Energy Savings Income Fund: Third Quarter Results for Three Months and Nine Months Ending December 31, 2005.

TORONTO -- Energy Savings Income Fund (TSX:SIF.UN):

SOLID OPERATING RESULTS
QUARTERLY RECORDS IN:
- CUSTOMER AGGREGATION - UP 52%
- NET CUSTOMER ADDITIONS - UP 132%
- SALES - UP 42%
- GROSS MARGIN - UP 23%
- DISTRIBUTABLE CASH - UP 15%
- NET INCOME - UP 88%
40,000 U.S. CUSTOMERS AGGREGATED
- THE HIGHEST OF ANY PREVIOUS QUARTER
21st DISTRIBUTION RATE INCREASE ANNOUNCED

Highlights for the third quarter ended December 31, 2005 included:

- Record levels of new customer additions. Gross customer additions were 117,000, up 15% from the prior record of 102,000 realized in Q2. Year over year, additions were up 52%. Net customer additions were 86,000 up 132% year over year.

- Sales of $328.6 million, up 42% year over year.

- Gross margin of $51.8 million, up 23% year over year.

- Premarketing distributable cash of $40.2 million ($0.38 per unit), up 15% year over year.

- Distributions of $24.3 million ($0.23 per unit), up 7% year over year.

- Net income of $13.2 million ($0.12 per unit), up 88% from $7.0 million ($0.07 per unit) year over year. For the nine months, net income was $33.7 million ($0.32 per unit), up 240% from $9.9 million ($0.09 per unit).

- Customer aggregation in Illinois and New York total 40,000, double the Q2 total of 20,000.

- In consideration of these operating results, Management announced that the Board of Directors has approved Energy Savings' 21st increase in annual distribution rate, an increase of $0.03 annually to $0.945 per unit ($0.07875 per month) effective the February distribution paid March 31, 2006.

Energy Savings Third Quarter Results

Energy Savings is an Income Fund and it reports in the attached Management's Discussion and Analysis a detailed calculation of distributable cash both before and after marketing expenditures to expand the Fund's customer base.

Energy Savings Income Fund announced its results for the three and nine months ended December 31, 2005.

---------------------------------------------------------------------
Three months ended December 31,                  Per              Per
($ millions except per Unit)            F2006   Unit     F2005   Unit
---------------------------------------------------------------------
Sales(1)                               $328.6           $231.8
---------------------------------------------------------------------
Gross Margin(1)                          51.8  $0.48      42.2  $0.40
---------------------------------------------------------------------
Distributable Cash(1)
---------------------------------------------------------------------
- Premarketing                           40.2  $0.38      34.9  $0.33
---------------------------------------------------------------------
- Post Marketing                         26.6  $0.25      23.6  $0.22
---------------------------------------------------------------------
Distributions                            24.3  $0.23      22.7  $0.21
---------------------------------------------------------------------
Long Term Customers                 1,413,000        1,201,000
---------------------------------------------------------------------
Nine months ended December 31,                   Per              Per
($ millions except per Unit)            F2006   Unit     F2005   Unit
---------------------------------------------------------------------
Sales(1)                               $862.5           $638.8
---------------------------------------------------------------------
Gross Margin(1)                         133.8  $1.25     117.8  $1.11
---------------------------------------------------------------------
Distributable Cash(1)
---------------------------------------------------------------------
- Premarketing                          104.0  $0.97      95.5  $0.90
---------------------------------------------------------------------
- Post Marketing                         68.9  $0.64      64.6  $0.61
---------------------------------------------------------------------
Distributions                            71.8  $0.67      66.1  $0.62
---------------------------------------------------------------------
Ending Annual Distribution per Unit           $0.915           $0.865
---------------------------------------------------------------------
(1) Seasonally adjusted

The third quarter of fiscal 2006 represented the third successive quarter in which the Energy Savings marketing team set a new record for customer additions. A total of 117,000 new customers were signed by our agents, 52% more than the comparable period in fiscal 2005 and 15% more than the number aggregated in Q2. Net additions of 86,000 were up 132% from the prior year. The strong net addition number includes an attrition rate of 10% and renewal rate of 80%. While there is volatility in the quarter over quarter attrition and renewal rates, management expects that fiscal 2006 results will be in line with planning expectations.

Our marketing success was marked by a sharp ramp-up in U.S. additions. Our U.S. operations generated 40,000 customers in the quarter, up from 16,000 in fiscal 2005 and double the previous quarterly record. These results were generated despite having only one office in New York. In addition to its four offices in Illinois, the Fund will have three offices in New York by the spring.

---------------------------------------------------------------------
                                     F2006     F2006            F2005
                       Published        Q3       YTD   % of        Q3
Market                    Target Additions Additions Target Additions
---------------------------------------------------------------------
Ontario - Gas             80,000    12,000    44,000    55%    21,000
---------------------------------------------------------------------
Other provinces - Gas     70,000    24,000    67,000    96%    30,000
---------------------------------------------------------------------
United States            100,000    40,000    75,000    75%    16,000
---------------------------------------------------------------------
Electricity - Canada     100,000    41,000   126,000   126%    10,000
---------------------------------------------------------------------
Total                    350,000   117,000   312,000    89%    77,000
---------------------------------------------------------------------

Overall, additions remain well ahead of pace with 312,000 customers added in nine months versus an annual target of 350,000. Total additions already exceed the record 290,000 customers signed last year and are up 39% from the total at this point last year. Management believes that the fiscal 2006 annual target will be exceeded.

Last quarter, management advised that, due to greater seasonality, the Fund's payout ratios (which were 75% premarketing and 112% post marketing after Q2) were expected to return to target levels of 65%-70% and under 100% respectively by year end. During Q3, payout ratio was 61% premarketing and 92% post marketing. Year to date, the premarketing payout ratio has moved back into the range at 69%. Post marketing is 104%. Management remains confident that both ratios will be within the target ranges at the end of the year.

Energy Savings' financial performance during Q3 was the strongest in its history. Gross margins reached record levels based on our continued customer growth. Our realized margin per new customer signed met or exceeded our target levels in every market in which we operate. Our bad debt experience in Illinois returned to expected levels reflecting a tightened customer screening process which was implemented earlier in the year. General and administrative costs ("G&A") are up 21% year to date reflecting our continued customer growth and geographic expansion. G&A costs will continue to rise as we expand our business into further New York utilities and the next target market. Despite higher costs, our distributable cash also increased to record levels both before and after marketing costs.

As most of our Unitholders would be aware, Ontario and our other key markets are experiencing warm temperatures this winter, the impact of which will be seen in Q4. While a very warm winter is the worst weather scenario for Energy Savings, any negative impact on our results is not expected to be material to our distributable cash or payout ratios.

Executive Chair Rebecca MacDonald noted: "We signed 35,000 customers in Ontario during our first full quarter as a public company in 2001 on top of a customer base of 217,000 when we went public. Fifty-one months later, we have more than one million Ontario customers, an increase of more than 800,000 in less than five years. This quarter, we added 40,000 customers in the United States, a growth rate higher than that achieved in Ontario four years into marketing. Unlike Ontario, which had a three million customer target market and 40% penetration when we went public, our near term U.S. markets have more than 18 million target customers and less than 10% penetration. As such, I believe that the U.S. has every bit the same or more potential as Ontario had for Energy Savings."

CEO Brennan Mulcahy stated: "Management is encouraged by the continued record breaking customer growth seen in Q3. In our first fiscal year of operation (F2002), we added approximately 120,000 customers. We have just added effectively the same number of customers in a single quarter. And we see no reason why our growth will end. As our quarterly report details, our record customer growth has also resulted in record gross margin, distributable cash and net earnings this quarter. And to paraphrase Rebecca, I don't think you have seen the last record. Energy Savings is well positioned for a bright future."

"In our Second Quarter Report, I provided updated guidance indicating that management expects our margin to grow between 15% and 20% this year and that our premarketing distributable cash should grow by slightly more than 20% for this fiscal year. As highlighted above, the extremely warm winter weather across our markets will result in meaningfully lower customer gas consumption this winter. This, in turn, results in lost margin on the underconsumed gas. Barring a substantially colder than normal February, we would modify our expectations to slightly less than 15% gross margin growth but maintain our expectation of slightly more than 20% distributable cash growth for the fiscal year. Despite the vagaries of unpredictable weather, Energy Savings remains dependable in maintaining its position as a high growth Income Fund."

Ms. MacDonald added: "This has been a very solid quarter for Energy Savings. Consistent with our policy of translating higher customer counts into higher distributable cash and higher distributions, I am pleased to announce our 21st increase in our annual distribution rate. The rate will move to $0.945 per unit ($0.07875 per month) effective our payment made on March 31, 2006. I want to thank all our Unitholders for their continued support."

The Fund

Energy Savings' business, which is conducted in Ontario, Manitoba, Alberta, Quebec, British Columbia, Illinois and New York, involves the sale of natural gas to residential, small to mid-size commercial and small industrial customers under long term, irrevocable fixed price contracts. Energy Savings also supplies electricity to Ontario, Alberta and New York customers. By fixing the price of natural gas or electricity under its fixed price contracts for a period of up to five years, Energy Savings' customers offset their exposure to changes in the price of these essential commodities. Energy Savings, which commenced business in July of 1997, derives its margin or gross profit from the difference between the fixed price at which it is able to sell the commodities to its customers and the fixed price at which it purchases the matching volumes from its suppliers.

Non GAAP Measures

Management believes the best basis for analyzing both the Fund's operating results and the amount available for distribution is to focus on amounts actually received ("seasonally adjusted"). Seasonally adjusted analysis applies solely to the Canadian gas market (excluding Alberta). In Canada (excluding Alberta), Energy Savings receives payment from the LDCs upon delivery of the commodity not when the customer actually consumes the gas. Seasonally adjusted analysis eliminates seasonal commodity consumption variances and recognizes amount available for distribution based on cash received from the LDCs.

Forward-Looking Statements

The Fund's press releases may contain forward-looking statements including statements pertaining to customer revenues and margins, customer additions and renewals, customer consumption levels, distributable cash and treatment under governmental regulatory  regimes. These statements are based on current expectations that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated. These risks include, but are not limited to, levels of customer natural gas and electricity consumption, rates of customer additions and renewals, fluctuations in natural gas and electricity prices, changes in regulatory regimes and decisions by regulatory authorities, competition and dependence on certain suppliers. Additional information on these and other factors that could affect the Fund's operations, financial results or distribution levels are included in the Fund's annual information form and other reports on file with Canadian securities regulatory authorities which can be accessed through the SEDAR website at www.sedar.com or through the Fund's website at www.esif.ca.

MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A") - February 1, 2006

The following discussion and analysis is a review of the financial condition and results of operations of Energy Savings Income Fund ("Energy Savings" or the "Fund") for the nine months ended December 31, 2005. This analysis should be read in conjunction with the unaudited interim consolidated financial statements for the nine months ended December 31, 2005 as well as the audited consolidated financial statements and related MD&A contained in the 2005 Annual Report. The financial information contained herein has been prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"). Unless indicated otherwise, all dollar amounts are expressed in Canadian dollars. Quarterly reports, the annual report and supplementary information can be found under "reports and filings" on our corporate web site at www.esif.ca. Additional information can be found on SEDAR at www.sedar.com.

Energy Savings is an open-ended, limited-purpose trust established under the laws of Ontario to hold securities and to distribute the income of its directly or indirectly wholly owned operating subsidiaries and affiliates: Ontario Energy Savings Corp. ("OESC"), Ontario Energy Savings L.P. ("OESLP"), Energy Savings (Manitoba) Corp. ("ESMC"), Energy Savings (Quebec) L.P. ("ESPQ"), ES (B.C.) Limited Partnership ("ESBC"), Alberta Energy Savings L.P. ("AESLP"), U.S. Energy Savings Corp. ("USESC"), Illinois Energy Savings Corp. ("IESC"), and New York Energy Savings Corp. ("NYESC"). Through its affiliates and subsidiaries, Energy Savings markets natural gas to residential customers and small to mid-sized commercial businesses in Ontario, Manitoba, Alberta, Illinois and New York as well as solely to commercial customers in Quebec and British Columbia. Energy Savings also markets electricity to residential and small to mid-sized commercial customers in Ontario, Alberta and New York. On August 1, 2005, Energy Savings began marketing both natural gas and electricity under OESLP in the Province of Ontario.

