Tag Archives: submetering

When Technology is Ahead of Multifamily Regulations – What Are Your Options

The rapid evolution of technological advances in energy and utility metering and billing platforms is constantly surpassing the current regulatory arena causing most companies to turn a blind eye. From new software-based HVAC systems to touchscreen metering devices, in-house legal and compliance departments are encountering difficulties in advising their clients appropriately considering legislation is light years behind.

In looking at the Texas market, many companies are selling smarter technology to multifamily building owners at low costs with enhanced energy efficiency, guaranteed savings and cost-recovery for utility usage. Simultaneously, the Substantive Rules governing electric, water, and HVAC metering of multifamily properties in Texas remain steadfast with requirements to use only watt-hour or volumetric sub-meters or choose to allocate energy and utility charges by subpar standards, such as by square footage or number of occupants.1 Such outdated regulations limit owners from using smarter technology that may provide a more accurate measurement of energy and utility usage.

That being said, every new technology doesn’t necessarily warrant new legislation; however, outdated legislation can create havoc for regulatory and compliance teams. For example, attempting to accurately determine whether use of energy efficient systems that provide Green Building Certifications is within compliance may set up companies for potential risks against future regulatory violations and litigation.

Allocation: Is it Really Fair?

The multifamily industry needs to remain aware of the currently regulatory landscape and its puclimits in allowing property owners and consumers to potentially benefit from smarter technology.

Specifically, in Texas, tenants may be billed for water and electric usage based solely on the square footage and/or occupancy of their apartment unit. This type of current legislation may cause tenants to pay for energy usage not used solely by the tenant.

You may have one tenant occupying an 800-square foot apartment unit and three
tenants occupying a similar 800-square foot apartment unit while both units are billed for the same amount of energy usage. By adding smarter technology solutions as an option under current regulations, property owners may be able to more accurately measure usage by applying additional factors, such as thermostat set points, valve position and timing, as well as individual unit energy load (demand) for a more accurate assessment of energy usage.

The scenario above is common. In Texas alone, the Public Utility Commission of Texas lists 6,970 submetered and allocated properties. Of that 6,970, only 24% are submetered, with the remaining 75% allocated.

The following provides a high-level overview of some compliance issues with the use of smarter technology for measurement of energy and utility consumption:

Key Focal Points with Technology and the Resulting Issues
type-of-technology
Why Regulatory Change is Critical

The primary reason for regulatory change is to meet the demands of property owners who are seeking more energy efficient systems to accurately assess energy charges to their residents. In turn, consumers are seeking more accurate billing methods for energy consumption. Property owners benefit from smarter technology due to the design/installation flexibility, lower installation and maintenance expense, long-term energy cost savings and green building certifications. In addition, consumers also benefit from smarter technology with more accurate measurement devices/software, energy savings due to efficiency, and lower costs allocated as a result of an owner’s savings realized overall.

So where lies the disconnect between regulatory agencies and the industry? Due to the literal meaning of the regulations and lack of regulatory action in the past years, property owners are limited in their use of smarter technology since such use will prevent recovery of energy and utility charges from their residents. In addition, property owners are entrusting the sellers of the smarter technology to provide the due diligence that will allow implementation and use of the technology in this current regulatory arena. Unfortunately; however, property owners are stuck with an enormous project that is of no use after proper review of regulations. Meanwhile, residents continue to be billed charges based on the most inaccurate methodologies of square footage and occupancy or outdated metering systems. 

To avoid these issues and take advantage of the smarter technology, consider the following steps to avoid future compliance issues:

Steps to Consider to Help Avoid Compliance Issues

  • Prior to purchase of smart technology systems, complete due diligence in (1) regulatory research (i.e., regulatory landscape, intent, need for approvals, etc.), (2) manufacturer studies, specifications, testing, actual use, and (3) review of seller’s references.
  • Search for third-party billing providers willing to work with you through the regulatory approval procedures, if necessary.
  • Conduct proper training of leasing staff to keep residents well-informed.
  • Ensure lease language incorporates new technology/billing methodologies with simple summary notices for ease of reference by residents.

While the current regulatory landscape does not incentivize owners to incorporate smarter technology and more energy efficient products within their properties, there are a few methods available that may allow owners to take advantage of energy savings.  Until legislation catches up, owners may have to take the extra, but necessary, steps to ensuring proper implementation of these smarter systems for measurement of energy and utility consumption.


kim-godsey
Kimberly Godsey, Esq.
Attorney, Director of Legal Affairs
972.386.6611, x422
kgodsey@minolusa.com

Kimberly has a wealth of experience in regulatory review and compliance. She led the development of Minol’s internal regulatory database that covers all fifty states and contains third-party utility billing compliance information from the utility provider requirements through state regulations. She has facilitated seminars for multifamily property owners in Texas and Massachusetts discussing utility billing compliance. She is a member of the Utility Management and Conservation Association.

She is a graduate of Texas Wesleyan School of Law (currently Texas A&M University School of Law) and is a licensed attorney in the state of Texas.

