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As part of the California water meter mandate, the city of Lodi is exploring various alternative submetering options for apartments, condominiums and mobile home parks. An initial meeting was held on March 14th and a follow up meeting was held on March 19th. Read more here: http://www.lodinews.com/news/article_d7e45194-5f56-5f96-a18d-68a62e2478cd.html.
The 2012 drought was one of the costliest natural disasters of the year. Agricultural yields fell far below what was expected, and have resulted in significant losses. The National Climatic Data Center has already recorded it as a “billion-dollar climate disaster.” Current estimates range from $36 to $100 billion.
One state that has seen severe effects of this natural disaster is California, receiving only 25-35% of the average rainfall in previous years. Water resource agencies, such as the Santa Clara Valley Water District, have been taking extra measures over the past years to protect water resources. The Santa Clara Valley Water District manages resources for the entire county which consists of 1,300 square miles, 800 miles of creeks and rivers, and a population of 1.8 million. Over the years it has invested in various efficiency programs including Water Conservation, Water Recycling and Water Desalination.
In 2000, Santa Clara Valley Water District started a pilot program to submeter mobile home parks. Submetering is the use of separate meters to gauge the amount of water used by individual units where a utility master/city meter exists. Before the project was implemented, staff at the Water District predicted a 15% savings from submeter installation. These savings would occur from conservational behavior associated with residential awareness of water usage by making residents pay directly for their water utility. These changes in metering would also make the mobile home park more desirable to live in, attributed to the lowering of monthly homeowner dues.
Santa Clara Valley Water District worked with Brandedburg, Staedler & Moore, a mobile home park management company to install a total of 1187 submeters. Comparing information from 3 years before the submeters were installed to 7 years after the submeters were installed, the results were stunning.
The project resulted in an average reduction in water use of 22.5% for all households. This exceeded the 15% expectation developed prior to implementation. Annual water savings were averaged at 18,550 gallons of water per household. Please note, the data collected was normalized for cumulative ETO and occupancy rate.
Original link found here:
In 1968, ecologist Garret Hardin published an article about the environmental dilemma referred to as the “Tragedy of Commons”. The Tragedy of the Commons is a concern for the allocation of scarce resources as the world reaches its carrying capacity. Hardin uses sheepherders and a common grazing-area to metaphorically illustrate the environmental degradation that occurs when firms or individuals share a commonly owned scarce resource. Acting out of self-interest, each sheepherder gains a net positive utility from adding new sheep to his own herd since the group has to bear the cost of grazing-area depletion until the land is eventually over-grazed.
In an article published 40 years later, Joyce Siegel compares the “Tragedy of Commons” to a very modern problem: energy conservation in utilities. The article highlights that individual metering of utilities leads to a decrease in energy use. Most residents that pay utilities at a fixed rate built into their rent are less likely to conserve energy because they do not benefit or save money on using less. Conservation awareness is dwarfed by the thousands, maybe even millions, of unexplored opportunities to conserve energy and natural resources. We can only rely on the increasing incentive programs, tax grants/benefits, and specialized sub-metering companies to bridge the gap of inefficiency.
See attached article, written by Joyce Siegel (published by National Catholic Reporter – 2010): http://www.theforumcondominium.com/editor_upload/File/Forum%20Energy/Tragedy%20of%20Commons.pdf
The Hawaii State Energy Office is hard at work on employing various programs to reach it’s clean energy goal. What is their goal? To generate 70% clean energy by 2030 and to spur economic development in the energy sector; where 30% of the clean energy would be a result of effeciency measures. This is definitely a large and aggressive goal for a very small State; however, their incentive programs are making a big impact!
The Hawaii Clean Energy Initiative requires statewide participation and support. If you are the owner of a multifamily residence, a good way to support this initiative is to install submeters.
Hawaii Energy’s view on submetering: “Submetering promotes equity in allocating energy costs and encourages energy conservation by the tenants. The combination of billing submeters, along with education, peer group comparisons and special equipment offerings, will assist the tenant achieve significant energy conservation and efficiency.”
In order to make submetering more effecient, Hawaii Energy has proposed revised requirements:
Application for incentive submetering can be found here, with additional information attachment here. Incentives are available on a first-come, first-served basis and subject to the availability of funds without notice. Incentives are not guaranteed.
Guardian Water & Power, a national leading provider of submetering products and services recently signed a billing contract with Green Homes Hawaii, a property management firm based in Honolulu, Hawaii. Guardian will be providing sub meters, radio frequency equipment and a monthly read and bill service for a property that Green Homes manages in Wainae, Hawaii. For more information about how you can take advantage of Hawaii Energy’s submetering incentive, please contact Northwest Regional Account Executive, Chris Apostolos at 877-291-3141 x139 or capostolos@guardianwp.com.
The U.S. multifamily industry, comprised of over 40 million apartments, numerous vendors, legislative committees and trade associations, is a particularly intriguing beneficiary of PACE financing. 40% of American households rent, and are subject to utility bills either paid to the property owner, third-part billing agent or directly to the resource provider.
PACE programs allow qualifying energy efficiency and water conservation projects to be financed through assessments on a multi-family or commercial property owner’s real estate tax bill.The assessments are then used to secure local government bonds issued to fund these improvements without requiring the borrower or the sponsoring local government to pledge its credit. By allowing property owners to pay for energy improvements to their properties via a bond issue tied to a special assessment on their property tax bill, PACE financing enables property owners to reduce water and energy costs with no upfront investment.
The overarching dilemma concerning PACE’s application to the multifamily industry is a matter of who is the beneficiary of the decreased utility expenses versus who is financing the PACE assessments. In multi-family property that is individually or “sub” metered, residents are billed directly for the amount of water, electric or gas consumed. In multi-family property lacking individual submeters, the ownership group incorporates utility expenses into monthly rent.
In both cases, the ownership group will be responsible for paying the utility provider for the apartment’s total consumption each billing period. However, in the case of a submetered apartment complex, such expenses will be recouped via direct billing of the residents versus an estimation included in monthly rent. Although PACE improvements will hypothetically reduce the amount collected, that amount will still be turned over to the utility provider by the owner.Therefore, any efficiency retrofit made to a submetered property will be beneficial to the resident, whereas in an “unsubmetered” property, the ownership group is the beneficiary.
While the benefits of using PACE to finance an energy or water efficiency project are clear to an owner of a non-submetered rental property, they are not so clear to an owner of a submetered property. Since the resident will be on the receiving end of the decreased utility bills, it does not make sense for the ownership group to finance the PACE assessments.
A financing scheme in unregulated markets known as “on-bill financing” allows owners to mitigate the split incentive by including the cost of an energy efficient retrofit made to a rental property on the tenant’s monthly utility bill. Under this scheme, the ownership group would partner with their billing provider who would then finance the retrofit install. The cost is then recouped over time through a charge on the customer’s monthly utility bill. If designed properly, the monthly loan payment is equal or less than the energy or cost reduction savings. By serving as a pass-through conduit for on-bill repayment, utility billing providers can offer investors and lenders a reliable repayment mechanism with low default rates.
In the multifamily industry, property that is not or cannot be submetered is the most intriguing candidate for PACE financing. It provides owners a great opportunity to build their bottom lines and conserve natural resources. However, many of the benefits of PACE financing have gone unnoticed by potential benefactors.
Financing Submeters via PACE: