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Revenues

Total revenue of $57,169 in 2010 increased by approximately $12,400 or 28% compared to 2009. Rentals revenue for the period was impacted by the January rate increase, billing accruals and asset mix changes. Sub-metering revenues improved by $10,329 in 2010, of which approximately $9,300 was related to the acquisition of EECI.

Investment income was $107, $93 greater than in the same period in 2009 due to the combination of greater investment balances and improved investment rates.

Cost of Sales and SG&A Expenses

Cost of sales and SG&A expenses increased by $13,337 over 2009 to $21,632. Sub-metering costs increased by approximately $10,300, $9,000 of which includes ECI for the period and $1,300 on account of commodity charges and meter servicing accruals in Stratacon. Rentals and corporate costs increased by approximately $3,100 related to incentive compensation and wages of $1,100, professional fees of $700 including Conversion expenses, $900 in bad debt provisions, $200 in marketing and other expenses.

Amortization Expense

Amortization expense of $26,934 was $1,480 lower than in 2009, primarily the result of cumulative portfolio Attrition and the expiry of shorter intangible amortization periods relating to a portion of the Stratacon intangibles.

Interest Expense

In 2010, interest expense of $10,666 was $559 higher than the same period in 2009. Interest costs payable in cash were $335 higher in 2010 due primarily to the issuance of Convertible Debentures partially offset by lower bank indebtedness. The remainder of the 2010 increase is on account of the non-cash interest expense which included the costs of the 2010 debt issue and Convertible Debenture offering.

Loss on Disposal of Equipment

During 2010, approximately 33,000 units were removed and exchanged, representing a net decrease of 12,000 units or 27% over the same period in 2009. Removals were 9,000 units lower than 2009 for a reduction of approximately 33% in part due to continued marketing efforts while exchanges decreased by 3,000 units or approximately 17%. The reduction in units was the principal component of the expense decrease.

Impaired Assets

During the fourth quarter of 2009, $4,106 was recognized as a charge to earnings related to impaired intangible assets and installed equipment in the Sub-metering business. The charges were primarily as a result of notices of termination from landlords following regulatory developments in Ontario and Alberta. No charges were recorded in 2010.

Net Earnings

Earnings before income taxes in 2010 were approximately $5,500 better than 2009, as previously described. Net earnings decreased by $19,007 in 2010 primarily as a result of the favorable impact in 2009 of lower provincial tax rates in future years.

EBITDA

EBITDA improved in 2010 by $4,531 to $30,757 as a result of continued strength in Adjusted EBITDA, the impact of lower attrition and asset exchanges on loss on disposal and the absence of impairment charges.

Adjusted EBITDA

Adjusted EBITDA was $35,430, approximately $1,000 lower than 2009 due to improved revenues offset by expenses which include Conversion costs. Adjusted EBITDA in the Sub-metering business improved as a result of the acquisition of EECI which contributed approximately $300 during the period.

OUTLOOK

The Rentals business saw significant improvement in Attrition levels in the last three quarters over comparable periods in the previous year. In 2011, we intend to extend the programs that we believe were effective against Attrition in 2010, as well as aggressively pursue new programs.

The Sub-metering legislation coming into force on January 1, 2011 has resulted in increased customer interest in Sub-metering. EnerCare has increased the number of sales resources in the Sub-metering business by more than 50% since September, and intends to continue to bolster its sales capability this year to match customer opportunity.

We are very pleased with the progress made in the integration of ECI with our existing Sub-metering business. ECI was EBITDA positive in the fourth quarter of 2010, the first quarter of operations by EnerCare. At the time of purchase, we stated that EECI would be EBITDA positive within one year of acquisition. We are pleased with this progress to-date and we will continue our efforts to reduce Sub-metering operating and capital costs throughout 2011. These measures include modified processes to get the best of both Sub-metering businesses, elimination of duplicate systems and material sourcing economies.

Financial Statements and MD&A

The Fund's financial statements and management's discussion and analysis for the fourth quarter and year-ended 2010 are available at [ www.sedar.com ] or on EnerCare's investor relations website at [ http://investors.enercare.ca ].

Conference Call and Webcast

Management will host a conference call and live audio webcast to discuss The Consumers' Waterheater Income Fund's (now EnerCare) financial results for the fourth quarter and year-end of 2010 on Wednesday, February 23, 2011 at 10:00 a.m. (ET). Messrs. John Macdonald, President and CEO, and Chris Cawston, CFO, will be on the call.