Jennifer V. Hughes in Building Operations
You probably live in a "master-metered" building , in which all of the building’s electricity use passes through one meter. Then the co-op or condo, which usually buys electricity at a bulk rate, bills each resident a proportionate amount – either by number of rooms or another formula – and adds it to the monthly maintenance or common charges. Residents with specific energy-gulping appliances usually get a surcharge added – but, even so, “The people who use too much energy are being subsidized by the rest of the building,” says Luke Falk, project manager with the New York State Energy Research and Development Authority (NYSERDA).
That’s why submetering seems attractive to many boards looking to reduce energy bills. Power is still tracked through a master meter, but each unit also has its own meter (either physically in each apartment or housed in an electrical closet or in the basement). And this way, each resident only pays for what he or she uses. NYSERDA estimates that residents, when paying for their own electricity via submetering, use between 15 and 30 percent less electricity.
The system is similar to those that exist in directly metered buildings, where each unit has its own meter and each resident gets his or her own bill from Con Edison. The difference is that residents don’t get the break of buying electricity in bulk. With submetering, that option is available to the building.
At Deepdale Gardens in Little Neck, Queens, “The cost of electricity has been skyrocketing,” says Shaun Carr, first vice president of a 1,396-unit co-op board pursuing submetering. “With that and with the NYSERDA [incentive] programs, we thought that now was the time to push ahead,” says Carr. If approved by the shareholders, he says, the project will lower everyone’s electricity costs and could lead to more energy and money-saving measures. Deepdale could see a payback on its investment in four to six years, says Tom Sahagian of the New York City energy-consulting firm Power Concepts. One of the biggest backers at Deepdale is a group of older residents who spend much of the winter in Florida. Under submetering, their winter bills would plummet.
The latest submetering technology allows for time-sensitive pricing. Energy producers charge more for electricity at certain times of the day than and others. With certain submeters, buildings can participate in programs that allow them to buy power at cheaper rates, because the meters can track when power is used during low-cost times. Some submeters assist by displaying lights that indicate when power is cheap.
Then there is curtailment, in which buildings agree to cut back on power usage during high-demand times – and are paid for the effort. Finally, in some cases, submeters can be used to regulate heat. (See “Green Report: Curtailment Is Now,” Habitat, October 2007.)
Submeter equipment and installation costs range between about $400 and $600 per apartment. There is an additional meter-reading fee that usually ranges from about $1.90 to $3.50 per unit monthly.
There are cases when submetering might not be cost-effective. Sometimes buildings are too small to benefit, although Sahagian says he's worked with some that have as few as 30 units. In very rare cases, notes energy consultant Herbert E. Hirschfeld, buildings will have wiring so complex that submetering doesn't make fiscal sense.
And in any event, people who have been involved in submetering agree that implementing it is not a simple process. “There is no such thing as a one-year project, even if it’s a small building,” says Hirschfeld. One element that can seriously complicate submetering is if there are rental units in the building, since the New York State Public Service Commission (PSC) requires boards to submit detailed information about the submetering plan.
Also, if only one tenant opposes the switch, the PSC will not approve and the building can’t go forward. However, you can install meters and just not enroll the renters in the program. The PSC requires that a majority of voting shareholders have to want it. That means if there are 1,000 units and just 20 vote, only 11 have to agree.
NYSERDA offers submetering incentives under its Multi-Family Performance Program. Buildings sign on with a NYSERDA-certified company that evaluates the building, creates a plan to reduce energy consumption by 20 percent, and then makes the necessary changes.
Submetering is one way to reach that goal, and so NYSERDA pays up to $150 per unit for market-rate buildings to submeter. Note: NYSERDA will not include submetering incentives unless related other measures are also implemented. (See “Green Report: NYSERDA Primes the Pump,” Habitat, June 2007.)
At Deepdale, the proposed submetering project includes upgrading the complex’s master meters; bids so far range from $695,000 to $1.1 million. NYSERDA’s incentives are projected to cover about $295,000. Whatever is not covered will come out of the co-op’s reserve fund.
If the project is approved, Carr says the board will work hard to educate residents about how to save energy and money. “We’re not just going to say, ‘Thanks for the vote, goodbye.’ We’re going to help them prepare for this new idea.”
Adapted from Habitat November 2007. For the complete article and more, join our Archive >>
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.
A free digital resource for co-op/condo board directors. Published twice a month. Read now on all digital devices.