Submetering Saves Money

Submetering Saves Money

You live alone. You work long hours. When you aren't home, you turn off

all the lights and the air

conditioning. You do everything you can to conserve energy. Your neighbors, on the other hand, have five kids and are home all the time. Even when they go out they leave the air conditioning on. In fact, there is always something electric on in their apartment: the TV, the stereo, the toaster oven. The shocking thing is, you both pay the same amount for electricity. Is it fair? No.

Don't fret. There is a solution to your problemsubmetering. In a building with submetering, each unit is billed for the amount of electricity used in that unit only. So a single person who is energy conscious doesn't have to pay the same amount as a family of energy-guzzlers.

Master Metered Buildings

A master metered building has only one utility meter that records all the electricity used on the premises in all the residential units, professional offices and commercial spaces. Because only one meter services the entire building, tenants do not receive an individual monthly electric bill. Everyone in the building pays the same amount per share or by square footage. There is no standard against which tenants can measure their electrical usage to implement various energy conservation techniques. With no one responsible for what they use, there is no incentive to be frugal with electricity, says Dick Koral, director of The Apartment House Institute of New York City Technical College.

Direct Metered Buildings

A direct metered building is one in which the tenants are individually metered directly through the utility company, such as Con Edison. In addition, the building is separately metered for its use of power for the common areas. The commercial and professional areas are also individually metered and pay the commercial rate.

The Ins and Outs

In a submetered building, energy enters through the master meter and is fed out to each unit through submeters, which read the electricity that is used in each individual apartment. The advantage of submetering is that you get to keep your wholesale rate and people pay for what they use, explains Koral. The meters are usually located in electrical closets located in the hallways or in the basement so that no one will have to enter an individual apartment to read the meter.

With new technology the meters can now be read electronically without anyone even stepping into the building. This is done through computer metering where a centrally located computer will call into the metering system and have the data transmitted to the main computer. Once this happens the computer can give itemized printouts of how much electricity has been used in each unit. The building will still receive a monthly bill from the utility company, but the tenants will be billed individually by either the building or a private company like Computer Metering, Bay City Metering or E-Mon Corporation.

Switching Over

Before a building can switch over to submetering, several steps must be taken to make sure that it is done properly. The first and foremost is to get board approval. Boards have to weigh the pluses and minuses, states Mitch Gelberg, a managing agent with Manhattan-based Rose Associates, Inc. Is this something they want to do? For some buildings it is advantag ffb eous to install submetering because the extra few thousand dollars saved can put them over the top. Then again there are buildings that may not want to deal with individual meters and are happy with the master meter system. Others may have to worry about 80/20 problems. I personally recommend it and all of the buildings I manage are submetered.

After the board votes for approval, the vote must be certified by Con Edison. If the building is a direct metered building, the board must seek approval from the Public Service Commission (PSC) and 70 percent of the shareholders. Finally, the proprietary leases must be altered to state that the building now has submetering and that the tenant is responsible for paying the electricity to the building.

For a direct metered building the process for switching over is a little more complicated. After getting all the proper approvals, the building must switch to a master meter and then purchase the existing individual meters for a nominal fee from Con Edison. Then the submetering company will come in and handle all of the metering and monthly billing.

When a direct metered building switches over to submetering, money is saved because the service classification rate changes from number nine to number eight which is the bulk rate. By switching to the service classification rate, all of the tenants and the building will be purchasing power at 17 percent less than they were paying prior to switching over, says Jerry Fund, president of Computer Metering Corporation in Manhattan. There are additional savings because the individual used to pay Con Edison $6.43 per month to have them read the meter and do the billing. We can do the exact same thing for less than half.

Choosing the Best System

Once the board has decided to switch the building over to submetering, there is still more work to be done: choosing a contractor and choosing the type of meter that will work best with the building. There are many meters on the market and each company has their own brand.

