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Submetered Electricity: How It Benefits Tenants and Landlords

For landlords and managers of New York City buildings with renters or condo owners, how you handle utility billing can be a headache… or a breeze. Here’s a look at how submetered electric power may make life easier for both tenants and landlords. And why installing electrical submetering probably makes sense for your property. In fact, by 2025, it may be required if you own a large commercial property.

What Is Submetered Electricity?

Monitoring individual consumption

Submetering is the process of monitoring or billing individual units in a building or complex for their utilities. Rather than the building paying one bill based on readings from one master meter, each unit is billed for its unique consumption. The cost is then either absorbed by the building or passed on to tenants in their rent or utility fee.

Many different types of utilities can be submetered. These include electricity, natural gas, and water. Cable television and internet are good examples of utilities that are already submetered in many places. Submetering can be implemented in large residential and commercial buildings. But, it can also be used for smaller dwellings, such as duplexes, three-flats, or fourplexes.

What Are the Benefits of Electrical Submetering?

Fairness, conservation, and landlord cost savings

There are multiple benefits to using electrical submetering. From the tenant’s perspective, each unit paying for their own electrical use is usually more fair than everyone paying the same fee tacked onto their rent. A family of four almost always uses more electricity than a single renter, for example. So, submetering accounts for this.

Tenants each pay for their own electricity. Therefore, it encourages them to conserve energy to keep their bills down. Having tenants use energy-efficient appliances, turn off lights, and monitor other power usage, like HVAC, can save on municipal energy consumption. This is desirable because city energy use comes with an environmental cost.

Landlords benefit from submetering too. If some tenants use more electricity than others, the landlord doesn’t wind up paying for it. And if utility rates go up, landlords aren’t locked into low electricity fees until the lease can be renegotiated.

Once tenants are taken off the master meter and billed separately, landlords also have a better idea of what their own electrical consumption is for non-tenant spaces. This gives them a better ability to budget and reduce electricity usage as needed.

How Does Submetering Work in New York City?

Rules and regulations

The New York State Public Service Commission reviewed and revised the rules for submetering residential properties in 2012. Furthermore, Local Law 88 was previously enacted in 2009 for commercial buildings in New York City as part of a green initiative. The key points are as follows:

• Landlords may not make a profit off electricity. Tenants may bill no more than the rate on a tenant’s direct meter (submeter).
• All commercial buildings greater than 50,000 square feet must have submeters installed for tenants who lease more than 10,000 square feet. This must be completed by January 1, 2025.
• Landlords are not required to change the way they are currently billing their tenants in large commercial buildings. But, they must have the required submeters in place by 2025. Moreover, tenants must be advised of their monthly electrical usage.
• Landlords may install submeters on commercial properties all at once or spread out over time. The landlord may decide what is more convenient and less disruptive to tenants.

How Can You Submeter Your Property?

Professional consultation

Changing over from a master meter to submetered electric requires the assistance of licensed electricians, like Bolt Electric. The age and layout of your building determine what is necessary for submetering. The condition of the electrical system also plays a role. However, nearly every building in New York City can be submetered once these factors have been evaluated.

Older buildings with original wiring may need to be rewired to handle the task of submetering. If electricity runs directly to units from a basement distribution closet, a meter may need to be installed in each apartment. However, if you have distribution panels every few floors with a circuit breaker, you can usually install submeters in those hallway electrical closets less intrusively. External submeters are becoming more obsolete as technology improves and buildings are modernized.

What Are Some Tips for Implementing Submetered Electric Power?

Considerations for landlords and managers

If you’re going to make the switch to submetered electric in your building, here are a few final tips:

• Try shadow billing for a predetermined period of time to get tenants used to direct billing. This means tenants still pay as with a master meter. But, they are informed monthly of their electrical consumption. This gives high users a chance to budget and reduce electricity use. It also helps tenants learn about time-sensitive pricing and seasonal cost fluctuations.
• Install the best meters your budget will allow to take advantage of improved technology. Features to look for include automatic data collection, direct-to-tenant billing, real-time usage monitoring, dynamic invoicing, and cloud storage.
• In co-ops and condos, consult with your board and/or legal professionals to determine how any related costs may be handled. Also, you will need to develop a policy for common areas.
• Ask your accounting professional about any possible tax benefits for installing submeters.
• Use electrical submetering as a springboard to submetering other utilities that are excessively costly. It also makes an ideal kickoff for other green initiatives.

Call Bolt Electric to Install Submetered Electric in Your Building

New York City’s best

If you would like to have your building evaluated for eventual conversion to submetered electric or schedule an installation, reach out to Bolt Electric, a division of the Omnia Mechanical Group. You can call us at 212-434-0098. Or, use our convenient online form to get in touch. Don’t pay more for your tenants’ electricity than you need to. And if you want to get ahead of the game for NYC submetering requirements in 2025, Bolt Electric are the experts to contact today.