Direct Energy Servicing Relationship

Direct Energy is a sales channel for EnerCare in Ontario. Their field technicians represent our products to homeowners while Direct Energy's sales force sell our products into the new home construction market. In addition, should Direct Energy successfully establish a significant base of rental water heater customers elsewhere in Canada, EnerCare has right of first refusal to acquire the portfolio.

Approximately 92% of the rental portfolio is subject to a Co-ownership Agreement with Direct Energy, under which Direct Energy and its contractors and independent franchisees service the rental portfolio assets and receive 35% of the related rental revenues. EnerCare earns the remaining 65% of the rental revenues and other payments. As a result, EnerCare's exposure to operating risk is significantly reduced.

For the remaining 7% of the rental portfolio, EnerCare earns the full revenues and incurs the operating costs to service those assets, and subcontracts with a number of entities, including Direct Energy, to service the assets, generally on a fee-for-service basis. All of the rental portfolio is located in the Province of Ontario.

Direct Energy Essential Home Services currently has access to more than 500 service technicians – certified, highly skilled personnel.

Most customers enjoy same-day service for loss-of-hot-water calls received before 6:00 p.m. and same-day water heater replacement is usually available for problems diagnosed before 4:00 p.m. – even on holidays.