It’s a beautiful Friday night and you’re out to dinner with four of your best buddies. The restaurant's ambiance is exquisite and the food is divine. You’re on a budget, so you stick to ordering a delicious appetizer and some tasty soup, while your friends go all in on surf and turf, quaff glasses of the restaurant’s best champagne and devour decadent desserts. The fun and laughter lasts for hours. You’ve had the time of your life—but when the check comes, your friends insist upon dividing it equally among the five of you, despite the fact that your meal cost only a fraction of theirs. Sighing, you hand over your credit card, feeling distinctly taken-advantage-of.
Hopefully you don't have friends who would pull a stunt like that at a restaurant, or anywhere else. If you're a resident of a multifamily building where you don’t have direct billing for your utilities however, this scenario is an everyday occurrence. Regardless of what you personally consume, you're picking up the tab for your neighbor’s water, gas and electric use. Unless you have submetered utilities, that is.
Breaking Up is Hard to Do
Many buildings are still master metered. “In a master metered building, the electricity charges are folded into the monthly maintenance charges (which are sometimes referred to as common area charges),” says Dean Zias, a project manager with the New York State Energy Research & Development Authority (NYSERDA), a public benefit corporation that offers objective information and analysis, innovative programs, technical expertise and funding to help New Yorkers increase energy efficiency, save money, use renewable energy and reduce reliance on fossil fuels. “So the electricity costs are treated much like fees for snow removal or grass cutting,” he says.
Zias explains that the building tallies up the total electricity charges—including demand and consumption (kW + kWh)—and divvies up the charges among residents within their maintenance bill. “The charges are divided by either the square footage of the unit, or by the number of shares a cooperator or owner has,” he says. “Apartments at the top of a building, for example, are more desirable, so owners of these units typically have more shares.”
Zias says that the real drawback of billing this way is that there is no incentive for shareholders or unit owners to save energy—the costs are buried among their general maintenance fees. “Most boards only look at maintenance expenses annually,” he says. “At that time, they might decide expenses are too high, and begin looking at ways to make energy efficiency improvements. It’s really a big disconnect in the ability to close the loop and look at electricity costs more often. It’s also hard to get data on in-unit consumption to see where opportunities to save energy and costs can be found.”