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Saving Energy Fairly in Multifamily Homes

Home Energy Magazine Online July/August 1999

Saving Energy Fairly in Multifamily Homes

by Herbert E. Hirschfeld and Joseph S. Lopes

Herbert E. Hirschfeld, P.E., is a consulting engineer practicing in Glen Cove, New York. He was responsible for the projects at Waterside Plaza and Manhattan Plaza. Joseph S. Lopes is a senior partner of Applied Energy Group (AEG), an energy services consulting company in Hauppauge, New York.

How do you promote energy conservation and fairly allocate energy costs in apartment buildings without upsetting tenant-owner relationships? An innovative and state-of-the-art combined electrical submetering and energy management system is one method with a proven track record.

A DOE study from 1978 to 1981 found that the EMS in this building--Manhattan Plaza in New York City--reduced electricity consumption by about 20%.

The three enclosed components of the dual-system control box are the control relays (one per heat pump), located at the bottom right of the box; the Power Line Carrier communications board, located at the top right; and the electric meter, located at the top left.


Table 1. Cost Per Apartment
	Installed Cost	Less Con Ed Rebate	Net Cost (%)
EMS alone	$750	$200	$550 (62.5%)
Submetering alone	$530	$200	$330 (37.5%)
Separate total cost	$1,280	$400	$880
Dual system cost*	$1,000	$400	$600
*The cost allocated to EMS = $375 (62.5% of total cost). The cost allocated to submetering = $225 (37.5% of total cost). Savings from combining the installations ($880 minus $600) = $280 (32%).

Figure 1: Submetering revealed that, while a small percentage of residents use a disproportionate amount of electricity, approximately 70% of the apartments use about 50% of the total electricity consumed.

Two large-scale methods exist for reducing overall energy use in master-metered multifamily residences: submetering individual apartments, or installing an Energy Management System (EMS) that allows the building management to control each apartment's electrical heating and cooling equipment. With submetering, residents have an incentive to conserve, and energy costs can be fairly allocated among the residents (see "Submetering vs. EMS"). But to gain acceptance of a submetering system, the building's owners must surmount regulatory hurdles and overcome resident reluctance. An EMS conserves energy in a slightly more indirect fashion--the building management programs the heating or cooling system to shut off when it is not needed--but it is easier to gain approval for an EMS.

We reasoned that a combined submetering/EMS would allow for the implementation of either method, and would provide the energy savings and potential for fair cost allocation of both. Furthermore, by installing both systems simultaneously, we could reduce equipment and installation costs, reduce resident intrusion, and speed the approval process. During the spring of 1997, after almost 20 years spent overcoming technical and regulatory barriers, an innovative Dual System that one of us (Hirschfeld) had conceived and Osaki Meter Sales had built was installed in the Waterside Plaza Complex in New York City. This complex consists of four 37-story master-metered towers containing 1,450 apartment units and an additional 20-unit master-metered town house building. All the apartments are electrically heated and air conditioned; energy for cooking and domestic hot water is provided by natural gas.

What we found out from the approval and implementation process was that overcoming bureaucratic obstacles and gaining consumer acceptance was harder than finding a way around the technical barriers. However, now that one Dual System has been installed, we estimate that subsequent projects could be implemented in 6 to 12 months.

Winning Regulatory Approval

A major disadvantage of submetering is that it requires regulatory approval. About a dozen states have regulations in place that govern electrical submetering, although deregulation has led many states to reevaluate these laws. Regulations regarding submetering are more stringent in New York, Maryland, and California than in other states. For example, in New York state rent reductions are required in order to obtain approval for installing a submetering system in regulated housing. (Such reductions are not required in fair market value rental buildings.)

In New York city, before a submetering system can be installed, an owner of regulated rental homes must get approvals from three agencies. To get permission for changes in how utility payments are collected, a building owner must apply to the public service commission. Approvals for the rent reductions needed to offset tenant charges for electricity no longer included in the rent and for implementing the submetering system must be obtained from a rental housing supervisory agency. In the case of the Waterside Plaza complex, the supervisory agency is the New York City Department of Housing Preservation and Development (HPD). Finally, approval from the New York City Building Department Advisory Board is required to put the submetering equipment in the apartment closets. The difficulty of seeking these regulatory approvals would discourage all but the most determined building owners from proceeding.

An EMS offers important advantages to building owners seeking to implement energy conservation measures. In New York State, implementation of an EMS does not require approval from the public service commission. Neither does it require rent reductions. In addition, by implementing an EMS, supervisory government agencies and owners can avoid potential confrontations with occupants--tenants or cooperators--that often result from changes that affect the occupant-management relationship.

