Submetering Your Building's Electricity Paying for What You Use

Submetering Your Building's Electricity

 Some multifamily buildings have direct metering—the utility owns each apartment’s meter, and each resident pays directly to the utility based on an individual  utility rate. Others don’t have electric metering of individual units—the entire building is charged as a whole. This is known as master metering.  

 Most master-metered buildings were built in the 1950s and ‘60s, when electrical costs were low. The building management charges the  individual units either based on the apartment’s size or the number of shares the unit owners have in the co-op.  

 But let’s say there are two one-bedroom apartments next to each other, one owned by an  elderly woman who rarely even turns on her TV set, the other by a young couple  with two computers, two window air conditioners, a heavily-used TV, a DVD, a  cell-phone charger and more. Is it fair that both would be charged the same  amount for electric usage?  

 And from management’s point of view, master metering can lead to problems when electric costs go up,  or when enough of the unit owners or shareholders start to buy super-powerful  air conditioners or heaters.  

 In response to all these problems, more and more buildings with master metering  are beginning to switch their electricity usage to submetering, which allows  management to bill each unit individually while getting one bill of its own.  

 Of course, in every situation, people tend to pay more or less based on seasonal  factors—for example, many, if not most, apartment residents pay a larger bill in the  summer when they’re running their individual air-conditioning units. But with submetering, users  will see more of a difference in their electric bills based on usage.  

 Herbert Hirschfeld, P.E., an energy consultant in Glen Cove, says, “If you’re a unit owner not paying for electricity, there’s no incentives for you to purchase energy-efficient air conditioners or  refrigerators or use lower-wattage light bulbs, and no reason not to run your  air conditioner continuously from Memorial Day to Labor Day.”  

 The Public Service Commission (PSC) allows a master-metered building to convert  to submetering by installing meters (or submeters) to measure electricity in  the individual apartments, according to Hirschfeld’s website,  

 The utility company still charges the building at a bulk rate based on the  master meter, but the building itself bills each apartment in proportion to its  actual usage.  

 The PSC also allows a directly metered building to convert to submetering by  installing a master meter and changing the individual meters to submeters, says  the site. This helps such buildings obtain the utility’s bulk rate.  

 And it may be of particular interest to some readers that the PSC allows  conversion to submetering not only in co-op and condo buildings with total unit  ownership, but also in those with a mix of owners and tenants (typically  buildings that were converted from rentals).  

 Greg Carlson, executive director of the Federation of New York Housing  Cooperatives & Condominiums (FNYHC), says his organization has been advocating the use of  submetering in master-metered buildings since the mid-1970s. “It has long been established that by submetering, a building’s electrical usage is reduced by 15 to 25 percent. By going to submetering, it  is not only green, it is fair to the residents who will pay for the amount of  their usage.”  

 And that’s not all, Carlson says. With a “smart meter,” he says, a resident can tie his meter to a computer program that will let him  know when he is using electricity and how much it can cost him.”  

 Lewis Kwit, president of Energy Investment Systems, further explains, “You can save by using electricity when capacity is abundant, and refrain when  capacity is strained and prices are higher. For example, it’s better to turn on your dishwasher before you go to bed and not during the day.  Maybe it’s better to not answer e-mails until nine or 10 o’clock, rather than answer them in the middle of a heat wave at four in the  afternoon.”  

 Some Nuts And Bolts

 The way the submeters are installed depends on the design of the apartment  building. For example, says Jerry Fund, president of Automatic Meter Reading  Corporation, in some older buildings you have electric distribution closets in  the basements from which wiring runs directly into the apartments. There,  technicians have to go into each apartment and attach the meter there.  

 “But in most buildings,’ he says, “you have a distribution panel every third floor with a circuit breaker, and the  wiring goes from that distribution box down the hall to each apartment. In that  case, we can put the meter in that electric closet very simply, hardly even  turning off the power.”  

 Time-Sensitive Pricing

 Many people describe one type of billing method that results from submetering as  real-time pricing, or real-time billing. “In real-time pricing,” says Carlson, “residents can take advantage and reduce their electrical costs.  

 Others prefer to use different terms—for example, Hirschfeld prefers the terms time-sensitive pricing or time of use  pricing In this type of billing, the apartment itself is billed differently  during peak (most expensive), “shoulder,” and non-peak hours.  

