SUBMETERING STRUGGLE, P.2

Shortly thereafter, a notice went out announcing an informational meeting to be held about submetering, which was a precursor to the shareholder vote. On the heels of this announcement, one of the shareholders sent out the previously mentioned letter saying that her electrician had told her that the building was cross-wired.

The informational meeting was canceled. Despite the appearance of a conflict of interest, the co-op asked its submetering vendor to perform a diagnostic at a cost of $8,000, two-thirds less than another vendor would have charged.

"Conflict of interest is real, but not every apparent conflict of interest is real conflict. In an instance like this, they would actually have to be outright crooked to lie about their results," Jim said recently. Since this vendor would have to deal with the post-installation headaches, the board felt the likelihood of fraud was minimal and worth the savings to the building.

The report found no instances of cross-wiring, but the test personnel couldn't gain access to or were turned away from about five percent of the units. Also, not every electrical plug in a given line was tested, and heavy furniture was not moved to test plugs behind it. Unfortunately, these omissions left open the possibility of an untested plug that could be hiding crossed wires. Not surprisingly, Jim said that the opposition pointed to untested plugs as "that which bespeaks the cancer in the building."

The Battle Continues

"All the challenges that my submetering opposition has presented has caused me to think this through in ways that I wouldn't have done otherwise," Jim reflected in late summer. "It's given me a much better understanding of what's involved, and a really interesting understanding of building dynamics and politics."

Jim faces an informational meeting and shareholder vote on the submetering issue this fall. His board has scrutinized the finances with a fine-tooth comb and done a sophisticated and informative analysis that will be presented to the shareholders. The board says that in 2011 the cost of electricity was 6.2 percent of total expenses, or $450,000 for the building. Of this amount, 84 percent is attributable to apartment usage.

The board plans to spend $140,000 on meter installation, and reducing maintenance over two years. This plan recoups the cost of installation and at the same time passes along the building's energy savings. At the end of the two-year plan, apartment owners will have gotten a five percent maintenance reduction, which will help to offset the expense of the new electric bills they will be receiving.

Sounds eminently reasonable, yet there's more. "I have to be able to reconcile the existing regulations before I can proceed," says Jim, and one of the wrinkles is that the building has a couple of rent-regulated apartments left. In the submetering world, rent-regulated tenants are a protected class, so how, or even if, their units can be switched from having their electricity included in their rent as a flat fee to getting an actual bill has to be worked out.

What About Rent-Regulated Tenants?

"This is a really hard question," he says. "You know, one possibility is to remove them from the electrical grid in the building and give them their electricity for free. All the rest of us simply eat that charge." The PSC doesn't recognize these kinds of deals, but it's an open secret in the submetering world that deals get worked out to protect rental tenants so that they don't end up protesting to the PSC.

Will Jim's co-op be successful in its quest to submeter? That remains to be seen. His board has spent nearly two years juggling financial planning, legal contracts, political opposition — and still has to deal with the Public Service Commission.

In an era of dwindling energy resources, the PSC seems headed in the wrong direction. Instead of shrinking the submetering pool, the PSC should be figuring out ways to expand it. Perhaps in their zeal to protect consumers, and perhaps themselves, PSC members are abandoning the really tough issue of how to do it fairly.

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