The Fund meets the estimated energy requirements of its customers by purchasing matching volumes of gas and electricity. Customers eliminate their exposure to price escalations and the Fund locks in its margins by entering into long-term, fixed price contracts for gas and electricity supply.

Forward-Looking Information

This MD&A contains certain forward-looking information statements pertaining to customer additions and renewals, customer consumption levels, distributable cash and treatment under governmental regulatory regimes. These statements are based on current expectations that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated. These risks include, but are not limited to, levels of customer natural gas and electricity consumption, rates of customer additions and renewals, fluctuations in natural gas and electricity prices, changes in regulatory regimes and decisions by regulatory authorities, competition and dependence on certain suppliers. Additional information on these and other factors that could affect the Fund's operations, financial results or distribution levels are included in the Fund's annual information form and other reports on file with Canadian security regulatory authorities which can be accessed on our corporate website at www.esif.ca or through the SEDAR website at www.sedar.com.

Key terms

"LDC" means local distribution company, the natural gas or electricity distributor for a regulatory or governmentally defined geographic area.

"Long-term Customers" represents customers that meet management's required margin thresholds and therefore expect to have the opportunity to renew at the end of their contract. "Customers not expected to renew" are generally large volume and/or low margin customers who are not part of Energy Savings' target market.

"RCE" means Residential Customer Equivalent or the "Customer" which is a unit of measurement equivalent to a customer using, as regards natural gas, 2,815 m3 (or 106 GJs) of natural gas on an annual basis and, as regards electricity, 10,000 kWh of electricity on an annual basis, which represents the approximate amount of gas and electricity, respectively, used by a typical Ontario household.

Financial Highlights
--------------------
For the three months ended December 31
(Thousands of dollars except where indicated and per unit amounts)

                                         2005          2004
                                            Per           Per
                                        $  Unit      $   Unit Change
Amount available for distribution(1)
 - Premarketing                    40,212 $0.38 34,930  $0.33     15%
 - Post marketing                  26,582 $0.25 23,603  $0.22     13%

Distributions                      24,333 $0.23 22,691  $0.21      7%
Payout Ratio
 - Premarketing                        61%          65%
 - Post marketing                      92%          96%

(1) See "Distributable cash and cash distributions"


For the nine months ended December 31
(Thousands of dollars except where indicated and per unit amounts)

                                         2005          2004
                                            Per           Per
                                       $   Unit      $   Unit Change
Amount available for distribution(1)
 - Premarketing                  103,967  $0.97 95,524  $0.90      9%
 - Post marketing                 68,907  $0.64 64,559  $0.61      7%

Distributions                     71,839  $0.67 66,146  $0.62      9%
Payout Ratio
 - Premarketing                       69%           69%
 - Post marketing                    104%          102%

(1) See "Distributable cash and cash distributions"

Non GAAP Financial Measures

Seasonally Adjusted Gross Margin

Management believes the best basis for analyzing both the Fund's operating results and the amount available for distribution is to focus on amounts actually received ("seasonally adjusted"). Seasonally adjusted gross margin is not a defined performance measure under Canadian GAAP. Seasonally adjusted analysis applies solely to the Canadian gas market (excluding Alberta). In Canada (excluding Alberta), Energy Savings receives payment from the LDCs upon delivery of the gas, not when the customer actually consumes the gas. Seasonally adjusted analysis eliminates seasonal commodity consumption variances and recognizes amount available for distribution based on cash received from the LDCs.

In Alberta, Illinois and New York, Energy Savings receives cash from the LDC only when the customer has paid the LDC for the consumed gas. Cash flows are greatest in the Fund's third and fourth quarters (the winter quarters) as natural gas cashflow is typically received from the LDC in the month following the month of customer consumption. It is important to note that, as Energy Savings' business grows in Alberta and in the U.S., the Fund's results will reflect greater seasonality. While year over year quarterly comparisons will remain appropriate, sequential quarters will vary materially. The main impact of this will be higher distributable cash with a lower payout ratio in Q3 and Q4 and lower distributable cash with a higher payout ratio in Q1 and Q2.

No seasonal adjustment is required for electricity as accounts are automatically balanced daily. In real time, any excess/shortfall is immediately settled in the open market. Electricity customers' consumption will be greatest during the summer (Q2) and winter quarters (Q4).

Distributable cash

Distributable cash is not a defined term under Canadian GAAP. It refers to the net cash received by the Fund that is available for distributions to Unitholders. Seasonally adjusted gross margin is the principal contributor to cash available for distribution. Distributable cash is calculated by the Fund as seasonally adjusted gross margin, adjusted for cash items including general and administrative expenses, marketing expenses, capital tax, bad debts, other income/expense and corporate taxes. Management believes that distributable cash is the most useful measure of performance as it provides investors with an indication of the amount of cash available for distribution to Unitholders. This non-GAAP measure may not be comparable to other income funds.

Distributable Cash and Cash Distributions
-----------------------------------------
For the three months ended December 31
(Thousands of dollars except per unit amounts)

                                         2005            2004
                                         ----            ----
                                                 Per             Per
                                                Unit            Unit
                                                ----            ----
Cash Available for Distribution
Gross margin per financial statements $50,394         $39,702
Adjustments required to reflect net
 cash receipts from gas sales           1,381           2,536
                                      --------        --------
Seasonally adjusted gross margin      $51,775  $0.48  $42,238  $0.40
                                      --------        --------
General and administrative             (9,271)         (6,979)
Capital tax (expense) recovery           (207)              3
Bad debts                              (1,300)            (62)
Corporate tax provision(1)               (714)           (352)
Other (expense) income(2)                 (71)             82
                                      --------        --------
                                      (11,563)         (7,308)
                                      --------        --------
Cash available for distribution
 before marketing expenses            $40,212  $0.38  $34,930  $0.33
Marketing expenses                    (13,630)        (11,327)
                                      --------        --------
Cash available for distribution       $26,582  $0.25  $23,603  $0.22
                                      --------        --------
                                      --------        --------

Reconciliation to Statements of
 Cash Flow
Cash inflow from operations            $1,230         $22,701
Add:
Increase in non-cash working capital   24,512             109
Tax effect on distributions paid to
 the holders of Class A preference
 shares                                   840             793
                                      --------        --------
                                      $26,582         $23,603
                                      --------        --------
                                      --------        --------

Distributions
Unitholder distributions              $21,934         $20,483
Class A preference share
 distributions                          2,326           2,197
Unit appreciation rights distributions     70              11
                                      --------        --------
                                       24,330          22,691
Non-cash distributions - deferred
 unit grants                                3               -
                                      --------        --------
Total distributions                   $24,333  $0.23  $22,691  $0.21
                                      --------        --------
                                      --------        --------
Diluted average number of units
 outstanding                                   107.0m          106.4m


For the nine months ended December 31
(Thousands of dollars except per unit amounts)

                                         2005            2004
                                         ----            ----
                                                 Per              Per
                                                Unit             Unit
                                                ----             ----
Cash Available for Distribution
Gross margin per financial
 statements                          $110,620         $93,365
Adjustments required to reflect net
 cash receipts from gas sales          23,162          24,395
                                     ---------       ---------
Seasonally adjusted gross margin     $133,782  $1.25 $117,760   $1.11
                                     ---------       ---------
General and administrative            (26,072)        (21,492)
Capital tax                              (621)           (497)
Bad debts                              (3,478)            (84)
Corporate tax provision (recovery)(1)     456            (518)
Other (expense) income(2)                (100)            355
                                     ---------       ---------
                                      (29,815)        (22,236)
                                     ---------       ---------
Cash available for distribution
 before marketing expenses           $103,967  $0.97  $95,524   $0.90
Marketing expenses                    (35,060)        (30,965)
                                     ---------       ---------
Cash available for distribution       $68,907  $0.64  $64,559   $0.61
                                     ---------       ---------
                                     ---------       ---------

Reconciliation to Statements of
 Cash Flow
Cash inflow from operations           $37,932         $52,710
Add:
Increase in non-cash working capital   28,492           9,366
Tax effect on distributions paid to
 the holders of Class A preference
 shares                                 2,483           2,483
                                     ---------       ---------
                                      $68,907         $64,559
                                     ---------       ---------
                                     ---------       ---------

Distributions
Unitholder distributions              $64,767         $59,239
Class A preference share
 distributions                          6,875           6,875
Unit appreciation rights distributions    189              32
                                     ---------       ---------
                                       71,831          66,146
Non-cash distributions - deferred
 unit grants                                8               -
                                     ---------       ---------
Total distributions                   $71,839  $0.67  $66,146   $0.62
                                     ---------       ---------
                                     ---------       ---------

Diluted average number of units
 outstanding                                   106.9m          106.2m

(1) The prior comparative quarter utilized the deduction of
    acquisition costs to reduce taxable income. As a result, the
    corporate tax amounts of prior quarters relate solely to large
    corporation tax ("LCT"). The current year provision is a result
    of LCT and represents a recovery of a portion of the income
    taxes paid in fiscal 2005.

(2) Other income relates to interest earned on investments. Other
    expense relates to interest and other bank service charges.


Sales and Gross Margin Analysis
-------------------------------

Sales and Gross Margin - Per Financial Statements
For the three months ended December 31
(thousands of dollars)

                               2005                     2004
                               ----                     ----

Sales                        United                   United
-----                Canada  States    Total   Canada States    Total

Gas                $175,366 $31,729 $207,095 $136,415 $7,344 $143,759
Electricity         112,326   1,740  114,066   69,890      -   69,890
---------------------------------------------------------------------
                   $287,692 $33,469 $321,161 $206,305 $7,344 $213,649
---------------------------------------------------------------------
Increase                39%  NMF(1)      50%


Gross Margin                 United                   United
------------         Canada  States    Total   Canada States    Total

Gas                 $35,021  $7,009  $42,030  $28,320 $1,386  $29,706
Electricity           8,195     169    8,364    9,996      -    9,996
---------------------------------------------------------------------
                    $43,216  $7,178  $50,394  $38,316 $1,386  $39,702
---------------------------------------------------------------------
Increase                13%  NMF(1)      27%


Sales and Gross Margin - Per Financial Statements
For the nine months ended December 31
(thousands of dollars)

                               2005                     2004
                               ----                     ----

Sales                        United                   United
-----                Canada  States    Total   Canada States    Total

Gas                $384,173 $44,372 $428,545 $313,656 $8,688 $322,344
Electricity         305,292   1,778  307,070  191,668      -  191,668
---------------------------------------------------------------------
                   $689,465 $46,150 $735,615 $505,324 $8,688 $514,012
---------------------------------------------------------------------
Increase                36%  NMF(1)      43%


Gross Margin                 United                   United
------------         Canada  States    Total   Canada States    Total


Gas                 $74,351  $8,716  $83,067  $63,621 $1,647  $65,268
Electricity          27,367     186   27,553   28,097      -   28,097
---------------------------------------------------------------------
                   $101,718  $8,902 $110,620  $91,718 $1,647  $93,365
---------------------------------------------------------------------
Increase                11%  NMF(1)      18%
(1) Not Meaningful Figure

Canada

Sales were $287.7 million for the quarter, up 39% from $206.3 million in the third quarter of fiscal 2005. Margins were $43.2 million for the quarter, an increase of 13% from the same quarter in the previous year. Refer to "Sales and Gross Margin - Seasonally Adjusted" for further details.

The increase in gross margin over the same comparable period is primarily attributable to the increase in customer base. Refer to "Sales and Gross Margin - Seasonally Adjusted" for further details.