(1) See P.U.C. Subst. R. § 25.142, § 25.142, and 30 TAC § 291.121-127.

THE INFORMATION CONTAINED HEREIN IS FOR INFORMATIONAL PURPOSES ONLY. IT SHOULD NOT BE CONSTRUED AS LEGAL ADVICE NOR RELIED ON AS LEGAL AUTHORITY. PLEASE CONSULT LEGAL COUNSEL TO DETERMINE SUITABILITY FOR YOUR SPECIFIC PROPERTY.

Water Submetering Best Practice Series: Part 1 of 3

Preparing for a New Construction Submetering Installation

I travel quite a bit for my job and it’s a rarity when I look out the cab window on my way to a client meeting that I don’t see dirt being moved. The construction market is hot for multifamily, university and affordable housing. While some markets are seeing a slight slowdown, particularly those heavily driven by the energy industry, most are still in boom mode.

Multifamily Executive still projects 2015 new construction to rise 76 percent above the historical average to 211,000 units. This would represent the highest level of new completions in a calendar year since the 1990’s. To put it in perspective, in 2012 new completions totaled just 79,000 units.

With so many projects and tight deadlines, submetering is often overlooked in the initial planning process – even in states that require submetering on new construction such as Texas, Georgia and California. Planning early not only saves time and money but headaches for your Project Management team.

If you are a contractor, your goal is to complete the project on time and on budget. If you are an owner or management company, your goal is to recover utility expenses that otherwise hit your bottom line. With rising water costs and shortages nationwide, water meters are becoming a standard fixture in new construction. One of the biggest pitfalls for not planning that impacts both parties is the costs involved when the plumber has to go back and installSubmetering Benefits tubes and couplings in each unit after he’s already completed the initial work.

Best Practices for a Seamless and Cost Effective Submetering Project

Plan Early
Don’t wait until the building is framed. The best case scenario is to include the request for submeters in the architectural plans. Also, make sure to identify which contract the submetering installation will be under – General Contractor, Mechanical Engineer or Plumber contract. You will then want to work closely with them to select the best meters for your project.

Choose Wisely
When selecting meters, make sure they are designed for horizontal installation. Work with your project team to insure sufficient room has been provided for the meter so read accuracy is not effected.  Another critical component is the AMR system. Always choose a non-proprietary AMR system to avoid technical and financial challenges as your system ages.

Central Boiler Systems
Are you installing a central boiler system? If yes, each unit must have a single entry point for both cold water and hot water with shut off valves. If you are not installing a central system, you will only need a single meter for each unit. Make sure the meter is easily accessible. Typically, next to or above the hot water tank is the best location for optimal performance.

If you are using gas to heat the boiler, make sure you meter everything so the owner can recapture gas costs associated with the water systems.

Valve Location
Valves must be in an accessible area. Preferably, valves are located outside the wall in an accessible area so the system can be maintained. If they are in the wall, access panels must be able to open. Otherwise, if valves are completely inaccessible, the building must be shut down to perform maintenance.

Tubes and Couplings
Don’t forget tubes and couplings need to be installed by a plumber during rough plumbing. These are sent by your submetering provider to the plumber or GC. It is their responsibility to install during rough in.

Timing is Everything
Do not put in a meter right before the plumber flushes out the lines. Lines get flushed when they are ready for their certificate of occupancy.

Hold the Phone
Make sure you have an Ethernet connection. Analog phone lines are being phased out and you don’t want to find yourself with an outdated connection.

Start Planning for Submetering Early in the Project
The sooner you plan, the better chances for a seamless installation. There is no financial benefit to having your plumber install a submeter versus your submetering provider. It is best to have your submetering provider manage the installation since they will need to install the transmitter and calibrate each meter to the appropriate transmitter. Properly commissioning the system to insure the transmitter is connected to the assigned unit is imperative to make sure the owner is billing the correct unit.

Be prepared to bring in reliable partners to help you select the highest quality and most cost effective submetering solution. They will also determine the best configuration for your building type. The payoff is well worth the effort – greatly increasing revenue and property value while also encouraging conservation.

                                                                                                                                                                       

Phil NePhil-Neeveseves
National Director of Multifamily Solutions
719.304.4111   pneeves@minolusa.com

Phil Neeves, a 20-year veteran of the submetering industry, is regarded as one of the leading industry experts in heating and cooling cost allocation systems.

Prior to joining Minol, Neeves served as Vice President of Central Region for ista North America. His experience includes 16 years in the submetering industry and 14 years as an owner/partner of a full-service real estate company specializing in syndicating multifamily apartment communities nationwide. Neeves extensive expertise in submetering and energy allocation has allowed him to successfully guide clients through utility metering conversions for both conventional financed and HUD insured properties. He served three years on the Board of Directors for the National Submetering and Utility Allocation Association (NSUAA) and is a Lifetime Member of the America’s Registry of Outstanding Professionals.