Legislative and Regulatory Trends In
Utility and Energy Management
Michael Foote & Mary Nitschke
Agenda
•
•
•
•
•
Utility Benchmarking
Submetering
RUBS (Ratio Utility Billing Service)
Lease Language
Q&A
About NWP
• Founded in 1995 - NWP has focused on building
the most secure, legally compliant and diverse
utility management platform in 50 states
• Largest and most experienced legal team in utility
billing and energy management in multifamily
• Serve property owners and managers of all types
and sizes
• Learn more at www.nwpsc.com
About Prometheus
• Our mission is, very simply, to revolutionize the
apartment industry
• Founded in 1965, Prometheus has a growing portfolio
of over 18,000 units in the Bay Area, Seattle, Portland
and Los Angeles Metropolitan areas
• Specialize in the acquisition, development and
management of high quality residential and
commercial properties
• Property Management Firm of the Year Award for 3
years in a row
Utility Benchmarking
What is it?
Why is it important?
What do I need to worry about?
Utility Benchmarking
Multifamily owners /
operators must comply with
local or state regulations
– EPA EnergyStar Portfolio
Manager
– Varying deadlines
– Varying penalties for noncompliance
Utility Benchmarking
• Seattle:
– Failure to accurately disclose
• $150 for the first violation. If not
remedied within 15 days,
• $150 per day for the next 10 days
and
• $500 per day for each subsequent
day.
– Failure to disclose to a tenant,
prospective tenant, buyer, or lender
• $150 for first violation,
• $500 for each subsequent violation.
Utility Benchmarking
• Washington, D.C.
– $100 per day for any
non-compliance after a
30 day period to cure
deficiencies
Utility Benchmarking
– Varying duties for
owners due to audit
findings:
• Austin: Retrofit electric,
heating and cooling
systems for buildings
that do not meet
targets
Utility Benchmarking
• EnergyStar Portfolio Manager
integration
– All jurisdictions using Portfolio
Manager
– Utility Expense Management partner
should have data and expertise
• Required in the following
jurisdictions in chronological order
Washington, D.C.
Law - Clean & Affordable Energy
Act
Disclosure - Public website,
Government
Enacted – July 2008
Building Type –
Public Buildings > 10,000 sq. ft.;
Commercial & Multifamily buildings
> 50,000 sq. ft.
Implementation – 2010 - 2014
Rating Type - Operational
Rating Tool – Portfolio Manager;
Target Finder
Austin
Law Energy Conservation Audit &
Disclosure (ECAD) Ordinance
Disclosure - Buyers, Government
Enacted – November 2008
Building Type – All public and non
residential buildings
Implementation – June 2011
Rating Type - Operational
Rating Tool – Portfolio Manager,
ACLARA
Note – audit based for Apartment
buildings 10 years or older
New York City
Law - Local Law 84
Disclosure - Public Website,
Government
Enacted – December 2009
Building Type –
Public Buildings > 10,000 sq. ft. ;
Commercial & Multifamily Buildings >
50,000 sq. ft.
Implementation – 2010 - 2013
Rating Type - Operational
Rating Tool – Portfolio Manager
Note – audit required every 10 years
on buildings > 50,000 sq. ft.
- Multifamily begins filing in Sept
2013
- Form required to be filled out
Seattle
Law - Council Bill 116731
Disclosure - Government, Tenants
Enacted – January 2010
Building Type –
Public Buildings > 10,000 sq. ft.;
Private non residential buildings and
Multifamily > 50,000 sq. ft.
Implementation – 2011 - 2013
Rating Type - Operational
Rating Tool – Portfolio Manager
Boston
Law - Building Energy Reporting
and Disclosure Ordinance
Disclosure
Enacted – May 2013
Building Type –
Multifamily buildings > 50,000 sq.
ft. or 50 units;
Multifamily building > 35,000 sq. ft.
or 35 units
Implementation –
May 2015 and May 2017
Rating Type - Operational
Rating Tool – Portfolio Manager
Pending Legislation in other Jurisdictions
• Portland, Oregon: POLICY NOT YET ENACTED
– Will require all commercial and multifamily buildings
20,000 square feet and larger to benchmark and
disclose their energy performance using Portfolio
Manager.