Sales for the nine months ended December 31, 2005 were $689.5 million, an increase of 36% from $505.3 million in the prior comparative period.

United States

Sales and margins were $33.5 million and $7.2 million for the quarter, respectively. Sales and margins for the nine months were $46.2 million and $8.9 million, respectively. The increase in sales and margin reflects the growth in customer base over the past year. For additional information, see "Sales and Gross Margin - Seasonally Adjusted".

Sales and Gross Margin - Seasonally Adjusted(1)
For the three months ended December 31
(thousands of dollars)


                               2005                     2004
                               ----                     ----

Sales                        United                   United
-----                Canada  States    Total   Canada States    Total

Gas                $175,366 $31,729 $207,095 $136,415 $7,344 $143,759
Adjustments           7,403       -    7,403   18,152      -   18,152
---------------------------------------------------------------------
                    182,769  31,729  214,498  154,567 $7,344 $161,911
Electricity         112,326   1,740  114,066   69,890      -   69,890
---------------------------------------------------------------------
                   $295,095 $33,469 $328,564 $224,457 $7,344 $231,801
---------------------------------------------------------------------
Increase                31%  NMF(2)      42%


Gross Margin                 United                   United
------------         Canada  States    Total   Canada States    Total


Gas                 $35,021  $7,009  $42,030  $28,320 $1,386  $29,706
Adjustments           1,381       -    1,381    2,536      -    2,536
---------------------------------------------------------------------
                     36,402   7,009   43,411   30,856  1,386   32,242
Electricity           8,195     169    8,364    9,996      -    9,996
---------------------------------------------------------------------
                    $44,597  $7,178  $51,775  $40,852 $1,386  $42,238
---------------------------------------------------------------------
Increase                 9%  NMF(2)      23%


Sales and Gross Margin - Seasonally Adjusted(1)
For the nine months ended December 31
(thousands of dollars)

                               2005                     2004
                               ----                     ----

Sales                        United                   United
-----                Canada  States    Total   Canada States    Total

Gas                $384,173 $44,372 $428,545 $313,656 $8,688 $322,344
Adjustments         126,883       -  126,883  124,828      -  124,828
---------------------------------------------------------------------
                    511,056  44,372  555,428  438,484 $8,688 $447,172
Electricity         305,292   1,778  307,070  191,668      -  191,668
---------------------------------------------------------------------
                   $816,348 $46,150 $862,498 $630,152 $8,688 $638,840
---------------------------------------------------------------------
Increase                30%  NMF(2)      35%


Gross Margin                 United                   United
------------         Canada  States    Total   Canada States    Total


Gas                 $74,351  $8,716  $83,067  $63,621 $1,647  $65,268
Adjustments          23,162       -   23,162   24,395      -   24,395
---------------------------------------------------------------------
                     97,513   8,716  106,229   88,016  1,647   89,663
Electricity          27,367     186   27,553   28,097      -   28,097
---------------------------------------------------------------------
                   $124,880  $8,902 $133,782 $116,113 $1,647 $117,760
---------------------------------------------------------------------
Increase                 8%  NMF(2)      14%

(1) for Canadian gas excluding Alberta

(2) Not Meaningful Figure

On a seasonally adjusted basis, sales were $328.6 million for the quarter, up 42% from $231.8 million in fiscal 2005. Margins were $51.8 million for the quarter, up 23% from the third quarter of fiscal 2005. The increase in sales for both gas and electricity is directly attributable to the increase in customer base and average customer sales price as well as balancing adjustments. Balancing results in two effects: either excess or short gas inventory.

Canada

Sales were $295.1 million for the quarter, up 31% from $224.5 million in the third quarter of fiscal 2005. Margins were $44.6 million for the quarter, an increase of 9% from the same quarter in the previous year.

Gas sales and margin both increased by 18% over the prior comparable quarter. The increase in sales is directly attributable to the increase in both customer base and average customer sales price. Customer margins increased from the prior comparative quarter primarily as a result of a 7% increase in the customer base. In addition, temperatures in Alberta were approximately 13% warmer than normal which resulted in consumption being lower than forecast. As a result, balancing inventory sales increased gross margin by $1.2 million as a result of high gas prices.

Electricity sales increased by 61%, which is directly attributable to the increase in customer base from the prior year. Margins decreased by 18% from the prior comparable quarter due to low margins realized on the customer contracts acquired from First Source Energy Corp. and EPCOR Utilities Inc. As discussed in Q2, the majority of these contracts are load following, resulting in Energy Savings bearing the risk and benefits of fluctuations in customer consumption. These contracts represent 11% of Energy Savings' electricity volumes and have an average remaining life of 1.5 years.

Sales for the nine months ended December 31, 2005 were $816.3 million, an increase of 30% from $630.2 million in the prior comparative period. Margins for the nine months were $124.9 million, an increase of 8% from $116.1 million in the prior comparative period. The increase in sales and margin for the nine months ended December 31, 2005 over the prior comparable period is primarily attributable to the increase in customer base, partially offset by the higher supply costs and low margin on the acquired books, specifically the load following electricity contracts.

Customers aggregated during the period will generate margins at or above Energy Savings' average annual target margins of $170/RCE for gas and $100/RCE for electricity, over the life of the contract.

United States

Sales and margins were $33.5 million and $7.2 million for the quarter. Sales and margins for the nine months were $46.2 million and $8.9 million, respectively.

The increase in gas sales and margin was primarily a result of the increase in long-term customers. In addition, during the quarter Energy Savings sold options for a gain of $1.8 million. Recent changes made by Nicor to their storage requirements provided greater flexibility allowing gas options originally purchased to mitigate  usage fluctuations by our customers to be sold while maintaining effective commodity risk control. Energy Savings' U.S. gas book remains effectively hedged through the use of gas options supplementing physical supply to mitigate risk.

Electricity sales and margins were $1.8 million and $0.2 million, respectively, as marketing efforts continued to ramp up in the State of New York.

No seasonal adjustment is required for the U.S. as Energy Savings is paid on consumption. As a result seasonally adjusted margins are the same as on a financial statement basis.

Customers aggregated during the period will generate margins at or above Energy Savings' average annual target margins of $140/RCE for gas and $100/RCE for electricity, over the life of the contract. The $140 target margin in Illinois includes an allowance for anticipated bad debt expense.

Distributable Cash

Premarketing distributable cash for the quarter was $40.2 million ($0.38 per unit), an increase of 15% from $34.9 million ($0.33 per unit) in the third quarter of fiscal 2005. The increase is primarily attributable to the increase in gross margin, offset by the increase in general and administrative expenditures, bad debts and taxes. As a result of a corporate reorganization which took effect on August 1, 2005 (See "Proposed Reorganization"), Energy Savings anticipates to pay minimal tax during the current fiscal year. Premarketing distributable cash for the nine months ended December 31, 2005 was $104.0 million ($0.97 per unit), an increase of 9% from $95.5 million for the prior comparable period.

Distributable cash after marketing expenses was $26.6 million for the quarter, an increase of 13% from $23.6 million in the prior comparable quarter. The increase is directly attributable to the increase in gross margin offset by the higher general and administrative expenditures and bad debts as outlined below (see "General and administrative expenses" and "Bad debt expense"). Marketing expenses increased by 20% over the prior comparative quarter despite the fact that aggregated customers increased by 52% as 35% of new customers were electricity additions versus only 13% in the comparable quarter. The aggregation costs for electricity customers are substantially lower than the aggregation costs for gas customers resulting in lower marketing costs. Cash flow from these new customers is realized two to six months after signing, depending on the market. Distributable cash after marketing expenses for the nine months ended December 31, 2005 was $68.9 million, an increase of 7% from $64.6 million in the prior comparable period.

The payout ratio before marketing expense was 61% for the quarter versus 65% for the prior comparative quarter. After marketing expenses, the payout ratio was 92% for the quarter versus 96% for the comparable quarter. The payout ratios before marketing expenses for the nine months ended December 31, 2005 was 69%, consistent with the prior comparable period while payout ratios after marketing expenses were 104%, versus 102% for the prior comparable period.

As Energy Savings continues to expand its business in Alberta as well as the U.S. markets, seasonality will have a greater impact on the quarterly payout ratios. In these markets impacted by seasonality, it is anticipated that 65 - 70% of its margin will be recognized in the second half of the fiscal year, based on expected consumption patterns. As was discussed in the previous quarter, seasonality of revenues and margins will be increasingly evident in Q3 and Q4. Management remains confident that the payout ratios on an annual basis will be within the target ranges of 65 - 70% (premarketing) and less than 100% (post marketing) respectively.

Net income
----------

Reconciliation to                Three months            Nine months
 Statement of Operations               ending                 ending
                                  December 31            December 31
                              2005       2004        2005       2004
---------------------------------------------------------------------
Cash available for
 distribution              $26,582    $23,603     $68,907    $64,559
  Adjustments required
   to reflect net cash
   receipts from sales      (1,381)    (2,536)    (23,162)   (24,395)
  Items not affecting cash (11,144)   (13,231)     (9,524)   (27,744)
  Tax effect on
   distributions paid to
   holders of Class A
   preference shares          (840)      (793)     (2,483)    (2,483)
---------------------------------------------------------------------
Net income                 $13,217     $7,043     $33,738     $9,937
---------------------------------------------------------------------
---------------------------------------------------------------------

Energy Savings had net income for the three and nine months ended December 31, 2005 of $13.2 million (2004 - $7.0 million) and $33.7 million (2004 - $9.9 million), respectively. Net income has increased over the prior comparative quarter as a result of the higher gross margins largely resulting from an increase in long-term customers offset by increases in general and administrative costs as well as marketing expenditures to fund the customer base expansion. For additional information, see "Sales and Gross Margin - Seasonally Adjusted".

Summary of Quarterly Results
----------------------------
(thousands of dollars except per unit amounts)

                                             F2006              F2005
------------------------------------------------------------ --------
                                      Q3        Q2        Q1       Q4
                                --------  --------  -------- --------
Sales per financial statements  $321,161  $180,049  $234,405 $406,901
Net income                        13,217     9,396    11,125   27,268
Net income per unit - Basic        $0.12     $0.09     $0.11    $0.26
Net income per unit - Diluted       0.12      0.09      0.10     0.26
Amount available for distribution
 - Premarketing                  $40,212   $31,491   $32,264  $28,483
 - Post marketing                 26,582    20,760    21,565   19,454
Payout ratio
 - Premarketing                      61%       76%       73%      81%
 - Post marketing                    92%      116%      109%     118%

                                             F2005              F2004
----------------------------------------------------------- ---------
                                    Q3         Q2        Q1       Q4
                              --------   --------  -------- ---------
Sales per financial
 statements                   $213,649   $114,290  $186,073 $312,905
Net income (loss)                7,043     (2,754)    5,648   22,724
Net income (loss) per unit
 - Basic                         $0.07     $(0.03)    $0.05    $0.22
Net income (loss) per unit
 - Diluted                        0.07      (0.03)     0.05     0.21
Amount available for distribution
 - Premarketing                $34,930    $32,769   $27,825  $28,878
 - Post marketing               23,603     22,094    18,862   22,505
Payout ratio
 - Premarketing                     65%        68%       77%      70%
 - Post marketing                   96%       100%      113%      90%

Energy Savings' operations are seasonal. Gas consumption is typically highest in the third and fourth quarters while electricity consumption is highest in second and fourth quarters. As a result, quarter over quarter comparisons are a more reliable basis for analysis than sequential quarter comparisons, as results from quarter to quarter may vary materially due to seasonality.

