When people are charged for energy based on how much they use individually, good habits tend to follow. When you pay for electricity based on your usage, you're more likely to make sure that the lights are turned off when you leave a room, that you wash laundry in larger loads, and limit your air conditioning use even in the dog days of summer.
Many co-op and condo buildings buy energy in bulk, then charge owners a flat rate based on apartment size or shares owned. This can result in conservation-minded residents being unfairly charged for energy they don't use and lets wasteful users off the hook. Introducing submetering technology and "real time pricing" to a development may be one way to address the issue. The idea behind submetering and real time pricing is not only to bill shareholders fairly, but also to conserve energy, since people will be more cautious of their energy usage if they're billed for what they use, instead of a flat fee.
The populations of master-metered cooperatives, which constitute a great majority of New York City's housing stock, are more diverse today than when they were built 30, 40, 50 or even 60 years ago. Patterns of electricity consumption also have greatly changed, according to Lewis Kwit, president of Manhattan-based Energy Investment Systems. Shareholders and unit owners rely on many more electrical items such as dishwashers, computers, microwave ovens, VCRs, air filters, air conditioners, cable boxes, clocks, phones and faxes that may not have existed when their co-op or condo was built.
Cooperative boards, Kwit says, certainly recognize the fact that electric usage will continue to rise and so will their costs. People depend more and more on electricity to service their needs and as a result, those usage charges that feed into a board's budget may grow incrementally over the years if steps are not taken to incorporate some savings, according to Kwit.
Real time pricing (RTP), Kwit explains, allows consumers, in this case co-op and condo buildings, to buy power at a certain rate from the wholesale electric market, based on a fluctuating market price or when demand is less. If usage were reduced during peak demand, when prices are their highest, costs would then be lower on the wholesale market, and those costs would then trickle down to the electric user.