LCS publishes an ongoing series about decision making. Below you’ll find a quick rundown on sub-metering, what it is, how it works, and the benefits it provides to building owners, operators, and tenants.
As a building owner/property manager in the affordable housing arena, your options for costing tenant power consumption are limited. Most times, you pay for the power consumption of your tenants by including it in the cost of their regulated rent; however, studies show that when utilities consumption is factored into rent as a “hidden” cost, tenants are largely unaware of their personal usage (IE: leaving lights and appliances on, among other undesirable behaviors), elevating power costs, and costing you money.
Sub-metering allows you to transfer the cost of energy to the tenant, while saving you money, even in the face of regulated utility allowances.
Let’s begin with a bit of napkin math: your tenant’s monthly income is $1,000, and regulations stipulate that only 30% of that income is allowable rent. That’s $300/mo. in rent. Let’s say your tenants use $75/mo. in electricity, making your net collection $225. With sub-meters installed, and having transferred the cost of energy to the tenant, you reduce rent to $250/mo., in accordance with utility allowance regulations. You’re now saving $25/mo. in energy expenditures. In addition, with the tenants now responsible for their own, exact usage, studies prove that overall consumption goes down (up to 30% less).
How do you sub-meter?
Sub-metering is the practice of installing third party meters after a main utility company meter to track individual units’, systems’, or buildings’ energy usage. The concept has been around since the 1920’s, but technology has only allowed this to become common practice beginning in the late 1980’s.
With regard to transferring the cost of energy to your tenants, this means you would contract a company that specializes in this practice and consult with them to design, install, and monitor the sub-meters. This will account for each individual unit’s usage, and then billing can be broken out accordingly. It’s that easy.
There exist companies, such as Accurate Metering Products & Services, that provide all services concerned from start to finish – they design, install, monitor, and bill your tenants; and there also exist companies and contractors that provide services for only one or two steps in the process (an electrical engineer, for example, may be able to install the equipment, but they may not offer services regarding system design or monitoring). Identify what your needs are, and then contact the company or contractor who can best meet them.
What are the additional benefits of electrical sub-metering?
When end users are aware of and/or directly responsible for the cost of their energy usage, studies show that their energy consumption is drastically decreased [*]. Sub-metering can reduce your energy costs by up to 20% (and sometimes more). Sub-meters can be temporarily installed to diagnose areas of excessive energy consumption or to assess the success of energy efficiency measures.
- Transfer the cost of energy usage to the client – when energy costs are a hidden component of tenant rent, they tend not to conserve
- Sub-metering positively impacts tenant behavior regarding
- Sub-metering generates accurate billing – all equipment is certified accurate (to meet or exceed national standards)
- Sub-metering can help you evaluate where to best spend your energy conservation dollars by calculating usage over time and peak usage hours of your energy using systems
Sub-metering results often have a positive environmental impact, reducing Carbon Dioxide, Sulfur Dioxide, and Nitrous Oxide waste levels.
What is sub-metering?
Sub-metering can be used to facilitate power conservation and utility cost reduction, but it can also be used as a temporary tool to sample power usage. For example, you own a building with an HVAC system with ten package units. Recently, they’ve been consuming more energy than is typical. By outfitting individual units with their own sub-meters, you will be able to determine which unit(s) is causing the increase in power usage.
For example, you want to install low energy LED lighting in your building, but want to know how much energy the current fixtures are using in order to calculate savings. Or perhaps you have limited funds and you need to decide between improving the efficiency of you lighting or HVAC systems, so you will need to know which consumes more power so you can make the best decision.
This is the flexibility that sub-metering provides.
Why choose sub-metering?
- It’s easy
- It saves you money via power conservation
- Data suggests that commercial buildings with lower energy usage – and the means to track energy usage by tenant – are more desirable, easier to lease, and have a higher market value [**]
- Sub-metering allows multiple loads from several facility locations to be aggregated to reduce costs by leveling overall demand [***]
What are your sub-metering options?
Three different types of sub-meters exist:
- Electromechanical (Socket)
- Electromechanical (Current Transformer)
In most cases, electronic is the superior option, as the equipment is cheaper, smaller, requires no interruption in service to install, and can be placed anywhere, all while providing the same features as both electromechanical models [***]; however, it is highly recommended that you consult with an expert to adequately address your specific needs.
What are the regulations?
All standard HUD approvals are required, including baseline submittals, etc.
Also, the State of California Division of Measurement Standards requires that tenants must have access to their actual usage. According to conversations LCS has had with specific service providers (including Accurate Metering Products & Services – www.accuratemetering.com), this means actual meter access. Tenants must be able to see their energy usage in real time. In addition, billing must show all meter ratings and rates specified by the servicing utility company including an accurate and true account of all meter activity. All other standard TCAC, CPUC, and investor regulations apply.