E-Mon Corporation, a metering company based in Pennsylvania, manufactures meters that have LCD displays and can be read by a computer that will give specific printouts on how much electricity has been used. It can turn billing statements into charts that can measure the demand at particular hours of the day. We are very proud of our software products. We definitely feel that this is going to be the way all meters will one day be read, states James Leonard, national sales manager of E-Mon. By doing everything over the computer you won't get bills that say your usage was estimated based on the previous month because the reader couldn't get to read the meter. Everyone will also be able to see the exact amount of electricity they used and be able to conserve accordingly.

E-Mon also offers onsite surveys to help buildings figure out ways to conserve energy. We will go through the building and point out how they are wasting energy. For example leaving the light on in the laundry room when no one is using it late at night or even cooling the basement during the summer. This can all be cut down and in turn save money, Leonard explains.

Computer Metering offers free equipment for five years. All the building has to do is pay for installation. They also conduct surveys that will help the building cut back on electricity usage.

Huge Potential Savings

It does take a great amount of research, as with anything having to do with the building, when switching over to submetering, states Benjamin Abbot, board president of his 389-unit co-op on East 23rd Street. Because there are so many types of products out there you have to be careful about what you are doing. You also have to find the company that is going to respond to your needs in a timely matter. At times it can be overwhelming, but in the long run it was definitely worth it. Our bills are down approximately 25 percent.

Even with the expected savings from switching to a submetered system it does take a few months to see the results. When a buildi ffb ng first switches over to submetering people freak out when they get their first bill because they see just how much electricity they are wasting, explains Fund. It usually takes a few months for them to settle down and start conserving electricity. It is at this point that they start to see the savings, which can be in the range of 17 to 20 percent.

Leslie Bernstein, a former board member, remembers the complaints when her building on Grand Avenue switched to submetering. It took a lot of convincing to get the board to switch over to begin with. When we finally switched over all of the board members were stopped in the building to hear people complaining that they were paying more and that switching over was a waste of money, recalls Bernstein. After about four or five months the angry shareholders stopped complaining. People started to realize that they had to conserve; that they couldn't leave the AC on all the time and that they had to turn off lights when no one was in a certain room. It took them a while to understand that by conserving their electrical usage they would see some real savings. Nobody complains now. If they have a high bill it's because they used too much electricity. There is no one to blame but themselves, Bernstein says.

This is not to suggest that anyone is a deliberate waster of electricity, adds Fund. Submetering and the monthly receipt of individual printed electric bills simply provides a means, and an incentive, to examine your individual monthly usage of electricity and reduce it. Whether it is how you use your air conditioner, dishwasher, refrigerator, or lights, there is room for conservation. It is the right thing to do, especially at this time of substantially higher and higher charges for electricity, almost on a monthly basis.

Another benefit of submetering is that it can defer significant capital expenditures necessary to increase power riser capacity. If your building is seven to ten years old, there is a good chance that it is close to the point where the risers that distribute electricity throughout the building are operating at full capacity. Unless something is done to cut electric consumption, substantial and expensive capital improvement will probably be needed within the next few years to enhance the capacity of these risers, explains Fund.

According to Fund, every building in which his firm has installed submetering has benefited from a substantial reduction in electrical consumption. We have not lost a single building. It is also important to remember that savings will be carried over whenever the utility company raises its rates. You will always save 17 to 20 percent, Fund estimates.

And, adds Koral, By making people think twice about the amount of electricity they use, the better it is for the environment and for their pockets.

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2 Comments

  • After reading the above selling points on submetering, I find it frightening that a corporation could wield that kind of control over my electric. I know exactly how much energy I am using by direct metering through Con Edison. In so doing I am able to conserve by the amount on my monthly statement. What Buildings are now submetered in Manhattan? Please provide addresses so one can substantiate your claim of a lower percent or savings.
  • Please clarify. I believe if you are in a master metered building already that is switching to submetering then the PSC only requires a simple majority of those that take part in a canvass and not 70% of the shareholders.