People who study electricity usage have concluded that one major opportunity to save is to have more submetering. It is simple for a building (residential or commercial) to have a single electric meter to give the owner one bill to pay the utility each month. The owner then apportions that bill to the tenants, using some formula to pay back for tenant usage. This is fraught with many problems. First, it is wasteful because if a tenant is not directly billed for its usage, then it is not motivated to conserve electricity and will, thus, be wasteful. The New York State Energy Research & Development Agency (NYSERDA) estimates that submetering – the tenant knows it will pay directly for their specific usage – reduces overall electricity usage by 15 to 30%. Savings in this range have been estimated in other locations in both the residential and commercial market. This is the impetus behind NYC Local Law 88, which requires all buildings 50,000 sf or greater to submeter all tenants of a certain minimum size by January 1, 2025.

In addition to energy savings, submetering is also good for building management, not to mention the stress level and health of the manager. Without submeters, how does one apportion electricity usage among tenants who perform different operations or have different routines or equipment? I was involved in a project years ago involving a mall that rented space to a variety of retail and professional firms. They were serviced by a single electric meter and that landlord apportioned monthly charges for electricity based on square footage size. The more room you took up, the more you paid for electricity. There was no motivation to reduce energy usage. After a dispute with one tenant, a restaurant, the landlord started to question his approach. In response to the dispute, the landlord changed the apportion and requested double the share to this restaurant. The restaurant owner, as you can imagine, was incensed and sued. I was brought in to determine the more likely inequities of charging the same rate per sf for a variety of tenants. It turned out that because of the large amount of refrigeration equipment, lights, and long hours of this restaurant, even doubling their electricity share was still not fair. They used more than three times as much electricity per square foot as the simple accounting or law firm or insurance agency, which operate a moderate number of lights, only one small refrigerator for worker lunches, and generally only from 9 am to 5 pm. Even the landlord himself had been shortchanged, as he operated in common areas just a small number of lights and other trivial electricity sources. The landlord submitted my report to the judge who agreed and ruled against the tenant and that it was fair to apportion more than the others. The landlord eventually submetered his mall, so this kind of dispute (and aggravation) will not come up again. Even the tenants applauded this, no longer having to worry about others taking advantage of the situation and knowing they would be charged for their actual utility consumption rather than a pro-rata share based on the square footage of their leased space.

Be aware that submetering is not just a simple installation and re-wiring job. For long-lasting benefits, this must be done professionally and should have input from IT professionals and electrical engineers.

It is likely worth the investment to tie submeters into building management networks to give landlords and tenants real time visibility into energy usage. Tenants can see where their electric bills are heading and incorporate changes in mid-cycle and not wait for their bill. Building owners and managers can use submetering data to plan for maintenance, upgrades, and future expansions.

CCES has the experts to advise you on potential submetering for your building and bring in experienced vendors to bid and implement such efforts to save you costs and reduce your stress. Contact us today at 914-584-6720 or at karell@CCESworld.com.