DBRS Comments on Consumers’ Waterheater Income Fund and Consumers’ Waterheater Operating Trust

DBRS has today noted that The Consumers’ Waterheater Income Fund (Consumers’ or the Fund) announced that it has entered into an agreement with Enbridge Gas Distribution Inc. (EGD) and Direct Energy Marketing Limited (Direct) to extend the date of termination of its existing receivables trust arrangement (RTA) from January 1, 2008, to February 1, 2008. Consumers’ also stated that the three companies (Consumers’, EGD and Direct) have agreed that essentially all terms of definitive agreements that have the effect of retaining trust arrangements substantially similar to the existing RTA have been settled and that draft agreements setting forth those terms are in final form. The Fund also stated its intention and expectation that these arrangements will be implemented and operationally effective concurrent with the termination of the existing RTA on February 1, 2008.

On November 7, 2007, DBRS placed the Fund’s stability rating Under Review with Developing Implications as well as the ratings of The Consumers’ Waterheater Operating Trust (the Operating Trust) following EGD’s notice of termination of the RTA (see the DBRS press release from that day for details). The ratings will remain Under Review with Developing Implications pending resolution of the revised trust arrangements. DBRS continues to believe that it is likely that new arrangements will be executed with structural protections substantially similar to the existing RTA, and DBRS would anticipate confirming the ratings with Stable trends if this were to occur. However, in the event that the Fund is forced to pursue alternative billing arrangements, DBRS would review the impact to the Fund unitholders and Operating Trust noteholders and assess the rating implications.