Sub-Metering Update: OEB Interim Decision

Article by Mike Chopowick

Disclaimer: As noted with previous bulletins on this matter, this bulletin does not provide legal advice.

Quick Summary of OEB Decision

• The order is meant to be an interim decision, until such time as the government brings into place a formal framework
• Any landlord who submetered after Nov. 3 2005 must go back and get detailed informed written consent from the tenant if they want to continue submetering
• This consent is required, whether or not the submetering happened to a sitting tenant, or on turnover
• As part of this consent, the landlord must have an independent energy audit done
• The following must be disclosed to the tenant in order to obtain consent:
a) the results of the energy audit required by section 2 of this Order must be provided in their entirety; 
b) the amount of any administrative charge that will be included on the electricity bills; 
c) a detailed description of the methodology used to arrive at the rent reduction (including information relating to how the electricity used by the common areas will be accounted for, how the electricity charges for non smart sub-metered customers
will be used in the rent reduction methodology, and any other numbers or assumptions used in the methodology); 
d) the specific amount of the rent reduction being offered to the customer; and 
e) the methodology used to apportion the delivery charges amongst the customers.
• If consent is not obtained, the submetering must be unwound “pursuant to structures and processes in place to resolve and adjudicate such matters”.

OEB Issues Interim Decision

The OEB has issued a decision on the matter of authorizing smart sub-metering systems in residential rental complexes. Please note that this OEB decision is an interim order and transitional in nature, pending future legislative action by the Ontario government.

While the order creates a framework for authorizing smart sub-metering, it places extensive responsibilities on landlords, who are defined by the OEB as “exempt distributors” of electricity (FRPO’s submission suggested that they were incorrect to find landlords to be distributors – this position has been rejected in this decision). The OEB’s decision requires costly and onerous tenant consent requirements which can allow existing and new tenants to opt-out of the government’s smart meter initiative.

The Board has determined that it is appropriate for it to make an order arising from this proceeding which will authorize discretionary metering activities by landlords, and those operating on their behalf, on certain terms and conditions.

The terms and conditions are largely directed to tenant/consumer protection measures. These consumer protection terms and conditions are summarized further below.

Smart sub-metering on or after 
November 3, 2005 is unauthorized

An important finding by the OEB is that any smart sub-metering installation in bulk-metered residential complexes and industrial, commercial or office building settings on or after November 3, 2005 is unauthorized (regardless of whether the arrangements were made with new tenants or pre-existing tenants) and any resulting financial changes to financial arrangements respecting the payment of electricity charges by tenants to be unenforceable.

However, the Board noted that its decision in this matter is not intended to impose any form of penalty, restitution order or other disciplinary action against “exempt distributors” (landlords), and states that any unwinding of changed financial arrangements that may be necessary should be undertaken within the context of the specific leasehold or rental arrangement existing between the tenant and the landlord.

Consumer Protection Measures

The OEB has ordered that smart sub-metering systems in residential complexes are only authorized if the distributors comply with the conditions below in order to use the smart sub-metering system for the purposes of billing their customers.

Landlords must:
• Obtain an independent third party energy audit of the property where the smart sub-metering system is installed. The report from the energy audit must, in addition to any other energy efficiency evaluation:
a. disclose the proportion of the landlord-supplied appliances within the individual units of the residential complex that are certified to be Energy Star or certified to be energy-efficient appliances; and 
b. assess the energy loss through the building envelope, and identify deficiencies that can be remedied through weatherization techniques for the building and the individual units. 
• Retain all contractual documents relating to the installation of the smart sub-metering system in the property including, but not limited to, documents regarding the costs of installation, the costs of the capital assets, and the administrative fees for the smart sub-metering provider. This information must be provided to any customer of the distributor, or the Board, upon request.

• Only use the smart sub-metering system for their customers that consent in writing to the use of the smart sub-metering system. The customer’s written consent must be voluntary and informed. Tenants must be provided with:
a. results of the energy audit 
b. the amount of any administrative charge that will be included in electricity bills; 
c. a detailed description of the methodology used to arrive at the rent reduction
d. the specific amount of the rent reduction being offered to the customer; and 
e. the methodology used to apportion the delivery charges amongst the customers.

• Obtain new consents from tenants in accordance with the terms and conditions in this Order. The terms and conditions contained in this Order apply to existing customers as well as prospective customers.

• Must use a licensed smart sub-metering provider if the distributor is going to conduct discretionary metering activities in relation to a smart sub-metering system.

• Must promptly post a copy of OEB Decision and Order 2009-0111 in a prominent location in each building in which a smart sub-metering system has been installed.

Future Government Legislative Action

The Board has considered statements made by the Minister of Energy and Infrastructure respecting his intention to enact regulations authorizing discretionary metering activity by landlords on appropriate terms and conditions. The Minister has indicated is intention to introduce legislation and develop regulations for this purpose later this year, following 

Full Copy of the Decision

A full copy of the decision can be found at the link below. Interested parties are encouraged to read the full decision:

For More Information:

Mike Chopowick
FRPO (Federation of Rental-Housing Providers of Ontario)

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