You have a rented water heater and you pay monthly fees on your gas bill. But Ontario’s gas utilities are no longer in the water heater rental business. Enbridge sold its portfolio to Direct Energy and Union Gas sold to Reliance Home Comfort.
Recently, new competitors are trying to grab the business away. The two legacy firms are losing market share and they’re not happy.
Direct Energy, in particular, has a strong motive to cover its assets. In 2002, it set up the Consumers’ Waterheater Income Fund, which gives investors 65 per cent of the rental revenues, while Direct Energy gets the remaining 35 per cent for life-cycle support.
“The Fund generates very stable cash flow, making it ideally suited to the income trust structure,” it says. But the share price has slipped to $3.66 from a 52-week high of $10.30.
In its latest quarterly report, the fund explains what went wrong:
The attrition rate of 3.5% increased significantly from 0.9% in the prior year due to intense competition.
The Fund and Direct Energy Marketing Limited (“DE”) have initiated a range of marketing programs aimed at informing our customer base and reducing future attrition levels.
It uses the same slogan I use (“straight talk”) and has bought the rights to use several of my columns there.
Reliance Home Comfort has set up a new consumer website as well, and posted my latest column there.
I’m not thrilled to be a poster child for these campaigns, but I do hate the way that some rivals misrepresent themselves to make a sale and lock customers into long-term contracts with stiff exit fees. The tactic of installing new water heaters during the 10-day cooling off period also makes me crazy.
As usual, readers happily shared their views about the water heater wars and other issues involving Direct Energy, Reliance and Enbridge. Some comments appear below.
Several people asked me to explain the pros and cons of renting vs. buying your own water heater. I’m a renter (just lazy, I guess) and I’d like to hear from those who have bought their own tanks. As for tankless (another question asked by a few readers), my thumb’s down for now.