Article
by Greg Drew
The energy industry in Ontario is staggering
through massive changes. The aftershocks of the August
blackout are still resonating and third quarter productivity
reports magnify the negative financial impact of that
momentous event. As the struggle continues to maintain
and operate our nuclear generators, the need for conservation
has become brutally apparent.
Property owners are faced with impending
increases to their electricity costs. An often overlooked
opportunity to reduce costs is electricity sub-metering.
What is electricity
sub-metering?
Sub-metering is the measurement and billing
of electricity consumption for individual suites in a
bulk-metered, multi-unit building.
With the installation of a sub-metering
system, the landlord implements a fair user-pay billing
system, and the subsidization of wasteful tenants is eliminated.
In a typical apartment building, 10% of the residents
use 25% of the hydro. In an individually metered building,
the residents that practice conservation benefit with
lower monthly expenses.
At the same time, the building owner is
only exposed to the electricity expense for the common
areas. Depending on the nature of the electrical loads
within the building, this may represent as little as 20%
of the overall electricity cost. Under this scenario,
a 10% increase to electricity rates represents only a
2% cost increase to the building owner.
The consumption for common area electricity
usage remains virtually static year-over-year, making
budgeting significantly easier. In a bulk-metered building,
the landlord is exposed to the potential for large increases
in consumption which may result from changing weather
patterns, an increase in the number of air conditioned
suites, or a change in the building’s demographics.
Sub-metering differs from direct metering
by the LDC (Local Distribution Company – i.e. Toronto
Hydro) as the residents can benefit by being invoiced
based on the lower bulk-metered rates charged to large
consumers. As well, residents may profit from the decreased
administration fees levied by sub-metering companies in
comparison to those of the LDCs for direct-metered buildings.
There are multiple methods available for
financing a sub-metering system including (but not limited
to) paying for the system outright as well as various
means of on-bill financing. An owner may benefit by applying
to Natural Resources Canada for financial incentives to
help fund the cost of qualifying energy conservation projects
through its Energy Innovators Initiative (EII) program.
Access to sophisticated online reports further enhances
the value of a sub-metering system.
Already reeling from the impact of a soft
rental market, property owners must now face the spectre
of imminent electricity price increases. With electricity
representing one of the largest operating expenses for
multi-residential dwellings, landlords must recognize
that electricity sub-metering offers a means to limit
exposure to future increases in consumption and electricity
rates.