 As an example of submetering with time-of-use pricing, his website gives the  example of Georgetown Mews, a co-op complex in Queens containing 37 two-story  buildings. The complex installed its submetering system in 2007, implemented  shadow billing (straight per-kWh billing, but telling the shareholders what  they would pay under time of use pricing to get them used to the idea) in 2008,  and then, in late 2008, initiated time-of-use pricing with a three-tier scale:  peak usage (most expensive), shoulder and off-peak.  

 As a result, says Hirschfeld, the buildings’ electric usage during the 12 billing periods up to July 2010 was reduced by  20.89 percent of the adjusted electrical usage and an associated cost avoidance  of 20.95 percent. Analysis also determined an adjusted reduction in belling  demand of 20.16 percent.  

 Physical Concerns

 Some buildings are easier to convert to submetering than others due to physical  reasons. In some buildings that haven’t had new electrical wiring since the World War II era, often have aluminum  rather than copper writing and can’t handle heavy loads, says Fund, “installing submetering is virtually impossible without rewiring the building.”  

 Still, say professionals, if there’s a will, there’s a way.  

 Hirschfeld says, “I’ve looked at hundreds, if not thousands, of buildings since 1980, and there was  only one building complex I can remember where submetering was impossible  because of the unusual manner in which it was wired.  

 “Generally speaking, in 99 percent of all master-metered buildings, it can be  done,” he says.  

 More Examples

 If you’re looking for examples of multifamily buildings where submetering has been  installed and is working, there are quite a few others. Just some of these are Jefferson Towers, Waterside Plaza, Penn South, Columbus  Park Towers, Gotham and West Village Houses in Manhattan; Fresh Meadows,  Greenpark Essex and Greenpark Sussex in Queens; Trump Village (Sections One and  Two) and Cadman Plaza North in Brooklyn; and Noble Mansion in the Bronx. These  examples were given by Hirschfeld and Kwit; there are many more.  

 How long does it take most residents of submetered buildings to see the  financial benefits of submetering? Much of that is up to the unit owners and  what action they will be willing to take to reduce energy use. If a unit owner  has been overcharged for electricity on a regular basis, then they will begin  to see the difference immediately.  

 Rule of Thumb, and Incentives

 By how much does submetering usually reduce owners’ monthly electric costs? Kwit answers that the rule of thumb is 15 to 20  percent, and it can be substantially higher.  

 For the board and management, there are government incentives for the process.  For example, the New York State Energy Research and Development Authority  (NYSERDA) earlier this year released its Energy Reduction in Master Metered  Buildings (ERMM) Program. The program is available for master-metered  multifamily buildings with more than five units where tenants currently don’t pay for their electric usage. The ERMM program provides up to 50 percent of  the cost of installing submeters as well as incentives for related  energy-efficient appliances. Still, there are very stringent eligibility  requirements that may limit a particular master-metered building from  participation in the ERMM program.  

 According to Ryan Moore, NYSERDA project manager, the ERMM program is available  for any building or board that wants to lower its energy costs by installing  advanced submetering, or Energy Star efficient appliances and lighting. The  program he said applies to all market rate co-op and condo buildings and  provides up to 50 percent of the cost of installing advanced submeters.  Buildings can receive $250 per meter, and $1,500 per master meter. Installing  Energy Star appliances, like a refrigerator, is worth $18 each in incentives,  with various air conditioning units, a $16-$19 payback, and lighting fixtures,  $15 each. An Energy Star commercial clothes washer is eligible for a $365  incentive.  

 Shareholders in a master-metered co-op must approve entrance into the program by  a majority or 51 percent vote, Moore explained.  

 “It can greatly help reduce your energy costs,” says Moore. “We normally see 15 to 18 percent in actual energy reduction.”  

 The program is due to expire December 31, 2011, but is likely to be extended. You can find out about the program on RMM.aspx  

 A Few Common Questions

 Here are some answers to common questions, by the way: Submetering does count as  a capital improvement, and under submetering, individual apartment owners can’t choose their own power suppliers. Remember, one power supply still comes into  the entire building.  

 While management itself can change the electricity provider for a building, this  has nothing to do with submetering one way or the other. The utility or ESCO  [energy service company] has nothing to do with the submetering process.  

 Now that we know about submetering electricity, can other utilities, such as  gas, also be submetered?  

 If you look at the web, it’s clear that in some places, submetering for water, and water costs, is a  reality. A company called American Water and Energy Savers advertises it for  various types of buildings, including multi-family residential, although the “success stories” they give are from the South and Southwest, not from our area.  