A primary benefit of the Dual System was that it enabled the Waterside Plaza Complex to obtain submetering capability while installing an EMS system. The supervisory agency for the complex, HPD, approved the Dual System installation with the understanding that initially the system would be operated only in an EMS mode. HPD would consider allowing the building manager to implement submetering only after all other issues, such as a rent reduction formula and a dispute resolution process, had been resolved, and after one year's worth of data had been collected to determine the amounts by which rent should be reduced.

Dual System Dually Useful

The Dual System installed in the Waterside Plaza complex controls the individual apartment heating/cooling units and measures each apartment's electrical consumption. It uses the communications technology inherent in the submetering system--power line carrier (PLC) communications, which employ the existing building wiring to transmit data and control signals--to communicate the EMS control commands.

Under the Dual System, the building can be operated under EMS control, under submetering, or both. The submetered data can be used to monitor and optimize EMS control strategies, and can later be used more directly to allocate building electricity costs. The EMS can help residents to reduce their consumption under submetering.

A design feature of the EMS used at Waterside Plaza is the incorporation of a tenant override capability, which enables individual residents to restore full heating/cooling operation in their apartments. This is both an advantage and a disadvantage. It is an advantage in that much of the tenant resistance to EMS is greatly diminished when tenants can activate their heating/cooling units upon demand. On the other hand, even the most energy-conscious tenants begin to rely on the automatic shutoff and fail to turn off their units, which tends to reduce the conservation benefits.

Equipment Details

The Dual System equipment installed in each apartment consists of a plain rectangular metal box (15 inches x 17 inches x 5 1/4 inches) located inside a closet near the apartment circuit breaker panel. The Dual System module is composed of three enclosed components, with an override button and two system status indicators mounted on the outside of the case. The three enclosed components are the control relays (one per heat pump), the PLC communications board, and the electric submeter.

The control relays interrupt the power supplied to each of the apartment heat pumps when they are under EMS control. The PLC communicates the EMS signals to the control relays from the central station, which is located in each building's electric utility room. The submeter measures electric usage in each apartment, using miniature current transformers that are installed in the apartment circuit breaker panel. The PLC communicates the individual apartment electric usage data from each apartment to the central station and to an off-site computer via a telephone modem. The PLC also provides status information, such as any indication of tampering or of problems with the EMS/meter control unit or with data communications.

Because the EMS utilizes PLC technology, no wiring into or out of the apartments is required. The existing building wiring serves as a vehicle to communicate control signals to and meter data from the EMS module to the central station located in the building's electric room. This expedites installation, reduces installation costs, and minimizes both space requirements and inconvenience to the residents during installation and operation. Neither control nor submetering requires that management gain access to the apartment, and there is virtually no wiring to install or maintain.

Although the equipment cost for the PLC installation is greater than that for a hard-wired installation, the total equipment and labor costs are generally lower. If the meter is located in the apartment, which depends on the location of the apartment circuit breaker, a hard-wired installation in New York may cost roughly 100% more than a PLC installation. This ratio will vary by geographical area, depending on the local hourly rate for installation. A site-specific evaluation should be conducted to determine the most cost-effective installation. Keep in mind, though, that cost is not the only factor to consider. Another advantage of PLC is that with it, the submetering system cannot be sabotaged by cutting the dedicated wiring. If you cut the wire of a PLC system, you also cut off the flow of electricity into your apartment.

Dual Implementation Drops Costs

Choosing to install a Dual System enabled us to gain agency approval in time to take advantage of two utility rebate programs. The local utility, Con Edison, was offering rebates of $200 for each apartment that got submetered and $0.10 per kWh saved by the EMS in the first year after installment. We obtained additional savings from our Dual System installation--the total cost of installing the two systems separately would have exceeded the cost of installing both systems together by almost half (see Table 1).

Delay in implementing one of the programs would have been costly in terms of lost rebates, since both Con Edison rebate programs were due to expire at the end of 1997. Implementing one system first, then the other, would have meant one of the rebates would have expired before we could claim it, making the total cost for the two separate installations $1,080 per apartment, rather than $880. With the loss of one rebate factored in, the savings from the combined installation was $480 (44%).

One disadvantage of the Dual System is that the conservation potential of the EMS component is reduced due to the nature of the design. Submetering requires that the monitoring equipment (meter and current transformers) be installed at the apartment circuit breaker panel. For this reason, the EMS also controls the dedicated branch circuits for all of the heating/cooling units in the entire apartment at the circuit breaker panel, rather than controlling the individual heating/cooling units in each room. This makes it impossible to establish a separate EMS control strategy for the individual heating/cooling units. That is, within an apartment, either all units are controlled, or all units are enabled through the tenant override. Of course, this problem can be addressed by installing individual receiver/controllers at each individual heating/cooling unit, but to do so would cost approximately $150 more per apartment, on average, for both the equipment and the system installation, which would reduce the economic viability of this measure.

