Enough Is Enough!

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The New York State Energy Research and Development Authority (NYSERDA) recently launched the Electricity Reduction for Master-Metered Buildings (ERMM) program, designed to provide significant incentive funding for master-metered buildings that implement electrical submetering – a process where apartment residents are billed and pay for their electricity based on their actual usage. The ERMM program also offers nominal incentives for replacement of appliances and lighting with more energy-efficient equipment. A primary purpose of this program was to make up for the significant lack of submetering implementations undertaken under the previous one, the Multifamily Performance Program.

In a master-metered building, residents don’t pay for their own actual electrical energy usage, but are charged a flat rate that is typically included in monthly maintenance or rent charges. It has long been recognized in the energy field that “you can’t manage what you can’t measure,” and many previous NYSERDA studies that I conducted have confirmed that installing “pay for what you use” submeters in a master-metered building will significantly reduce its electrical energy consumption by 18 to 26 percent (see supporting data at www.submeteronline.com). If the consumer has to pay for what he or she actually uses – which is really the necessary ingredient to conserving – you will have a meaningful energy policy.

Most of the roughly 4,000 master-metered buildings in New York State (representing around 500,000 apartments) are in the New York City metropolitan area, including a sizable number of Mitchell-Lama buildings. You’d think these buildings would be the prime candidates for the ERMM program. But because of very restrictive requirements, the ERMM program excludes significant housing sectors, including low-income housing, Mitchell-Lama buildings (originally constructed during the 1960s as master-metered buildings because of lower construction costs and relatively cheap electricity), and even market-rate buildings that contain a single tenant receiving assistance from programs such as Section 8. In fact, this is how bizarre the rules are: a building with 1,000 apartments that includes a single apartment occupied by a Section 8 tenant is excluded from the ERMM program.

Why would an energy program be launched that excludes the substantial majority of potential participating buildings? Good question. When I asked NYSERDA staff members about that, they responded that the program parameters were stipulated by the New York State Public Service Commission (PSC), an agency whose mission includes protecting consumers and supporting New York State policies designed to improve overall energy efficiency. So, why is the PSC standing against one of its own stated goals?

Alice in Energy Land

In order to understand the PSC’s policy, you have to look at some facts: NYSERDA-sponsored energy studies have confirmed that, in a master-metered building, about 10 percent of all the apartments consume roughly 25 percent of the residential electricity, regardless of the size, location, or tenant makeup of that building. These residents use more than twice the electricity of the average apartment. Installing “pay for what you use” submeters in such buildings would force this minority to pay its fair share of actual usage, which, in turn, would mean a larger monthly bill – something that they would naturally oppose.

In a 1,000-unit cooperative, for example, unless they altered their consumption patterns, about 100 shareholders would end up paying more for their electricity. Typically, a group of these “abusers” of electricity will band together to attempt to derail the submetering process by lodging complaints with the PSC and/or with their local politicians. This represents a perfect example of a vocal minority imposing its will on the silent majority – something we often see in our society. If, for instance, a local politician receives 20 to 30 complaints about a “pay for what you use” submetering proposal in a 500-unit building, he may then intervene on their behalf by contacting the PSC, appeasing a small segment of his or her constituency at the expense of the majority who would support responsible energy policies.

The PSC itself, which is staffed by public servants, is uncomfortable when contacted by politicians and feels required to investigate every complaint. According to PSC staff members, this sort of intimidation wears down the PSC staff and frequently results in delays or denials in approval of “pay for what you use” submetering applications. It also results in the development of ineffective policies that, in the case of the ERMM program, undermine the intent of the program and the creation of effective conservation policies. In some cases, PSC staff members would probably prefer to rid themselves of these complaints by letting submetering disappear altogether. That disappearance would certainly simplify matters – regardless of the public benefits of energy conservation.

Several legislators have spoken to me privately about their belief in the need for electrical submetering but admit that mandating “pay for what you use” submeters would never happen because politicians tend to avoid areas of potential controversy that may alienate some voters.

The New York State Energy Conservation Construction Code currently prohibits new construction of master-metered residential buildings, unless the apartments are submetered. Currently existing master-metered buildings can convert to direct metering by their local utility, but would lose the favorable bulk rate offered to master-metered buildings, which in Con Edison territory is substantially less than the directly metered rate.

Additionally, conversions to direct metering are generally far more costly than the submetering option and also preclude the buildings from installing effective cogeneration equipment and from participating in state and utility incentive programs that are dedicated to master-metered buildings.

Unfortunately, many energy professionals in New York State, whether employed by a state agency or in the private sector, are reluctant to weigh in on this subject because of their direct or indirect dependency on NYSERDA for contracts or employment.

A Proposal

What is the solution? If New York State wants to adopt a meaningful energy policy, one of the first things it should do is to make each individual who consumes energy pay for his or her own use. Nothing makes one more accountable than having to pay money. Whether it takes the leadership of the governor’s office or the actions of the New York State assembly and senate, it is apparent that legislation must be passed to mandate that all master-metered buildings implement “pay for what you use” submetering.

This action would also relieve the concerns of the PSC of becoming involved in controversy. It would initially require the education of our politicians to understand the energy saving benefits of “pay for what you use” submetering and allow them to see the complaints within a broader perspective. They could then make more meaningful decisions based on the overall energy picture. Implementation of this energy plan can be accomplished over the long term, allowing ample time for the master-metered buildings to conform. NYSERDA incentives should be made available to defray some of the buildings’ installation costs.

I would propose that the incentive schedule be scaled so that the maximum incentives available are during year No. 1, with lesser amounts available until year No. 5, after which no incentives would be available. This would offer enough time for buildings to adopt “pay for what you use” submetering and, at the same time, provide an incentive to act quickly.

I have decided, after more than 40 years of practicing engineering in New York State, to speak out on this subject because, frankly, I am tired of fighting a flawed system and would appreciate some help from those who have the power to correct this mess. It is time to take responsibility.