New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

HABITAT

ARCHIVE ARTICLE

The ABCs of Energy Grades

Co-op and condo boards will soon be taking a trip back to elementary school. In the coming months, their buildings will be awarded letter grades – from A to F – on their energy efficiency, and, just as in restaurants, those letter grades must be prominently displayed. If you don’t want potential buyers to make a U-turn as soon as they enter your lobby, read on.

How Energy Benchmarking and the Energy Letter Grades Relate
Energy benchmarking, as mandated by Local Laws 84 and 133, requires buildings larger than 25,000 square feet, including co-ops and condominiums, to submit their annual energy and water usage to the city using the Environmental Protection Agency’s Portfolio Manager benchmarking tool. One of the results of the submission is a calculated score, known as an Energy Star score, which is a numerical score from 1 to 100, comparing your building’s energy use with similar buildings nationwide. A score of 1 means you are among the worst-performing buildings, using the most energy per square foot; a score of 100 means you are among the best-performing buildings. Buildings with an Energy Star score of 75 or above are also eligible for Energy Star Certification, meaning the building is among the top 25 percent of all buildings from an energy-use perspective.
The Energy Star score is also the basis for your building’s energy letter grade, which the city will begin awarding later this year. Based on your building’s energy use and corresponding Energy Star score, the city has created a grading system that translates the Energy Star scores into letter grades as follows:
  85 to 100: Grade A  
  70 to 84: Grade B  
  55 to 69: Grade C  
  1 to 54: Grade D  
  Failure to Comply with Local Law 84:   
  Grade F  
How the City Computes Your Letter Grade
Typically, energy benchmarking is performed by a building’s management company or its energy consultant submitting the data – monthly electric, natural gas, steam, oil and water usage – with the Portfolio Manager benchmarking tool. All of this data is automatically shared with the city, so it knows exactly how much energy the building consumed and what its Energy Star score is for the given reporting period. Based on the results of the energy usage and the corresponding score generated by the Portfolio Manager, the city will be able to calculate your building’s letter grade.
What the Grades Mean
An Energy Star score of 50 is the median. So if your building scores below 50, it means it’s performing worse than 50 percent of similar buildings nationwide, while a score above 50 means it’s performing better than 50 percent of its peers.
Since the D grade covers all buildings with scores from 1 to 54, this will be applied to more than half of all buildings. A D grade indicates that a building is using more energy than buildings with grades of C, B and A.
The letter grades are intended to motivate building owners and managers to cut their energy use and thus improve their grade. An A grade presumably will attract potential buyers and renters to a given building, while a C, D, or F grade will lower the building’s appeal.
Posting Your Letter Grade
The city has yet to clarify the rules about exactly when and where letter grades must be posted. Based on current information, the letter grades are expected to be published in the fourth quarter of 2020, around October, and they will have to be posted in a conspicuous location near each public entrance to the building. Further details will be established by the city later this year.
Potential Fines for Failure to Post
At this time, the Department of Buildings has not set financial penalties for failure to post letter grades. Currently, if a building fails to submit its benchmarking data, it is assessed a penalty of $500 per quarter, for a maximum annual penalty of $2,000. The penalties for failure to post letter grades are expected to be similar to the benchmarking fines.
What to Do About a Poor Grade
It’s simple: to improve a building’s letter grade, a co-op or condo board must reduce energy use. The typical first step in the process is to hire an engineering consultant to conduct a comprehensive energy audit. One of the primary goals of an audit is to identify potential energy-conservation measures, such as upgrading lighting, HVAC and building controls. Another goal is to identify operational deficiencies and low- or no-cost improvements that will result in reduced energy consumption. This is typically covered during retro-commissioning, the process of ensuring that the energy systems in an existing building are installed according to the design intentions, are functionally tested, and are capable of being properly operated and maintained.
The final goal of an audit is to develop a capital plan to implement retro-commissioning and energy-conservation measures. The capital plan should be based on the cost of improvements, the potential energy savings and carbon-emission reductions, and the comfort and safety of residents.

Thomas Morrisson is director of energy management at the consultancy En-Power Group.

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