EMS Savings and Apartment Usage

From the fall of 1997 to the fall of 1998, the EMS reduced total electricity consumed in the Waterside Plaza apartments by 2.42 million kWh, or 16% of the usual electricity use. These savings are entirely consistent with typical EMS reductions of roughly 20%.

When we analyzed the apartment usage data collected by the Dual System, we found a consistent distribution-of-consumption pattern, whether we were comparing apartments within the same apartment line, by apartment size (number of rooms), or overall (see Figure 1). This result matched the findings for virtually all other buildings analyzed in previous submetering studies. That is:

A small percentage of residents use a disproportionate amount of electricity. Approximately 10% of the apartments use 20%-25% of the total electricity consumed.

About 70% of the apartments use approximately 50% of the total electricity consumed. This means, all other factors being equal, that a majority of the residents would pay less under submetering, even if they made no effort to conserve.

These data provide indisputable evidence that submetering is the only fair way to allocate building electricity costs in master-metered apartment buildings. One of our primary motivations in submetering and analyzing the Waterside Plaza Complex was to obtain data that would confirm this premise in a rental property, and to use these data to develop a rent reduction methodology that could be used by government agencies that have jurisdiction over similar residential properties. Prior studies have focused on cooperative and condominium properties, in which apartment residents are also owners. Our study is the first to focus specifically on a rental property. As such it provides strong evidence to support a government policy that favors submetering, especially one that mandates electrical submetering for all master-metered buildings.

The New York State Energy Research and Development Authority (NYSERDA) has awarded us a contract to further evaluate this Dual System retrofit. NYSERDA is interested in data demonstrating that submetering is an equitable means to allocate building operating costs. These data will be used to develop an appropriate rent reduction methodology for submetered rental buildings. NYSERDA has also given Hirschfeld funding to provide technical assistance to any building owners in New York State who are considering installing a submetering system.

Submetering vs. EMS

Submetering Systems

Submetering is the measurement and billing of electric use in individual apartment units in a master-metered multifamily building. Without submetering, allocation of electric cost is based on other methods, such as the number of rooms or the floor area of the apartment.

With submetering, individual apartments are metered by building management, which then allocates utility costs to residents in proportion to their actual consumption. The utility continues to bill the whole building as before and building management renders bills to individual residents that reflect their actual share of overall electric costs. By keeping a building master-metered, the building maintains the master-metered electric rate, which is often substantially lower--in the case of Waterside Plaza, about 40% lower--than it would be for directly metered buildings, where the utility bills each apartment individually. In a deregulated environment, building managers may also be able to take advantage of bulk purchasing rates offered by energy service companies.

Under submetering, the portion of rent or maintenance fees that represents electric costs previously charged to residents is excluded from the rent, and electricity charges are billed separately to each resident. Once the residents begin paying for what they use, they no longer perceive electricity as being "free." This gives them an incentive to both conserve and invest in energy efficiency, by buying compact fluorescent lighting or more efficient refrigerators, for example.

Submetering can lead to substantial reductions in building electric use. Studies conducted throughout New York State have documented the conservation benefit of electrical submetering, demonstrating savings of 18%-26% annually. Additional studies, such as the Consolidated Edison Residential Submetering Program, conducted between 1991 and 1995, and the NYSERDA Facilitating Submetering Implementation Program, conducted between 1995 and 1997, have further documented the energy conservation benefit of electrical submetering and have identified some of the implementation barriers in this marketplace.

Submetering makes possible the equitable allocation of building electrical charges. Case studies have established that even for apartments of the same size, electric consumption can vary by up to a factor of ten. This finding is consistent across all the buildings for which data have been collected and analyzed.

Submetering is preferable to an EMS in that with submetering, conservation is completely voluntary. Residents can decide how much effort and investment they wish to make to achieve the cost savings they desire. Submetering also eliminates the conflicts that can arise when residents' energy consumption is controlled by building management, as it is with an EMS. With current technology, submeters can be read from outside the apartment access, and without costly rewiring.

Energy Management Systems

With an EMS, building management controls each apartment's electrical heating/cooling units--in the Waterside Plaza case, air-cooled heat pumps--by activating remote switching equipment installed on the unit branch circuits. The purpose of this energy conservation measure is to reduce wasted consumption by turning off the units when the apartments are unoccupied or when the outside temperature makes heating or cooling unnecessary.

Studies conducted throughout the United States have documented the conservation benefit of energy management via control of individual electric heating/air conditioning units in the residential multifamily housing sector. The U.S. Department of Energy, Division of Buildings and Community Systems, conducted a multiphase study at the Manhattan Plaza complex in New York City from 1978 through 1981. This study found that EMS reduced electricity consumption by approximately 20% in the apartments.

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