Long-term Customers
For the three months ended December 31, 2005

                -----------------------------------------------------
Canada             Begin-    Addi-       Attri-  Failed To     Ending
                     ning    tions      tion(1)   Renew(2)
                -----------------------------------------------------
Gas
Ontario           622,000   12,000     (17,000)    (3,000)    614,000
Other markets(3)  156,000   24,000      (3,000)         -     177,000
---------------------------------------------------------------------
Total - Gas       778,000   36,000     (20,000)    (3,000)    791,000
Electricity(4)    475,000   41,000      (6,000)         -     510,000
---------------------------------------------------------------------
Total Canada    1,253,000   77,000     (26,000)    (3,000)  1,301,000
---------------------------------------------------------------------

United States(5)   74,000   40,000      (2,000)         -     112,000
---------------------------------------------------------------------

Combined        1,327,000  117,000     (28,000)    (3,000)  1,413,000
---------------------------------------------------------------------
---------------------------------------------------------------------

(1) Attrition - Customers whose contracts were automatically terminated primarily due to relocation or death, or cancelled by Energy Savings due to delinquent accounts

(2) Failed to Renew - Customers who did not renew expiring contracts at the end of their term.

(3) Includes Quebec, British Columbia, Manitoba and Alberta.

(4) Includes Ontario and Alberta

(5) Includes Illinois and New York for gas and New York for electricity

The marketing results for this quarter were another record for Energy Savings. Overall, 117,000 RCEs were aggregated during the quarter, an increase of 15% over the second quarter of fiscal 2006 and 52% over the comparable quarter in fiscal 2005.

Customers Not Expected to Renew

In addition to the long-term customers, Energy Savings has an additional 123,000 customers (18,000 gas and 105,000 electricity), a decrease from 167,000 at the end of Q2, which were acquired through various acquisitions of customer contracts. Management does not anticipate that these customers will renew upon expiration of their contract. These customers generate substantially less margin than is typically realized on customers aggregated by Energy Savings and on average have approximately 1.5 years remaining until the end of their contract.

Attrition

Overall attrition was 10% on an annualized basis, which remains consistent with the rate used for internal planning purposes.

Attrition levels in the Illinois market are expected to be higher than those historically experienced in the Canadian markets. This higher attrition is primarily due to customer terminations by Energy Savings for delinquent accounts. Based on results to date, it is anticipated that the attrition in Illinois will remain at approximately 15%, higher than the Canadian markets. The increase is attributable to customers being dropped as a result of delinquency  thereby minimizing bad debt expense.

Failed to Renew

A total of 3,000 long-term customers failed to renew during the quarter. This level of renewals was consistent with Energy Savings' target renewal rate of 80% of its long-term customers. These renewals are realized through various marketing efforts and management estimates that the Fund incurs a cost of $40 per contract renewal. For additional information, see "Renewals".

Gross Additions (excluding acquisitions)

Energy Savings' published targets for fiscal 2006 were gross customer additions excluding acquisitions of 350,000. The following table shows the aggregation to date compared with these targets.

%
                                                                 Real-
                                                           Publ- ized

Gross Customer         Q1       Q2       Q3       YTD     ished    To
 Additions          F2006    F2006    F2006     F2006    Target  Date
---------------------------------------------------------------------

Canada
Gas
Ontario            17,000   15,000   12,000    44,000    80,000   55%
Other markets(1)   21,000   22,000   24,000    67,000    70,000   96%
---------------------------------------------------------------------
Total - Gas        38,000   37,000   36,000   111,000   150,000   74%
Electricity(2)     40,000   45,000   41,000   126,000   100,000  126%
---------------------------------------------------------------------
Total Canada       78,000   82,000   77,000   237,000   250,000   95%

United States(3)   15,000   20,000   40,000    75,000   100,000   75%
---------------------------------------------------------------------

Combined           93,000  102,000  117,000   312,000   350,000   89%
---------------------------------------------------------------------
---------------------------------------------------------------------

(1) Includes Quebec, British Columbia, Manitoba and Alberta

(2) Includes Ontario and Alberta

(3) Includes Illinois and New York for gas and New York for electricity

Canada

Gas

Total gross gas customer additions in Canada for the third quarter were 36,000, bringing the total additions to 111,000. Although Ontario additions continue to be behind target due to the concentration of efforts on the electricity market, the marketing efforts in the rest of the Canadian markets has compensated for this shortfall, resulting in the total number of gas customer additions being on track with 74% of the published annual target realized.

The Canadian gas customers added through marketing efforts during the period were matched with supply to generate margins at or above Energy Savings' average annual target margin of $170/RCE over the life of the contract.

It is anticipated that the Alberta market will continue to be the primary contributor to net gas customer growth. Growth in the Ontario gas market is expected to replace attrition and customers not renewing although, in fiscal 2006, additions are expected to be lower than the number of customers lost through attrition and failure to renew in Ontario due to the concentration of efforts on electricity marketing, which is ahead of pace.

Electricity

Total electricity additions were 41,000 for the quarter, bringing the total additions to 126,000, surpassing the annual published target by 26% with one quarter of marketing remaining. Energy Savings began offering five-year fixed price contracts in Ontario to small commercial customers in Ontario in May 2005 and residential customers in December 2005.

The electricity customers signed during the quarter were matched with supply to generate margins expected to be at or above Energy Savings' average annual target margin of $100/RCE over the life of the contract.

United States

Energy Savings aggregated 40,000 RCEs in the U.S. markets during the quarter, bringing the total additions to date to 75,000 (75% of published target). Energy Savings continues to ramp up its marketing efforts in the U.S., with approximately 185 independent sales agents at the end of December. A second sales office in the city of New York is expected to be opened during the fourth quarter with a third expected to open in the spring.

The gas and electricity customers signed during the quarter were matched with supply to generate margins at or above the Energy Savings' average annual target margin of $140/RCE and $100/RCE, respectively, over the life of the contract.

Renewals

The marketing program aimed at maximizing the number of customers which renew at the end of their contract continues to achieve results consistent with expectations. Based on our experience to date and the marketing program, management continues to use an 80% renewal target for planning purposes.

General and administrative expenses

General and administrative costs were $9.3 million (2004 - $7.0 million) and $26.1 million (2004 - $21.5 million) for the three and nine months ended December 31, 2005, an increase of 33% and 21%, respectively from the prior comparative period. These costs were up 9% from Q2 reflecting an increase in customer service support as a result of our increased customer aggregation in addition to a one-time executive severance payment.

Unit based compensation

Compensation in the form of units (non-cash) granted by the Fund to the directors, officers, full-time employees and service providers of its subsidiaries and affiliates pursuant to the 2001 Unit Option Plan, the 2004 Unit Appreciation Rights Plan and the Directors' Deferred Compensation Plan amounted to $1.9 million (2004 - $0.7 million) and $3.9 million (2004 - $2.2 million) for the three and nine months ended December 31, 2005.

Marketing expenses

Marketing expenses, which primarily consist of commissions paid to independent sales agents upon signing new customers, were $13.6 million (2004 - $11.3 million) and $35.1 million (2004 - $31.0 million) for the three and nine months ended December 31, 2005. The increase is primarily attributable to the 39% increase in customers aggregated year to date. The increase in marketing expense was lower than the increase in customers aggregated because electricity accounted for 35% of the customers aggregated in the quarter and 40% year to date versus 13% and 20%, respectively in the prior year.

Bad debt expense

In Illinois and Alberta, Energy Savings assumes the credit risk associated with the collection of its customers accounts. Credit review processes have been put in place for these markets to manage the customer default rate. Management factors default from credit risk in its margin expectations for both Illinois and Alberta.

Bad debt expense provided for the three and nine months ended December 31, 2005 was $1.3 million and $3.5 million, respectively. In Illinois and Alberta, revenue amounted to $65.3 million (2%) and $117.6 million (3%) for the three and nine months ended December 31, 2005, respectively. The rate of 3% for the nine months reflects bad debts associated with prior year's winter for which the full impact has been recognized. In prior year, management based its estimate on the historical Nicor rate of 1.1% which did not reflect a higher default rate associated with the winter season. It is anticipated that the bad debts expense will be approximately 1.5%-2.0% of annual revenue earned in both Illinois and Alberta. This default rate is consistent with recent utility experience in both of these markets.

For Energy Savings' other markets, the LDCs provide collection services and assume the risk of any bad debt owing from Energy Savings' customers.

Interest expense

As at December 31, 2005, Energy Savings had utilized $35.7 million of its operating line for working capital needs. In addition to utilization of the operating line, a total of $5.7 million in letters of credit have been issued. The operating line bears interest at bank prime plus 0.5% and letters of credit bear interest at 1.5%. Total interest expense amounted to $0.4 million for the nine months ended December 31, 2005 (2004 - $0.07 million).

Foreign exchange

Energy Savings has an exposure to foreign currency exchange rates as a result of its investment in U.S. operations. Changes in the applicable exchange rate may result in a decrease or increase in income. A non cash loss of $0.09 million (2004 - $0.5 million) and $0.4 million (2004 - $0.6 million) was recognized during the three and nine months ended December 31, 2005.

Income taxes provision (recovery)

The recovery of income taxes for the three and nine months ended December 31, 2005 amounted to $1.1 million and $6.8 million, respectively. The balance is a culmination of a reduction in the future income tax liability as well as a small recovery of corporate taxes paid relating to fiscal 2005. The decrease in the future tax liability is attributable to the decrease in the difference between the tax and accounting cost basis for the acquired gas and electricity contracts. The majority of these assets are deducted for tax at a rate greater than that for accounting.

Liquidity

Summary of                    Three months               Nine months
 Cash Flows                         ending                    ending
 (thousands                    December 31               December 31
  of dollars)             2005        2004        2005          2004
                       ----------------------------------------------
Operating activities    $1,230     $22,701     $37,932       $52,710
Investing activities      (793)    (12,048)     (9,379)      (14,391)
Financial activities,
 excluding
 distributions          27,553       2,714      39,939         9,666
Loss on foreign
 exchange                 (214)       (526)       (481)         (623)
                       ----------------------------------------------
Increase in cash
 before distributions   27,776      12,841      68,011        47,362
Distributions
 (cash payments)       (24,326)    (22,669)    (71,558)      (65,414)
                       ----------------------------------------------
Increase
 (decrease) in cash      3,450      (9,828)     (3,547)      (18,052)
Cash - beginning
 of period               9,061      32,017      16,058        40,241
                       ----------------------------------------------
Cash - end of period   $12,511     $22,189     $12,511       $22,189
                       ----------------------------------------------
                       ----------------------------------------------

Operating activities

Cash flow from operating activities decreased for both the three and nine months ended December 31, 2005 over the prior comparable periods as a result of the increased working capital requirements. As Energy Savings continues to expand in Alberta and the U.S., seasonality will have a greater impact on cash flow from operating activities. The credit facility will be utilized to support the working capital requirements. See "Financing activities" for further details.

Investing activities

Energy Savings purchased capital assets totaling $0.8 million and $2.8 million in the three and nine months ended December 31, 2005, compared with $1.8 million and $4.1 million, respectively, in the prior comparable quarter. The purchases were primarily for information technology systems supporting the Fund's expanding customer base within the various geographical segments. In addition, Energy Savings purchased the EPCOR Ontario electricity customer contracts for $6.6 million (net of adjustments).

Financing activities

The increase in financing activities for the nine months ended December 31, 2005 in comparison to the prior period is directly related to the $35.7 million draw down of the credit facility to fund working capital needs.

As Energy Savings continues to expand in the United States markets, Ontario electricity and Alberta, there will be increased requirements to fund working capital and security requirements. These requirements are driven primarily by the number of customers aggregated and to a lesser extent by the number of new markets. Based on the new markets Energy Savings is currently in and those we expect to enter, funding requirements will be supported through the credit facility.

The operating credit facility is expected to increase from $60.0 million to $100.0 million in early February 2006. The increase is in anticipation of the Ontario power auction planned for mid-February  and April as well as the continued strong growth in Ontario electricity customer aggregation. The contemplated power purchase will likely require the posting of security via letter of credit.

Distributions

Distributions amounted to $24.3 million (2004 - $22.7 million) and $71.6 million (2004 - $65.4 million) for the three and nine months ended December 31, 2005, an increase of 7% and 9%, respectively, from each of the prior comparable periods. Management continues to target its payout ratios before marketing expenses in the range of 65% - 70%. Distributions are funded through cash generated by operations.

At the end of the quarter, the annual rate for distributions per unit was $0.915. The annual rate for distribution was subsequently increased to $0.945 per unit for the distribution payable in March 2006.

Balance Sheet December 31, 2005 compared to March 31, 2005

Cash decreased from $16.1 million to $12.5 million. The decrease in cash is primarily attributable to acquisition of the Ontario electricity customer contracts from EPCOR for approximately $6.6 million (net of adjustments) and payment of the $10.0 million 2005 corporate tax liability. Energy Savings utilized $35.7 million of the credit facility to assist with the working capital requirements.

Accounts receivable increased from $101.6 million to $124.9 million and accounts payable increased from $76.5 million to $95.3 million as a result of the increase in long-term customers.

At the end of the quarter, Energy Savings had delivered more gas to the LDCs than customers had consumed. Since Energy Savings is paid for this gas when delivered yet recognizes revenue when the gas is consumed by the customer, the result on the balance sheet is the deferred revenue amount of $76.3 million and gas delivered in excess of consumption of $62.8 million. At March 31, 2005, customers had consumed more than had been delivered to the LDCs, thereby resulting in unbilled revenues amounting to $50.5 million and accrued gas accounts payable of $40.9 million.

Gas in storage represents the gas delivered in Illinois and Alberta. The balance at December 31, 2005 is $13.3 million, an increase from $0.4 million at March 31, 2005. The balance in Illinois increased as a result of gas injections during the period May 1 - October 31 which will be withdrawn during the remaining winter months. The balance in Alberta reflects a decrease in demand due to warmer temperatures and will reduce future supply delivery requirements.

The carrying values of electricity contracts increased by $14.6 million as a result of the Ontario electricity customer contract acquisition in May 2005.

Corporate taxes payable decreased from a payable of $10.0 million to a recovery of $2.1 million (net). The current balance reflects the current change in corporate tax structure. See "Proposed reorganization" for further details.

Other assets and liabilities represent the estimated fair value of various derivative financial instruments for which hedge accounting in accordance with Hedging Relationships "AcG-13" has not been applied. These assets and liabilities are marked to market and any changes to the fair value are recorded in other income (expense). Hedge accounting has been applied to the Fund's electricity fixed-for-floating swaps which represent the majority of derivative financial instruments in terms of notional value. The gains or losses on these swaps are recognized as a component of cost of sales when the hedged electricity costs are incurred.

Contractual obligations

In the normal course of business, the Fund is obligated to make future payments. These obligations represent contracts and other commitments that are known and non-cancelable.

Payments due
 by period                         Less
 (thousands of                     than      1 - 3    4 - 5    After
 dollars)               Total    1 year      years    years  5 years
                    -------------------------------------------------
Property & equipment
 lease agreements     $14,961      $689     $5,177   $4,992   $4,103
Marketing agreement
 obligations            3,912     1,191      2,721        -        -
EPCOR billing,
 collections &
 supply commitments     9,953     1,686      8,067      200        -
Commodity supply
 purchase
 commitments        3,153,919   281,426  1,762,616  934,919  174,958
                   --------------------------------------------------
                   $3,182,745  $284,992 $1,778,581 $940,111 $179,061
                   --------------------------------------------------
                   --------------------------------------------------

Other obligations

The Fund is also subject to certain contingent obligations that become payable only if certain events or rulings were to occur. The inherent uncertainty surrounding the timing and financial impact of these events or rulings prevents any meaningful measurement, which is necessary to assess any material impact on future liquidity. Such obligations include potential judgments, settlements, fines, and other penalties resulting from lawsuits, claims or proceedings. In the opinion of management, the Fund has no material pending lawsuits, claims or proceedings which have not been either included in its accrued liabilities or in the financial statements.

Transactions with related parties

On April 1, 2003, Energy Savings entered into Marketing Fee Payment Agreements ("Marketing Agreements") with three officers. The Marketing Agreements expire, at the earliest on March 31, 2007. Each person is entitled to receive annual marketing fees or commissions equal to the greater of an individual's percentage of Energy Savings' incremental gross margin and an individual's specified guaranteed amount, paid at the end of the first, second and third quarters and trued up at year end to reflect the year end financial results, as to, 50% in cash and 50% in fully paid unit appreciation rights ("UARs") which vest on the first, second and third anniversary day of the grant date when they become exchangeable for units on a one for one basis. In the event of a change of control: (i) each officer is entitled to a lump sum payment declining to zero at March 31, 2007 and (ii) all UARs vest and become immediately exchangeable into units on a one for one basis. For the three and nine months ended December 31, 2005, cash payments made to the three officers amounted to $0.1 million (2004 - $0.4 million) and $0.3 million (2004 - $1.1 million), respectively and UAR payments amounted to $0.3 million (2004 - $nil) and $0.7 million (2004 - $nil), respectively.

Critical accounting estimates

The consolidated financial statements of the Fund have been prepared in accordance with Canadian GAAP. Certain accounting policies require management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, cost of sales and marketing and general and administrative expenses. Estimates are based on historical experience, current information and various other assumptions that are believed to be reasonable under the circumstances. The emergence of new information and changed circumstances may result in actual results or changes to estimated amounts that differ materially from current estimates. For a detailed discussion of the significant judgments and estimates used in the preparation of the Fund's interim consolidated financial statements, refer to the Fund's annual MD&A. There are no material updates to these estimates based on events from April 1, 2005 to February 1, 2006.

Financial instruments

The Fund has entered into a variety of derivative instruments as part of the business of purchasing and selling gas and electricity. Energy Savings enters into contracts with customers to provide electricity and gas at fixed prices. These contracts expose Energy Savings to changes in market prices to supply these commodities. To reduce the exposure to the commodity market price changes, Energy Savings uses derivative financial and physical contracts to secure fixed price commodity supply matching its delivery obligations.

The Fund's business model objective is to minimize commodity risk other than consumption, usually attributable to weather. Accordingly, it is Energy Savings' policy to hedge the estimated requirements of its customers with offsetting volumes of natural gas and electricity at fixed prices for terms equal to those of the customer contracts.

The Fund is also planning further expansion into other U.S. states. This will introduce foreign exchange related risks. Similar to the gas and electricity commodities, it is the intent of Energy Savings to hedge this exposure through the use of foreign exchange strategies. There are currently no derivative instruments in place as all monies generated from U.S. operations have been redeployed to fund continued operations and further expansion in the U.S. Management anticipates deploying its foreign exchange hedge strategy on U.S. receipts before the end of the fiscal year.

The estimation of the fair value of certain electricity and gas supply contracts requires considerable judgment and is based on market prices or management's best estimates if there is no market and/or if the market is illiquid.

Adoption of new accounting policies

There have been no new accounting policies adopted by the Fund for the period April 1, 2005 to February 1, 2006, nor are there changes pending or proposed.

Risks and uncertainties

The Fund is subject to a number of risks and uncertainties that could have a material adverse effect on the results of operations, business prospects, financial condition, distributions and the trading price of the Fund. A comprehensive discussion of these risks can be found in the Fund's Annual Information Form and our 2005 Annual Report which is available on our corporate website under "reports and filings" at www.esif.ca and from SEDAR through its website at www.sedar.com. There have been no material changes for the period April 1, 2005 to February 1, 2006 that require an update to the discussion of the applicable risks.

Corporate governance

Energy Savings is committed to transparency in our operations and our approach to governance meets all recommended standards. Full disclosure of our compliance with existing corporate governance rules is available on our website at www.esif.ca. Energy Savings actively monitors the corporate governance and disclosure environment to ensure timely compliance with current and future requirements.

Based on an evaluation of the Energy Savings' disclosure controls and procedures, the Fund's Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective as of December 31, 2005.

Proposed reorganization

As previously outlined in the 2005 annual report, OESC generates significant cashflows which result in taxable income. Management had proposed a revised "trust on trust on partnership" structure which received Unitholder approval on June 29, 2005. The Fund has requested a tax ruling on certain aspects of the reorganization from the Canada Revenue Agency ("CRA"). As an interim step, on August 1, 2005, Energy Savings began to conduct substantially all of its business in Ontario under a new limited partnership, Ontario Energy Savings L.P, which is expected to result in an increase flow through of funds for the operation of the business. As at the date of writing, the CRA has not issued a ruling.

Class A Preference shares of OESC and Trust Units

As at February 1, 2006, there were 10,168,695 Class A preference shares of OESC outstanding and 95,883,488 units of the Fund outstanding.

Taxability of 2005 distributions

We estimate that approximately 90% of the distributions pertaining to calendar 2005 will be taxable as other income, with the remainder classified as tax-deferred return of capital. The actual taxability of the distributions will be determined and reported to Unitholders prior to February 28, 2006.

Outlook

Customer aggregation in the State of New York and Ontario electricity is expected to continue to ramp up in the fourth quarter. The Fund continues to actively monitor the progress of the deregulated markets in various jurisdictions including Indiana, Virginia and Maryland. Based on results to date, management believes that the Fund's published estimate of 350,000 customer additions for fiscal 2006 will be exceeded.

Due to the start month of January being unseasonably warm across Energy Savings' major markets, management currently anticipates that the margin growth for fiscal 2006 will be slightly below management's previous guidance. It is anticipated that the margin increase will be slightly below 15%. The excess supply resulting from lower consumption has been and will continue to be sold in the open market. Management continues to expect that year over year distributable cash (both pre and post marketing) will meet or slightly exceed 20% which is consistent with previous guidance.

Based on growth in both customers and cash flow realized to date, the Fund announced its 21st distribution increase, $0.03 to $0.945 per annum, with these quarterly results. The increase will be effective with the March distribution.

Energy Savings has been and remains a marketing company. While the Fund has more than 1.4 million RCEs under long-term contracts at locked-in margins, its future results are dependent upon its ability to continue to add new customers both in existing and future new markets. Management believes that these growth opportunities will continue to exist.

ENERGY SAVINGS INCOME FUND

                                         CONSOLIDATED BALANCE SHEETS
                                   (Unaudited - thousands of dollars)

---------------------------------------------------------------------
---------------------------------------------------------------------

                                          December 31,      March 31,
                                                  2005           2005
ASSETS

CURRENT
  Cash                                        $ 12,511       $ 16,058
  Restricted cash (Note 4)                       7,326          5,682
  Accounts receivable                          124,886        101,631
  Gas delivered in excess of consumption        62,821              -
  Gas in storage                                13,252            414
  Unbilled revenues                                  -         50,536
  Prepaid expenses                               1,458          2,108
  Corporate taxes recoverable                    2,315              -
---------------------------------------------------------------------
                                               224,569        176,429

GAS CONTRACTS (less accumulated
 amortization - $220,856; March 31,
 2005 - $198,483)                               23,072         45,446

ELECTRICITY CONTRACTS (less
 accumulated amortization - $11,462;
 March 31, 2005 - $3,040)                       14,959          8,794

GOODWILL                                        94,576         94,576

CAPITAL ASSETS (less accumulated
 amortization - $5,310; March 31,
 2005 - $3,558)                                 11,313         10,279

OTHER ASSETS (Note 9a)                          20,486          5,474
---------------------------------------------------------------------
                                             $ 388,975      $ 340,998
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES

CURRENT

  Bank indebtedness (Note 9b)                  $ 35,708           $ -
  Accounts payable and accrued
   liabilities                                   95,316        76,505
  Customer rebates payable (Note 4)               7,326         5,682
  Management incentive program payable            1,225         1,173
  Unit distribution payable                       7,311         7,039
  Corporate taxes payable                           229        10,048
  Deferred revenue                               76,347             -
  Accrued gas accounts payable                        -        40,900
---------------------------------------------------------------------

                                                223,462       141,347

DEFERRED CHARGES (less amortization - $3,108)     4,884             -

OTHER LIABILITIES (Note 9a)                         400           644

FUTURE INCOME TAXES                              12,228        21,020
---------------------------------------------------------------------
                                                240,974       163,011
---------------------------------------------------------------------

