Ontario man told to pay $1,000 to end water heater contract

An Ontario man was surprised to learn he would have to pay a $1,000 penalty to cancel his water heater rental.

"I was shocked that the penalty I had to pay was almost the cost of a brand new water heater," James Alves, of Etobicoke, told CTV News Toronto.

Now that Alves is on a fixed income, he said he was reviewing his bills when he decided to cancel his water heater rental contract. But he had no idea he would have to pay a penalty.

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"I decided it was costing too much money paying rent every month, and I figured after eight years I had paid enough in rental fees for the hot water tank," said Alves.

Over the years, Alves said he paid about $4,144, including taxes, to rent a water heater from Enercare.

When he contacted Enercare to end his contract, he was told there was a buyout cancellation fee of $1,082, including taxes, which Alves was surprised he had to pay.

"For something I could buy now for $1,200 they have charged me enough in rental fees and now to have to pay this cancellation fee. I just feel it's ridiculous," said Alves.

When Alves complained to Enercare, they reduced the buyout price by $250.

"We do not typically share details of customer accounts or interactions. However, we can confirm that our rental contract includes the option to customers to purchase the equipment to end a contract," an Enercare spokesperson told CTV News Toronto.

"In this case and as noted by Mr. Alves, as a valued and long-standing customer, a goodwill credit was already applied to his account to reduce the purchase price. Nevertheless, we always strive to ensure customer satisfaction and have reached out to Mr. Alves."

Water heaters are generally reliable, need little to no maintenance and last 15 years or more. While the majority of Canadian homeowners in many provinces buy their water tanks, many people in Ontario continue to rent them.

Bill Adams, who looks after the water heater division for Home Depot, says those who still rent may want to consider buying one instead.

"A lot of people, they have been in the rental market, they move into a home, and they just continue with their monthly payment like it's another monthly bill, but we have many options when it comes to water heaters," said Adams.

There are more basic electric and natural gas models. Power vent and tankless water heater models will cost more to purchase and install.

Adams said a standard electric water heater costs about $600 to purchase and about the same to install, while a natural gas model is slightly more at about $800 to buy and install.

They range from 40 to 80 gallon tanks and can come with various warranty periods, which Adams describes as a "good, better, best" line of protection with prices varying on a case-by-case situation.

"For about $1,500 to $2,200, you will then have your own water heater installed, and we will take out the old model and put in the new one," said Adams.

Alves said in the future, he'll always own his water tank and never rent one again.

"They have spent no money on this tank other than bring it in to my home eight years ago. Now they want me to pay basically the cost of another water tank to purchase their eight-year-old tank," said Alves.

Some companies are also trying to get homeowners to rent their furnaces and air conditioners, and while there may not be an upfront cost, you could pay three to four times more for the equipment over the life of the contracts.