 “In the New York marketplace,” says Hirschfeld, “if people refer to submetering, 99 percent of the time it’s electricity. In New York high-rises in particular, it’s impossible to submeter water.” Still, one Brooklyn company, Jack Schwartz Water Management, advertises water  submetering. Kwit predicts that submetering of water will grow in the future.  

 Selling the Idea to Residents

 So now you know some of the nuts and bolts of submetering. However, there’s another factor, especially in condos and co-ops: the human factor.  

 “Doing the project is the easy part,” says Carlson of FNYHC. “Selling it to the residents is the much harder part. You have to analyze the  demographics of the residents in the building. Do you have rent-regulated  residents [like many co-ops that converted from rentals and still have rental  tenants]? If so, you should have a plan to deal with that situation.  

 “Once you put the demographics of the residents together, you make a plan  accordingly. This is like a political campaign,” says Carlson. You need shareholder/owner consent before starting a submetering  project.  

 Above all, find a knowledgeable consulting firm, engineer or contracting firm,  or have a savvy board member or manager do so. The energy you save may be your  own.   

 Raanan Geberer is a freelance writer, editor and a frequent contributor to The  Cooperator.  

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  • i want to request for the answer about how does a sub meter counts its units please
  • Hi Steven, There is some good information about how the submeters work to measure here: For electricity they have donuts that go around the wire to measure the current and then voltage pickups from each of the hot wires
  • I installed submeters in my 64 unit complex 15 years ago. They paid for themselves in one year because consumption dripped by a third. My immediate problem is that my submetering service no longer wants to offer disconnect service. I am therefore looking for software so I can read meters and bill tenants myself.
  • My building is proposing submetering but is not going to reduce maintenance. How does this save me money? Seems to be a big increase in my monthly expenses.
  • I would like to have a separate meter on my garage which has an overhead apartment on it. Do you know where to find this ? I just don't want that unit's electric on MY house bill as it is now.
  • How to know My submeter amount on online ? Pls Inform it ?
  • @an unknown user: It will reduce your monthly expense, because each individual unit owner will now have an incentive to conserve. When everyone pools their energy costs together, a lot of people waste energy, because they're not paying the full cost of their extra consumption. Economists call this the Tragedy of the Commons. Also, any energy savings investments you make will go 100% to you.
  • Can anyone add or transfer unit from mother/main meter to my sub meter?if so then how?
  • @John Neill: We installed submeters in our 70 unit co-op. We developed our own simple billing software to bill ourselves.
  • Does submeter work with one AC system? Each unit has to have its own AC system and thermostat, right? The cost of an AC system for each unit ($5k) is a problem for me right now. Do you know any other ways around it?
  • Does submetering separate electric service ? Fir instance, my landowner is always late paying bill. Sometimes its shut off, if submetered would it still be shut off or stay on for me,?
  • I'm researching the billing aspect of sub metering in a condo building where all of the units are individually owned. there is electric from the local utility company, there is pv solar panels on building roofs and a back up battery, and the developer owns the pv system. A solar company operates it and tells the association management company how much to bill the owners for their electricity monthly. How does this work? If the association gets a monthly bill from the electric company, the developer for the lease of the system and the solar company operator, the owners are paying for all of this upfront. The solar company gives the reading to the management company who bills owners their electric charges along with their monthly maintenance fees. Why is it that the homeowners association collectively pay all the bills for common area electric for the whole property as well as the electric bill for two buildings that are sub metered as well as paying the developer for monthly lease rent of the system and the solar operator monthly, and then the association management company bills the homeowners for their unit's portion. All of the electric bills were paid by the owners through the association and then they are charging the owners to "pay back" the association. Isn't this duplication? aren't the owners paying twice? How should this be handled so that owners aren't paying twice? thank you for your help. My apologies for the length of my question. thanks
  • Did anyone respond to your question I am wondering the same thing.
  • Hi there I have a question about does the coop have the right to charge. you for gas and electric if no meter present .I have been living in the building over 20 years and it is included in the maintenance.They have raised my maintenance twice in the past few years. But they want to start charging me a basic flat fee based on my shares not my usage. Please let me know if this is a legal way to go about this. Danny
  • What's the point of asking a question here, if no one answers it. The idea of a comment is to share, ask, and receive information. 🤷‍♂️