SHAREHOLDERS WILL VOTE FOR SUBMETERING

Here's how it works: In master-metered buildings, electricity comes into the building and is run through a master meter before the power flows into each individual apartment. The whole building gets one electric bill and usually buys electricity at a bulk rate. Residents pay with their monthly maintenance and are charged by the room or by another formula. Many times surcharges are added for energy-gulping appliances. In direct-metered buildings, each unit has its own meter and each resident gets his or her own bill from Con Edison, without the price-break of bulk purchasing.

Submetering combines the best of both worlds. Power comes in through the master-meter but then flows into each unit, which has its own meter. Submeters can either be placed physically in each apartment or housed in an electrical closet or in the basement. That way, buildings can buy in bulk, but each resident only pays for what he or she uses. Buildings often contract out to a meter reading company, which sends bills to the management office.

In order to get a submetering project passed, the state Public Service Commission requires that a majority of voting shareholders approve the project. This can be difficult because the very act of submetering is a sea change — you're asking residents to pay directly for something they had previously received without paying for their actual usage (electrical costs having been passed along through maintenance fees).

How do you convince shareholders to change? Some boards use the argument that it's a matter of fairness — that it is unjust for the energy miser to pay the same maintenance fee as the energy hog. But Lewis Kwit, president of the consulting company Energy Investment Systems, disagrees with that tack. "Getting up and talking about energy abusers is very polarizing," he says, noting that when people bought their apartments, utilities were included in maintenance.

"When you're submetering, you're changing the deal," Kwit says. Instead, he argues that boards should point out that if a building does not submeter, shareholders are losing out on a chance to save: Turn off the lights or AC in a master-meter building and your maintenance remains the same; do that when you're submetered, and you see the savings.

Incentivize

Other advocates suggest offering economic incentives. "The greatest incentive is money," says Gregory J. Carlson, executive director of the Federation of New York Housing Cooperatives & Condominiums. A building could offer, for example, to pay full electric bills for a few months if they agree to submetering, he proposes.

After that period, reduce the monthly maintenance by a certain amount to reflect the fact that shareholders are now paying directly for their apartment's electrical usage. Kwit gives this example: If a monthly maintenance bill is $1,500, let's say $100 of that covers electrical costs for both the apartment and the common areas. Figure $75 of that is attributable to the apartment. Then, consider that if a building goes to submeters, the board can also eliminate apartment air-conditioner fees, generally about $20 per unit per month. So, if a family has three ACs, those two savings alone can trim about $135 ($75 + $60) off a shareholder's expenses each month. When it comes to reducing maintenance to reflect a submetering change, Kwit says, "Boards should be liberal about it."

One other sweetener Kwit suggests is to offer enticements for energy-efficient appliances. If a building approves a submetering project, the board could work out a deal with appliance stores so residents can get a discount on new energy-efficient appliances. As well, the board could borrow money or use reserves to offer loans to shareholders so they can upgrade refrigerators, ACs and dishwashers.