EQUITY
 Unitholders' equity (Note 7)                 $ 139,654     $ 173,106
 Contributed surplus                              8,347         4,881
---------------------------------------------------------------------
                                                148,001       177,987
---------------------------------------------------------------------

                                              $ 388,975     $ 340,998
---------------------------------------------------------------------
---------------------------------------------------------------------


                                          ENERGY SAVINGS INCOME FUND

                      CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY

                                   (Unaudited - thousands of dollars)
                               FOR THE NINE MONTHS ENDED DECEMBER 31
---------------------------------------------------------------------
---------------------------------------------------------------------
                                                   2005         2004

UNITHOLDERS' EQUITY, BEGINNING OF PERIOD      $ 173,106    $ 206,401

Trust unit options exercised                      2,112       10,434

Deferred unit grants exercised                       53            -

NET INCOME                                       33,738        9,937

DISTRIBUTIONS ON UNITS                          (64,964)     (59,271)

CLASS A PREFERENCE DISTRIBUTIONS, NET OF TAX     (4,391)      (4,392)
---------------------------------------------------------------------

UNITHOLDERS' EQUITY, END OF PERIOD            $ 139,654    $ 163,109
---------------------------------------------------------------------
---------------------------------------------------------------------


                                          ENERGY SAVINGS INCOME FUND

                               CONSOLIDATED STATEMENTS OF OPERATIONS
            (Unaudited - thousands of dollars except per unit amount)

---------------------------------------------------------------------
---------------------------------------------------------------------
                                  Three months           Nine months
                                         ended                 ended
                                   December 31           December 31
                                  2005    2004          2005    2004

SALES                     $ 321,161  $ 213,649  $ 735,615  $ 514,012

COST OF SALES               270,767    173,947    624,995    420,647
---------------------------------------------------------------------

GROSS MARGIN                 50,394     39,702    110,620     93,365
---------------------------------------------------------------------

EXPENSES

  General and
   administrative expenses     9,271     6,979     26,072     21,492
  Capital tax                    207        (3)       621        497
  Marketing expenses          13,630    11,327     35,060     30,965
  Unit based compensation
   (Note 8)                    1,876       749      3,912      2,184
  Bad debt expense             1,300        62      3,478         84
  Amortization of gas
   contracts                   7,457    12,413     22,373     36,720
  Amortization of electricity
   contracts                   2,000       692      5,314      1,226
  Amortization of capital
   assets                        629       438      1,752      1,148
---------------------------------------------------------------------
                              36,370    32,657     98,582     94,316
---------------------------------------------------------------------

INCOME (LOSS) BEFORE
 OTHER INCOME (EXPENSE)       14,024     7,045     12,038       (951)

OTHER INCOME (EXPENSE)
 (Note 9)                     (1,876)    1,115     14,935      1,215
---------------------------------------------------------------------

INCOME BEFORE INCOME TAX      12,148     8,160     26,973        264

PROVISION FOR (RECOVERY OF)
 INCOME TAX                   (1,069)    1,117     (6,765)    (9,673)
---------------------------------------------------------------------

NET INCOME                  $ 13,217   $ 7,043   $ 33,738    $ 9,937
---------------------------------------------------------------------
---------------------------------------------------------------------

Net income per unit
 (Note 10)

  Basic                       $ 0.12    $ 0.07     $ 0.32     $ 0.10

  Diluted                     $ 0.12    $ 0.07     $ 0.32     $ 0.09


                                          ENERGY SAVINGS INCOME FUND

                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited - thousands of dollars)

---------------------------------------------------------------------
---------------------------------------------------------------------
                                      Three months       Nine months
                                             ended             ended
                                       December 31       December 31

                                     2005     2004     2005     2004
Net inflow (outflow) of cash
 related to the following activities

OPERATING
 Net income                      $ 13,217  $ 7,043 $ 33,738  $ 9,937
---------------------------------------------------------------------
---------------------------------------------------------------------

 Items not affecting cash
  Amortization of gas contracts     7,457   12,413   22,373   36,720
  Amortization of electricity
   contracts                        2,000      692    5,314    1,226
  Amortization of capital assets      629      438    1,752    1,148
  Unit based compensation           1,876      749    3,912    2,184
  Future income taxes              (2,623)     (29)  (8,792) (12,674)
  Loss on foreign exchange
   (unrealized)                        88      526      355      623
  Other (income) expenses
   (unrealized)                     1,717   (1,558) (15,390)  (1,483)
---------------------------------------------------------------------

                                   11,144   13,231    9,524   27,744
---------------------------------------------------------------------
  Adjustments required to
   reflect net cash receipts
   from gas sales                   1,381    2,536   23,162   24,395
---------------------------------------------------------------------

                                   25,742   22,810   66,424   62,076
---------------------------------------------------------------------

 Changes in non-cash working
  capital                         (24,512)    (109) (28,492)  (9,366)
---------------------------------------------------------------------

 Cash inflow from operations        1,230   22,701   37,932   52,710
---------------------------------------------------------------------

FINANCING
  Exercise of trust unit options
   (Note 8)                           307    1,921    1,748    7,183
  Distributions paid to
   Unitholders                    (22,001) (20,472) (64,684) (58,539)
  Distributions on Class A
   preference shareholders         (2,325)  (2,197)  (6,874)  (6,875)
  Tax impact on distributions on
   Class A preference shareholders    840      793    2,483    2,483
  Bank indebtedness (Note 9b)      26,406        -   35,708        -
---------------------------------------------------------------------

                                    3,227  (19,955) (31,619) (55,748)
---------------------------------------------------------------------

INVESTING
  Purchase of capital assets         (793)  (1,779)  (2,786)  (4,122)
  Acquisition of customer
   contracts                            -  (10,269)  (6,593) (10,269)
---------------------------------------------------------------------

                                     (793) (12,048)  (9,379) (14,391)
---------------------------------------------------------------------

  Loss on foreign exchange
   (unrealized)                       (88)    (526)    (355)    (623)
  Other (income) foreign exchange
   (unrealized)                      (126)       -     (126)       -
---------------------------------------------------------------------

NET CASH INFLOW (OUTFLOW)           3,450   (9,828)  (3,547) (18,052)

CASH, BEGINNING OF PERIOD           9,061   32,017   16,058   40,241
---------------------------------------------------------------------

CASH, END OF PERIOD              $ 12,511 $ 22,189 $ 12,511 $ 22,189
---------------------------------------------------------------------
---------------------------------------------------------------------

Supplemental Information

  Interest paid                     $ 251     $ 35    $ 444     $ 69

  Income taxes paid                 $ 974    $ 363 $ 12,282    $ 863

ENERGY SAVINGS INCOME FUND

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited - thousands of dollars except where indicated and per unit amount)

---------------------------------------------------------------------

1. INTERIM FINANCIAL STATEMENTS

The unaudited interim consolidated financial statements do not conform in all respects to the requirements of Canadian generally accepted accounting principles for annual financial statements and should therefore

be read in conjunction with the audited consolidated financial statements and notes thereto included in the Fund's annual report for fiscal 2005. The unaudited interim consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles applicable to interim consolidated financial statements and follow the same accounting policies and methods in their applications as the most recent annual financial statements.

2. ORGANIZATION

Energy Savings Income Fund ("Energy Savings" or the "Fund")

Energy Savings is an open-ended, limited-purpose trust established under the laws of the Province of Ontario to hold securities and to distribute the income of its directly or indirectly wholly owned operating subsidiaries and affiliates: Ontario Energy Savings Corp. ("OESC"), Ontario Energy Savings L.P. ("OESLP"), Energy Savings (Manitoba) Corp. ("ESMC"), Energy Savings (Quebec) L.P. ("ESPQ"), ES (B.C.) Limited Partnership ("ES (BC) L.P."), Alberta Energy Savings L.P. ("AESLP"), U.S. Energy Savings Corp. ("USESC"), Illinois Energy Savings Corp. ("IESC"), New York Energy Savings Corp. ("NYESC"), (collectively the "Energy Savings Group").

Ontario Energy Savings L.P.

OESLP was formed under the laws of the Province of Ontario on June 1, 2005. Effective August 1, 2005, OESLP acquired substantially all of the assets and certain related liabilities of OESC, thereby transferring operations and all future marketing efforts in Ontario to OESLP.

3. SEASONALITY OF OPERATIONS

Energy Savings' operations are seasonal. Gas consumption by customers is typically highest in October through March and lowest in April through September. Electricity consumption is typically highest in January through March and July through September. Electricity consumption is lowest in October through December and April through June.

4. RESTRICTED CASH/CUSTOMER REBATES PAYABLE

Restricted cash represents rebate monies received from Local Distribution Companies ("LDCs") in Ontario as provided by the Independent Electricity System Operator ("IESO"). OESLP is obligated to disperse the monies to eligible end-use customers in accordance with the Market Power Mitigation Agreement as part of OESLP's Retailer License conditions.

5. ACQUISITION OF CUSTOMER CONTRACTS

On May 19, 2005, Energy Savings purchased effective May 1, 2005, approximately 187,000 residential customer equivalents ("RCEs") of deregulated electricity customers in Ontario from EPCOR Utilities Inc ("EPCOR").

The purchase price has been allocated as follows (subject to adjustments):

Net assets acquired:

Electricity contracts                     $ 14,585
Deferred charges                            (7,992)
                                          ---------

                                           $ 6,593
                                          ---------
                                          ---------

Consideration:

Cash                                       $ 6,593
                                          ---------
                                          ---------

The entire purchase price will be amortized over the average remaining life of the contracts, which at the time of the acquisition was 1.5 years.

Cash consideration was determined by valuing the margin remaining on contracts acquired at their associated fixed prices, and is subject to adjustments. These fixed prices were not reflective of the market price of electricity at the time of acquisition. Canadian GAAP requires financial instruments to be fair valued upon acquisition. Customer contracts are not considered financial instruments, while supply contracts are. Deferred charges relate to the fair value associated with the acquired supply contracts.

6. RELATED PARTY TRANSACTION

On April 1, 2003, Energy Savings entered into Marketing Fee Payment Agreements ("Marketing Agreements") with three officers, through its subsidiary OESC (see Note 13(b)). The Marketing Agreements expire, at the earliest, on March 31, 2007. Each person is entitled to receive annual marketing fees or commissions equal to the greater of an individual's percentage of Energy Savings' incremental gross margin and an individual's specified guaranteed amount, payable on March 31 in each year, as to, 50% in cash and 50% in fully paid unit appreciation rights ("UARs"), which vest on the first, second and third anniversary day of the grant date when they become exchangeable into units on a one for one basis. In the event of a change of control, (i) each officer is entitled to a lump sum payment declining to zero at March 31, 2007 and (ii) all UARs vest and become immediately exchangeable into units on a one for one basis. For the three and nine months ended December 31, 2005, cash payments amounted to $112 (2004 - $357) and $338 (2004 - $1,069), respectively, while payments made in the form of UARs amounted to $244 (2004 - $nil) and $732 (2004 - $nil), respectively.

7. UNITHOLDERS' EQUITY

Trust Units of the Fund

An unlimited number of units may be issued. Each unit is transferable, voting and represents an equal undivided beneficial interest in any distributions from the Fund whether of net income, net realized capital gains or other amounts, and in the net assets of the Fund in the event of termination or winding-up of the Fund.

Preference Shares of OESC

Unlimited Class A preference shares, non-voting for OESC, non-cumulative, exchangeable into trust units in accordance with the OESC shareholders' agreement, with no priority on dissolution. Pursuant to the amended and restated "Declaration of Trust" which governs the Fund, the holders of Class A preference shares are entitled to vote in all votes of Unitholders as if they were the holders of the number of units which they would otherwise be entitled to receive if they exercised their shareholder exchange rights. Class A preference shareholders have equal entitlement to distributions from the Fund as Unitholders.

