Submetering Enhances Property Value

By Lisa Iannucci, Contributing EditorGlobal warming has already directly impacted weather patterns and reduced fresh water resources. Studies show that submetered properties consume less water than those billing water as part of the rent charge. “Submetering, unlike utility rationing, gives the resident both personal control and incentive to save water,” says Scott Bolin, director of meters and networks for Velocity.By tracking actual per unit consumption, submetering helps property owners and investors accurately and fairly assign resident expenses. In addition to reducing overall utility consumption, it has the added benefit of pinpointing usage exceptions. “Prompt investigation and remedying of these exceptions can further reduce utility consumption and costs to the property,” adds Bolin. “Wireless transmission of usage reads eliminates manual reads, further reducing management expense and labor. Many jurisdictions now require submetering for new multifamily construction. These improvements and cost reductions in turn enhance the asset value of the property.”Implement during a building upgrade”Spring is an appropriate time to implement a utility conversion plan to individually submeter electric and gas utilities, because it is prior to high summer air-conditioning use and often high winter gas heating use,” says Roger Freischlag, president of Energy Billing Systems, Inc., in Colorado Springs, Colorado. “Property owners should review electric and natural gas costs for the 2008-9 air conditioning/heating seasons, for any master metered buildings in their portfolios.”Actually, says Freischlag, the most appropriate time to submeter electric and gas is in conjunction with a building upgrade. “Many studies and our 28 years of experience in converting over 1,000 properties show 15-35 percent energy savings with electric and gas conversions,” he says. Even if it’s forecast that your building’s bottom line will see a nice jump after installing submetering, it doesn’t mean you can move forward with the project just yet. The building–and even the budget–may not be suitable for the technology. In addition, what equipment you use may depend on where you are located geographically.”The ability to submeter is determined by building logistics (such as plumbing and electrical wiring for water and electric submetering, respectively), and by economics. For example, is there a sufficient capital budget to pay for the initial installation, and subsequent system maintenance?” explains Dan Witte, executive vice president of sales at AUM (American Utility Management), in Oak Brook, Illinois.There are also different types of devices, temperature sensors, time converters and allocation systems depending on the location of building and on the limitations of the plumbing or electrical work, says Ringo Lanzetti of Studebaker Submetering in Alexandria, Virginia. Witte also explains that developers and architects with projects still on the drawing boards must plan for submetering. “That means single entry points for water supplies, and accessible breaker boxes for electric submetering,” he says. “Additionally, some manufacturers and some states have very specific guidelines for how meters are to be installed. Most meters are designed such that they require at least eight to 12 inches of space overhead to allow enough space to attach radio frequency transmitters. California requires that meter faces be readable by residents; if that is not possible, a display device of some kind must be attached to the meter and be visible at eye level.”Installation and upgrade In a perfect world, a newly constructed building would already include submetering technology–it’s easier and more cost effective to install it at this stage. However, says Witte, retrofitting an existing building is more challenging because of building design, inconvenience to existing residents, and cost (retrofits are generally at least twice as expensive as new construction installations). If your building has an antiquated hardwired submetering system, it might benefit from upgrading to a wireless system.”Most of the time the meters are compatible, so we just layer it on top of that and others are functionally obsolete and need to be replaced,” says Lanzetti. “With an electric program, we put electric submeters in each of the apartments and measure the kilowatt hour consumption that is wired to the submeter. We get copies of the master meter utility bills from the property and use that rate and generate the bill for the resident. When installing a water submeter, an ideal situation, according to Lanzetti, would be having a tenant with a hot water heater in their apartment. “We would install a wireless transmitter with a network that receives the signal from the transmitter and a base station that receives readings throughout the day. We read them every day and generate bills once a month based on those readings. The customer logs in online with a password and pays their bill.  Changing lease languageThen, there’s the paperwork. Lanzetti suggests that you start the process by changing the lease language. “You can include the utility charge as a condition of their new lease,” he says. “Once the system is put in physically you would have to wait for the leases to renew. If you’re installing submetering now, start letting people know they will be paying for it with their next lease. “There is also the matter of preparing residents, which is done the old-fashioned way: by communicating with them,” he says. “Distribute announcements and resident letters that spell out the plan for the submeter program; emphasize the conservation effects; change the property’s advertising if it boasts of free utilities.There are several benefits to investing in a submetering program. “Both owner and resident benefit with an electric or gas conversion,” says Freischlag. “Owners benefit by removing the utility cost as a project expense which significantly increases the value of the property when its time to sell. Residents benefit because their actions reduce electric and gas use for the property. Responsible residents can often lower their utility use enough to reduce this total monthly housing cost.”To those customers that live in drought states, Witte explains that there is a keener interest in seeing multifamily residents conserve their water than, say, Great Lakes states. “But the principles are the same: submetering encourages responsible usage and offsets the highest variable costs at an apartment community.”To comment, e-mail diana.mosher@nielsen.com.