• Massachusetts: POLICY NOT YET ENACTED
– Will require all public, commercial and multifamily
buildings 10,000 square feet and larger to benchmark
and disclose their energy performance.
Pending Legislation in other Jurisdictions
• Chicago, Illinois: POLICY NOT YET ENACTED
– Will require all commercial and multifamily buildings
50,000 square feet and larger to benchmark and
disclose their energy performance using Portfolio
Manager. New twist – an engineer must examine data
every 3 years. (2015 Target)
Utility Benchmarking
• Understanding what the system
is telling us and will tell
residents, prospective residents,
lenders and buyers.
• Early adoption provides a great
opportunity provide input in
other jurisdictions to shape the
duties imposed on owners.
Utility Benchmarking
• What benefits come with utility benchmarking?
– Compliance to local and state regs
– You can only manage what you measure
– Identify properties that are underperformers in
utility consumption (might be working, but not cost
effective)
– Marketing opportunities
Submetering
What is it?
Why is it important?
What do I need to worry about?
Benefits
Conserve between 18-36% compared to in-rent billing
Resident fairness (they prefer it)
Submetering
• Examples of jurisdictions that mandate for new
construction:
– Texas (property must have a plumbing configuration
that allows for meters in each unit)
– Georgia
– San Diego
• Issues in pending legislation
– Costs Recovery mechanisms for billing
• Late fees and recovery
– Rates that residents will be charged
Submetering
• California Senate Bill 750
– Passed Senate. In Assembly. Democratic supermajorities in both
houses
– Would mandate that all properties that apply for a connection
from the local utility on or after 1/1/14 be submetered and can
only bill residents using a metered methodology
– Allows for administrative cost recovery of $4.00 per month and a
5% late fee
• Administrative fee increases beginning 1/1/17 tied to CPI increase
– Penalties for non-compliance include 3x any overcharge, one
month’s rent, attorney’s fees and costs (matches TX language)
• Can be enforced by any City, County, or State agency
Submetering
• CA Weights and Measures
– Bill in 2012 to divest W&M from jurisdiction
passed Assembly and Senate but vetoed by
Governor due to pressure from unions
• The existing bill must deal with civil/criminal liability
and test bench issues
• Owner/Developer issues
RUBS
(Ratio Utility Billing Service)
What is it?
Why is it
important?
What do I need to worry about?
RUBS
(Ratio Utility Billing Service)
• Mandates and plumbing code changes will
eventually dictate that there are fewer and
fewer RUBS properties.
• Some jurisdictions neither specifically allow or
prohibit RUBS.
• Some local jurisdictions are more restrictive
than state level.
RUBS
(Ratio Utility Billing Service)
• Best practices
– Lease language is the first line of defense and
creates a contract.
• Carefully disclose method, any fees and billing
– Common area deductions
• Resident equity
• Good utility billing providers will give guidance for
CAD% if not specified by law/regulation
RUBS
(Ratio Utility Billing Service)
• Lawsuits
– In “unregulated” jurisdictions, Plaintiffs use
consumer protection remedies to shift burden to
owner and biller to prove “fairness” of billing
• Global conservation v. individual conservation
– Plaintiffs allege that CAD% is not adequate
Lease Language
• First line of defense
– Disclose method, fees, billing
procedures, dispute resolution
information, etc.
• Escalation – when you should
escalate to the provider
• Communication is better than
silence with residents
Lease Language
• If Landlord-Tenant Code allows, preference to
include term that modifications to billing
program and fees can be made with notice to
residents
– Not allowed in Texas
– Benefits
Closing Thoughts
• Mandated Energy Benchmarking and
Submetering – This is important for
development and risk mitigation – stay on top
of it.
• Take advantage of the opportunities which
come with mandates – rebates, marketing,
savings, building commission
Q&A