund the purchase of the rental portfolio from Direct Energy Marketing Limited, a utility subsidiary. Direct Energy continues to provide service to the rental portfolio and receives 35 percent of aggregate rental revenues for its co-ownership interest in certain water heater related assets. CWIF owns and receives the remaining 65 percent. It has no investment interest in Direct Energy's services business or operations.

Direct Energy will be responsible for originating and servicing the commercial water heaters on substantially the same terms as the existing residential business. In fiscal year 2004, CWIF reported earnings of $15.7 million on total revenue of $142.9 million, compared with a loss of $37.1 million and total revenues of $138.7 million in 2003.