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Legislative and Regulatory Trends In Utility and Energy Management

Legislative and Regulatory Trends In Utility and Energy Management. Michael Foote & Mary Nitschke. Agenda. Utility Benchmarking Submetering RUBS (Ratio Utility Billing Service) Lease Language Q&A. About NWP.

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Legislative and Regulatory Trends In Utility and Energy Management

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  1. Legislative and Regulatory Trends In Utility and Energy Management Michael Foote & Mary Nitschke

  2. Agenda • Utility Benchmarking • Submetering • RUBS (Ratio Utility Billing Service) • Lease Language • Q&A

  3. About NWP • Founded in 1995 - NWP has focused on building the most secure, legally compliant and diverse utility management platform in 50 states • Largest and most experienced legal team in utility billing and energy management in multifamily • Serve property owners and managers of all types and sizes • Learn more at www.nwpsc.com

  4. About Prometheus • Our mission is, very simply, to revolutionize the apartment industry • Founded in 1965, Prometheus has a growing portfolio of over 18,000 units in the Bay Area, Seattle, Portland and Los Angeles Metropolitan areas • Specialize in the acquisition, development and management of high quality residential and commercial properties • Property Management Firm of the Year Award for 3 years in a row

  5. Utility Benchmarking What is it? Why is it important? What do I need to worry about?

  6. Utility Benchmarking Multifamily owners / operators must comply with local or state regulations • EPA EnergyStar Portfolio Manager • Varying deadlines • Varying penalties for non-compliance

  7. Utility Benchmarking • Seattle: • Failure to accurately disclose • $150 for the first violation. If not remedied within 15 days, • $150 per day for the next 10 days and • $500 per day for each subsequent day. • Failure to disclose to a tenant, prospective tenant, buyer, or lender • $150 for first violation, • $500 for each subsequent violation.

  8. Utility Benchmarking • Washington, D.C. • $100 per day for any non-compliance after a 30 day period to cure deficiencies

  9. Utility Benchmarking • Varying duties for owners due to audit findings: • Austin: Retrofit electric, heating and cooling systems for buildings that do not meet targets

  10. Utility Benchmarking • EnergyStarPortfolio Manager integration • All jurisdictions using Portfolio Manager • Utility Expense Management partner should have data and expertise • Required in the following jurisdictions in chronological order

  11. Washington, D.C.

  12. Austin

  13. New York City

  14. Seattle

  15. Boston

  16. Pending Legislation in other Jurisdictions • Portland, Oregon: POLICY NOT YET ENACTED • Will require all commercial and multifamily buildings 20,000 square feet and larger to benchmark and disclose their energy performance using Portfolio Manager. • Massachusetts: POLICY NOT YET ENACTED • Will require all public, commercial and multifamily buildings 10,000 square feet and larger to benchmark and disclose their energy performance.

  17. Pending Legislation in other Jurisdictions • Chicago, Illinois: POLICY NOT YET ENACTED • Will require all commercial and multifamily buildings 50,000 square feet and larger to benchmark and disclose their energy performance using Portfolio Manager. New twist – an engineer must examine data every 3 years. (2015 Target)

  18. Utility Benchmarking • Understanding what the system is telling us and will tell residents, prospective residents, lenders and buyers. • Early adoption provides a great opportunity provide input in other jurisdictions to shape the duties imposed on owners.

  19. Utility Benchmarking • What benefits come with utility benchmarking? • Compliance to local and state regs • You can only manage what you measure • Identify properties that are underperformers in utility consumption (might be working, but not cost effective) • Marketing opportunities

  20. Submetering What is it? Why is it important? Benefits Conserve between 18-36% compared to in-rent billing Resident fairness (they prefer it) What do I need to worry about?

  21. Submetering • Examples of jurisdictions that mandate for new construction: • Texas (property must have a plumbing configuration that allows for meters in each unit) • Georgia • San Diego • Issues in pending legislation • Costs Recovery mechanisms for billing • Late fees and recovery • Rates that residents will be charged

  22. Submetering • California Senate Bill 750 • Passed Senate. In Assembly. Democratic supermajorities in both houses • Would mandate that all properties that apply for a connection from the local utility on or after 1/1/14 be submetered and can only bill residents using a metered methodology • Allows for administrative cost recovery of $4.00 per month and a 5% late fee • Administrative fee increases beginning 1/1/17 tied to CPI increase • Penalties for non-compliance include 3x any overcharge, one month’s rent, attorney’s fees and costs (matches TX language) • Can be enforced by any City, County, or State agency

  23. Submetering • CA Weights and Measures • Bill in 2012 to divest W&M from jurisdiction passed Assembly and Senate but vetoed by Governor due to pressure from unions • The existing bill must deal with civil/criminal liability and test bench issues • Owner/Developer issues

  24. RUBS(Ratio Utility Billing Service) What do I need to worry about? • What is it? • Why is it important?

  25. RUBS (Ratio Utility Billing Service) • Mandates and plumbing code changes will eventually dictate that there are fewer and fewer RUBS properties. • Some jurisdictions neither specifically allow or prohibit RUBS. • Some local jurisdictions are more restrictive than state level.

  26. RUBS (Ratio Utility Billing Service) • Best practices • Lease language is the first line of defense and creates a contract. • Carefully disclose method, any fees and billing • Common area deductions • Resident equity • Good utility billing providers will give guidance for CAD% if not specified by law/regulation

  27. RUBS (Ratio Utility Billing Service) • Lawsuits • In “unregulated” jurisdictions, Plaintiffs use consumer protection remedies to shift burden to owner and biller to prove “fairness” of billing • Global conservation v. individual conservation • Plaintiffs allege that CAD% is not adequate

  28. Lease Language • First line of defense • Disclose method, fees, billing procedures, dispute resolution information, etc. • Escalation – when you should escalate to the provider • Communication is better than silence with residents

  29. Lease Language • If Landlord-Tenant Code allows, preference to include term that modifications to billing program and fees can be made with notice to residents • Not allowed in Texas • Benefits

  30. Closing Thoughts • Mandated Energy Benchmarking and Submetering – This is important for development and risk mitigation – stay on top of it. • Take advantage of the opportunities which come with mandates – rebates, marketing, savings, building commission

  31. Q & A

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