2005                   2004
Issued and Outstanding      Units/                 Units/
                            Shares                 Shares
Trust units
-----------

Balance, beginning of
 period                 95,515,617  $ 147,684  91,093,142  $ 177,323

Options exercised          364,665      2,112   2,379,322     10,434

Deferred unit grants
 exercised                   3,206         53           -          -

Exchanged from
 Class A preference
 shares                          -          -   1,462,483      3,656
                        ---------------------------------------------

Balance before income
 and distributions      95,883,488    149,849  94,934,947    191,413
                        ---------------------------------------------

Class A preference shares
-------------------------

Balance, beginning of
 period                 10,168,695     25,422  11,631,178     29,078

Exchanged into units             -          -  (1,462,483)    (3,656)
                        ---------------------------------------------

Balance, end of period  10,168,695      25,422 10,168,695     25,422
                        ---------------------------------------------

Combined balance,
 end of period         106,052,183     175,271 105,103,642   216,835
                        ---------------------------------------------

Net income                       -      33,738           -     9,937

Distributions(1)                 -     (69,355)          -   (63,663)
                        ---------------------------------------------

Unitholders' equity,
 end of period         106,052,183   $ 139,654 105,103,642 $ 163,109
                        ---------------------------------------------
                        ---------------------------------------------

(1) Unitholders are entitled to receive distributions. The holders of Preference A shares, unit appreciation rights and deferred unit grants are also entitled to receive distributions equal to the amount receivable if their shares/rights were exchanged into units of the Fund.

Pre-tax distributions for the three and nine months ended December 31, 2005 and 2004 are as follows:

Three months       Nine months
                                             ended             ended
                                       December 31       December 31

                                    2005      2004     2005     2004

Unitholders                     $ 21,934  $ 20,483 $ 64,767 $ 59,239

Class A preference share
 distributions                     2,326     2,197    6,875    6,875

Unit appreciation rights              70        11      189       32
                                -------------------------------------
                                  24,330    22,691   71,831   66,146

Deferred unit grants                   3         -        8        -
                                -------------------------------------
                                $ 24,333  $ 22,691 $ 71,839 $ 66,146
                                -------------------------------------
                                -------------------------------------

8. UNIT BASED COMPENSATION PLANS

(a) Unit option plan

The Fund grants awards under its 2001 unit option plan to directors, officers, full-time employees and service providers (non-employees) of its subsidiaries and affiliates. In accordance with the unit option plan and as a result of the unit splits which took effect July 29, 2002 and January 30, 2004, the Fund may grant options to a maximum of 11,300,000 units. As at December 31, 2005, there were 859,166 options still available for grant under the plan. Of the options issued, 1,736,170 options remain outstanding at quarter end. The exercise price of the unit options equals the closing market price of the Fund's units on the last business day preceding the grant date. The unit options will vest over periods ranging from three to five years from the grant date and expire after five or ten years from the grant date.

A summary of the changes in the Fund's unit option plan during the nine month period and status at December 31, 2005 is outlined below:

Weighted        Weighted
                                  Range of   average         average
                    Outstanding   Exercise  exercise      grant date
                        Options     prices   price(1)   fair value(2)

Balance, beginning
 of period            1,825,835     $2.50-    $ 8.99
                                   $18.70

Granted                 275,000    $15.63-    $15.65           $2.20
                                   $15.90

Exercised              (364,665)    $2.50-    $ 4.79
                                   $11.25
                      ----------

Balance, end
 of period            1,736,170     $2.50-    $10.92
                                   $18.70
                      ----------
                      ----------

(1) The weighted average exercise price is calculated by dividing the exercise price of options granted by the number of options granted.

(2) The weighted average grant date fair value is calculated by dividing the fair value of options granted by the number of options granted.

Options outstanding          Options exercisable
---------------------------------------------------------------------

                               Weighted
                                average Weighted             Weighted
                              remaining  average              average
Range of             Number contractual exercise      Number exercise
exercise prices outstanding        life    price exercisable    price

$2.50 - $3.24        40,000        0.33    $2.50      40,000    $2.50
$4.24 - $6.09       462,671        1.08    $5.02     154,671    $5.03
$7.29 - $10.68       82,666        2.15    $9.17      51,334    $8.81
$11.25 - $12.17     693,333        2.28   $12.05     660,002   $12.09
$14.25 - $18.70     457,500        3.86   $16.24      28,500   $16.72
                 ----------                      -----------

Balance,
 end of period    1,736,170        2.33   $10.92     934,507   $10.47
                 ----------                      -----------
                 ----------                      -----------


Options available for grant

Available for grant                         11,300,000
Less: granted in prior years               (11,083,000)

Add: cancelled/forfeited in prior years        917,166
                                          -------------
Balance, beginning of period                 1,134,166
Less: granted during the period               (275,000)
                                          -------------
Balance, end of period                         859,166
                                          -------------
                                          -------------

The Fund uses a binomial option pricing model to estimate the fair values. The binomial model was chosen because of the yield associated with the units. Fair values of employee unit options are estimated at grant date. Fair values of non-employee unit options are estimated and revalued each reporting period until a measurement date is achieved. The following weighted average assumptions have been used in the valuations:

Risk free rate                             3.53% - 3.65%
Expected volatility                      25.57% - 25.62%
Expected life                                    5 years
Expected distributions          $0.885 - $0.915 per year

(b) Unit appreciation rights

The Fund grants awards under its 2004 unit appreciation rights ("UARs") plan to senior officers or service providers of its subsidiaries and affiliates in the form of fully paid UARs. In accordance with the unit appreciation rights plan, the Fund may grant UARs to a maximum of 1,000,000. As at December 31, 2005 there were 679,328 UARs still available for grant under the plan. Except as otherwise provided, (i) the UARs vest up to one to five years from the grant date, (ii) expire no later than ten years from the grant date, (iii) a holder of UARs is entitled to distributions as if a UAR were a unit, and (iv) when vested, the holder of a UAR may exchange one UAR for one unit.

UARs Available for Grant

Available for grant                          1,000,000
Less: granted in prior years                  (240,426)
                                             ----------
Balance, beginning of period                   759,574
Less: granted during the period                (80,246)
                                             ----------
Balance, end of period                         679,328
                                             ----------
                                             ----------

(c) Deferred unit grants

The Fund grants awards under its 2004 Directors' deferred compensation plan to all independent directors. In accordance with the deferred compensation plan, the Fund may grant deferred unit grants ("DUGs") to a maximum of 100,000. The DUGs vest on the earlier of the date of the Director's resignation or three years following the date of grant and expire ten years following the date of grant. As of December 31, 2005, there were 84,772 DUGs available for grant under the plan.

DUGs Available for Grant

Available for grant                            100,000
Less: granted in prior years                    (9,365)
                                             ----------
Balance, beginning of period                    90,635
Less: granted during the period                 (5,863)
                                             ----------
Balance, end of period                          84,772
                                             ----------
                                             ----------

Total amounts credited to contributed surplus in respect of unit-based compensation awards, UARs and DUGs amounted to $1,846 for the three months ended December 31, 2005 (2004 - $749), and $3,882 for the nine months ended December 31, 2005 (2004 - $2,184).

Total amounts charged to units in respect of awards exercised during the three months ended December 31, 2005 amounted to $207 (2004 - $164) and $417 (2004 - $3,250) for the nine months ended December 31, 2005.

Cash received from options exercised for the three and nine months ended December 31, 2005 amounted to $307 (2004 - $1,921) and $1,748 (2004 - $7,148), respectively.

9. FINANCIAL INSTRUMENTS

(a) Fair value

The Fund has a variety of gas and electricity supply contracts that are considered derivative financial instruments. The fair value of derivative financial instruments is the estimated amount the Energy Savings would pay or receive to dispose of these supply contracts in the market. Management has estimated the value of electricity and gas swap contracts using a discounted cash flow method which employs market forward curves as well as a forward curve compiled by management for Alberta electricity (electricity information is based on market). Gas options have been valued using the Black option value model using the applicable market forward curves and the implied volatility from other market traded gas options.

(i)(a) At December 31, 2005, Energy Savings had electricity fixed-for-floating swap contracts in Ontario designated as hedges of Energy Savings' anticipated cost of sales to which it has committed with the following terms:

Notional volumes (peak, flat, off peak and weekend)     5.0-50.0 MW/h
Total remaining notional volume                        11,830,219 MWh
(peak, flat off peak and weekend)
Maturity dates                                     January 31, 2006 -
                                                    December 31, 2010
Fixed price per MWh (in dollars)                     $45.00 - $103.75
Fair value                                        $156,134 favourable
Notional value                                               $753,349

(i)(b) At December 31, 2005, Energy Savings had electricity fixed-for-floating swap contracts in Alberta designated as hedges of Energy Savings' anticipated cost of sales to which it has committed with the following terms:

Notional volumes (peak and off peak)                     0.1-7.9 MW/h
Total remaining estimated notional volume               2,790,670 MWh
(peak, off peak and load following)
Maturity dates                                     January 31, 2006 -
                                                     October 31, 2011
Fixed price per MWh (in dollars)                      $55.80 - $79.30
Fair value                                         $48,219 favourable
Notional value                                               $176,334

(i)(c) At December 31, 2005, Energy Savings had electricity fixed-for-floating swap contracts in New York designated as hedges of Energy Savings' anticipated cost of sales to which it has committed with the following terms:

Notional volumes (peak and off peak)                     0.2-9.8 MW/h
Total remaining notional volume                           699,785 MWh
(peak and off peak)
Maturity dates                                     January 31, 2006 -
                                                     January 31, 2011
Fixed price per MWh (in dollars)                    $108.65 - $132.52
                                                (US $93.42 - $113.95)
Fair value                                                     $6,072
                                             (US $5,221 unfavourable)
Notional value                                   $90,042 (US $77,422)

Since hedge accounting has been applied to these swaps, no recognition of the mark to market gain has been recognized in these financial statements. The electricity fixed-for-floating contracts related to the Province of Alberta are predominantly load following, wherein the quantity of electricity contained in the supply contract "follows" the usage of customers designated by the supply contract. Notional volumes associated with these contracts are estimates and subject to change with customer usage requirements. There are also load shaped fixed-for-floating contracts in Ontario and New York wherein the quantity of electricity is established but varies throughout the term of the contracts.

(ii) At December 31, 2005, Energy Savings' fixed-for-floating gas swap contract in Ontario has expired. The loss of $572 (2004 - $283 loss) and loss of $716 (2004 - $375 gain) for the three and nine months ended December 31, 2005 respectively has been recorded in other assets with its offsetting value being recorded in other income.

(iii) At December 31, 2005, Energy Savings' floating-for-fixed gas swap contract in Ontario has expired. The gain of $389 (2004 - n/a) and gain of $171 (2004 - n/a) for the three and nine months ended December 31, 2005 respectively has been recorded in other assets with its offsetting value being recorded in other income.

(iv) At December 31, 2005, Energy Savings had other gas puts and calls in Manitoba which have been marked to market with the following terms:

Notional volume                                 465 - 60,450 GJ/month
Total remaining notional volume                          1,684,230 GJ
Maturity dates                      January 31, 2006 - April 30, 2011
Fixed price per GJ (in dollars)                         $5.48 - $9.18
Fair value                                          $399 unfavourable

The gain of $239 (2004 - $91 gain) and the gain of $245 (2004 - $946 loss) for the three and nine months ended December 31, 2005 respectively have been recorded in other liabilities with its offsetting value being recorded in other income. The fair value of the options is net of the present value of premiums which have yet to be paid.

(v) At December 31, 2005, Energy Savings had other gas puts and calls in Alberta which have been marked to market with the following terms:

Notional volume                                 500 - 95,500 GJ/month
Total remaining notional volume                          6,059,000 GJ
Maturity dates                   January 31, 2006 - February 28, 2011
Fixed price per GJ (in dollars)                        $5.50 - $11.85
Fair value                                          $4,876 favourable

The loss of $884 (2004 - $749 loss) and gain of $4,875 (2004 - $749 loss) for the three and nine months ended December 31, 2005 has been recorded in other assets with its offsetting value being recorded in other income. The fair value of the options is net of the present value of premiums which have yet to be paid.

(vi) At December 31, 2005, Energy Savings had other gas put and call options in Illinois which have been marked to market with the following terms:

Notional volume                            500 - 150,000 Mm BTU/month
Total remaining notional volume                       7,915,000 MmBTU
Maturity dates                   January 31, 2006 - November 30, 2010
Fixed price per MmBTU (in dollars)  $6.40 - $11.63 (US $5.50 -$10.00)
Fair value                            $13,129 favourable (US $11,289)

The fair value is net of prepaid premiums of $2,347 (US$2,018). These premiums are included in other assets. The loss of $780 (US$671) and gain of $10,862 (US$9,340) for the three and nine months ended December 31, 2005 (2004 - loss of $511 (US $410) and $206 (US $171)) has been recorded in other assets with its offsetting value being recorded in other income.

(vii) At December 31, 2005, Energy Savings had gas put and call options in New York which have been marked to market with the following terms:

Notional volume                               173- 1,440 Mm BTU/month
Total remaining notional volume                         350,387 MmBTU
Maturity dates                    January 31, 2006 - January 31, 2011
Fixed price per MmBTU(in dollars) $10.93 - $12.35 (US $9.40 - $10.62)
Fair value                                  $134 favourable (US $115)

The loss of $23 (US $20) (2004 - n/a) and gain of $134 (US $115) (2004 - n/a) for the three and nine months ended December 31, 2005 has been recorded in other assets with its offsetting value being recorded in other income. The fair value of the options is net of the present value of premiums which have yet to be paid.

These derivative financial instruments create a credit risk for Energy Savings since they have been transacted with a limited number of counterparties. Should any counterparty be unable to fulfill its obligations under the contracts, Energy Savings may not be able to realize the other asset balance recognized in the financial statements.

Energy Savings' physical gas supply contracts are not considered derivative financial instruments and a fair value has therefore not been assessed.

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, management incentive program payable and unit distribution payable approximates their fair value due to their short term liquidity.

(b) Bank indebtedness

Energy Savings has available a $60,000 operating credit facility. As at December 31, 2005 Energy Savings had drawn $35,708 against the facility to assist with working capital requirements. In addition, outstanding letters of credit at December 31, 2005 amounted to $5,675. Energy Savings has $18,617 of the facility remaining for future working capital and security requirements. The operating line of credit bears interest at bank prime plus 0.5% and letters of credit bear interest at 1.5% and is secured by the majority of the assets held by Energy Savings.

(c) Customer credit risk

In Illinois and Alberta, Energy Savings assumes the credit risk associated with the collection of its customers. Credit review processes have been put in place for these markets where Energy Savings has credit risk. If a significant number of customers were to default on their payments, it could have a material adverse effect on Energy Savings' operations and cash flow.

For the remaining markets in which Energy Savings operates, the LDCs provide collection services and assume the risk of any bad debts owing from Energy Savings' customers. Therefore, Energy Savings receives the collection of customer account balances directly from the LDCs. Management believes that the risk of the LDCs failing to deliver payment to Energy Savings is minimal.

(d) Foreign currency risk

The Fund has an exposure to foreign currency exchange rates, as a result of its investment in U.S. operations. Changes in the applicable exchange rate may result in a decrease or increase in income. A non-cash loss of $88 (2004 - $526) and $355 (2004 - $623) for the three and nine months ended December 31, 2005 has been recorded in other income (expense).

10. INCOME PER UNIT

                                 Three months            Nine months
                                        ended                  ended
                                  December 31            December 31

                              2005       2004        2005       2004
Basic income per unit
---------------------
Net income available to
 unitholders              $ 13,217    $ 7,043    $ 33,738    $ 9,937
Weighted average number
 of units outstanding       95,879     94,700      95,791     93,432
Weighted average number
 of Class A preference
 shares                     10,169     10,169      10,169     11,071
                          --------    --------   --------    --------
Basic units and shares
 outstanding               106,048    104,869     105,960    104,503
                          --------    --------   --------    --------
Basic income per unit       $ 0.12     $ 0.07      $ 0.32     $ 0.10
                          --------    --------   --------    --------
                          --------    --------   --------    --------

Diluted income per unit
-----------------------
Net income available to
 unitholders              $ 13,217    $ 7,043    $ 33,738    $ 9,937
Basic units and shares
 outstanding               106,048    104,869     105,960    104,503
Dilutive effect of:
  Unit options                 688      1,448         692      1,642
  Unit appreciation rights     300         50         270         50
  Deferred unit grants          13          -          11          -
                          --------    --------   --------    --------
Units outstanding on a
 diluted basis             107,049    106,367     106,933    106,195
                          --------    --------   --------    --------
Diluted income per unit     $ 0.12     $ 0.07      $ 0.32     $ 0.09
                          --------    --------   --------    --------
                          --------    --------   --------    --------

11. REPORTABLE BUSINESS SEGMENTS

Energy Savings operates in two reportable geographic segments, Canada and the United States. Reporting by geographic region is in line with Energy Savings' performance measurement parameters. Both the Canadian and the U.S. operations have gas and electricity business segments.

Energy Savings evaluates segment performance based on gross margin.

The following tables present Energy Savings' results from continuing operations by geographic segment:

Three months ended December 31, 2005

                                                United
                                    Canada      States   Consolidated
                                 ---------    --------   ------------
Sales                            $ 287,692    $ 33,469     $ 321,161
---------------------------------------------------------------------

Gross margin                      $ 43,216     $ 7,178      $ 50,394
Amortization of gas contracts       (7,457)          -        (7,457)
Amortization of electricity
 contracts                          (2,000)          -        (2,000)
Amortization of capital assets        (511)       (118)         (629)
Other expenses                     (21,530)     (4,754)      (26,284)
Other (expenses) income               (689)     (1,187)       (1,876)
Recovery of income tax               1,066           3         1,069
---------------------------------------------------------------------
Net income                         $ 12,095    $ 1,122      $ 13,217
---------------------------------------------------------------------
---------------------------------------------------------------------

Additions to capital assets       $ (1,239)    $ 2,032         $ 793
---------------------------------------------------------------------
---------------------------------------------------------------------

During the quarter, assets were allocated from OESC to USESC.

Three months ended December 31, 2004

                                                United
                                    Canada      States   Consolidated
                                 ---------    --------   ------------
Sales                            $ 206,305     $ 7,344     $ 213,649
---------------------------------------------------------------------

Gross margin                      $ 38,316     $ 1,386      $ 39,702
Amortization of gas contracts      (12,413)          -       (12,413)
Amortization of electricity
 contracts                            (692)          -          (692)
Amortization of capital assets        (423)        (15)         (438)
Other expenses                     (17,031)     (2,083)      (19,114)
Other (expenses) income               (686)      1,801         1,115
Provision of income tax             (1,117)          -        (1,117)
---------------------------------------------------------------------
Net income                         $ 5,954     $ 1,089       $ 7,043
---------------------------------------------------------------------
---------------------------------------------------------------------

Additions to capital assets        $ 1,746        $ 33       $ 1,779
---------------------------------------------------------------------
---------------------------------------------------------------------


Nine months ended December 31, 2005

                                                United
                                    Canada      States   Consolidated
                                 ---------    --------   ------------
Sales                            $ 689,465    $ 46,150     $ 735,615
---------------------------------------------------------------------

Gross margin                     $ 101,718     $ 8,902     $ 110,620
Amortization of gas contracts      (22,373)          -       (22,373)
Amortization of electricity
 contracts                          (5,314)          -        (5,314)
Amortization of capital assets      (1,606)       (146)       (1,752)
Other expenses                     (52,641)    (16,502)      (69,143)
Other income                         4,717      10,218        14,935
Recovery of income tax               6,765           -         6,765
---------------------------------------------------------------------
Net income                        $ 31,266     $ 2,472      $ 33,738
---------------------------------------------------------------------
---------------------------------------------------------------------

Additions to capital assets          $ 705     $ 2,081       $ 2,786
---------------------------------------------------------------------
---------------------------------------------------------------------

Total goodwill                    $ 94,576         $ -      $ 94,576
---------------------------------------------------------------------
---------------------------------------------------------------------

Total assets                     $ 332,596    $ 56,379     $ 388,975
---------------------------------------------------------------------
---------------------------------------------------------------------


Nine months ended December 31, 2004

                                                United
                                    Canada      States   Consolidated
                                 ---------    --------   ------------
Sales                            $ 505,324     $ 8,688     $ 514,012
---------------------------------------------------------------------

Gross margin                      $ 91,718     $ 1,647      $ 93,365
Amortization of gas contracts      (36,720)          -       (36,720)
Amortization of electricity
 contracts                          (1,226)          -        (1,226)
Amortization of capital assets      (1,106)        (42)       (1,148)
Other expenses                     (50,337)     (4,885)      (55,222)
Other income (expense)                (586)      1,801         1,215
Recovery of income tax               9,673           -         9,673
---------------------------------------------------------------------
Net income (loss)                 $ 11,416    $ (1,479)      $ 9,937
---------------------------------------------------------------------
---------------------------------------------------------------------

Additions to capital assets        $ 4,020       $ 102       $ 4,122
---------------------------------------------------------------------
---------------------------------------------------------------------

Total goodwill                    $ 94,576         $ -      $ 94,576
---------------------------------------------------------------------
---------------------------------------------------------------------

Total assets                     $ 323,892    $ 15,014     $ 338,906
---------------------------------------------------------------------
---------------------------------------------------------------------

GUARANTEES

(a) Officers and Directors

Corporate indemnities have been provided by the Fund to all directors and certain officers of its subsidiaries and affiliates for various items including, but not limited to, all costs to settle suits or actions due to their association with the Fund and its subsidiaries and/or affiliates, subject to certain restrictions. The Fund has purchased directors' and officers' liability insurance to mitigate the cost of any potential future suits or actions. Each indemnity, subject to certain exceptions, applies for so long as the indemnified person is a director or officer of one of the Fund's subsidiaries and/or affiliates. The maximum amount of any potential future payment cannot be reasonably estimated.

(b) Operations

In the normal course of business, the Fund and/or the Fund's subsidiaries and have entered into agreements that include guarantees in favour of third parties, such as purchase and sale agreements, leasing agreements and transportation agreements. These guarantees may require the Fund and/or its subsidiaries to compensate counterparties for losses incurred by the counterparties as a result of breaches in representation and regulations or as a result of litigation claims or statutory sanctions that may be suffered by the counterparty as a consequence of the transaction. The maximum payable under these guarantees is estimated to be $27,000.

13.COMMITMENTS

(a) Commitments for premises and equipment under operating lease obligation for each of the next five years are as follows:

2006                $ 689
                 2007                2,587
                 2008                2,590
                 2009                2,571
                 2010                2,421
                               ------------
                                  $ 10,858
                               ------------
                               ------------

(b) Commitments under the Marketing Agreements for each of the next two years are as follows:

2006              $ 1,191
                 2007                2,721
                               ------------
                                   $ 3,912
                               ------------
                               ------------

(c) Commitments under the Master Service agreement with EPCOR for

each of the next four years are as follows:

2006              $ 1,686
                 2007                6,743
                 2008                1,324
                 2009                  200
                               ------------
                                   $ 9,953
                               ------------
                               ------------

(d) Commitments under long-term gas and electricity contracts with various suppliers for each of the next five years are as follows:

2006            $ 281,426
                 2007              993,924
                 2008              768,692
                 2009              553,036
                 2010              381,883
                               ------------
                               $ 2,978,961
                               ------------
                               ------------

Energy Savings is also committed under long-term contracts with customers to supply gas and electricity. These contracts have various expiry dates and renewal options.

The Toronto Stock Exchange has neither approved nor disapproved of the contents of this release.

Energy Savings Income Fund (TSX:SIF.UN)