Tenant Metering and Billing - Overcoming Challenges

The Importance of Tenant Metering

Tenant metering allows building owners and managers to monitor individual tenant energy consumption. This not only promotes energy accountability but also enables fair and accurate billing. In large buildings where utility usage varies significantly, submetering ensures that tenants are charged precisely for what they consume rather than using an an established cost per square foot within the lease structure. This pre-defined lease cost creates risk as energy costs can fluctuate significantly in the current energy markets. The global energy capacity market has been impacted by decarbonization by power generators and electrification efforts by energy consumers. If a lease agreement is structured over a 20 year period with per-defined escalation schedules, either the tenant will lose out or the landlord will lose out from high volatility energy costs. 

According to the U.S. Department of Energy, tenant metering can lead to a 20% reduction in energy consumption as tenants become more aware of their usage and costs. Moreover, metering systems help identify inefficiencies and reduce energy waste. We have had much experience with this area. When tenants are not able to impact their operating costs by investments in energy efficiency projects such as lighting, HVAC or process upgrades, they have to incentive to invest in upgrades. Properly metering and billing the tenant for their actual energy use improves energy insights for all parties and provides the needed incentives for capital and investments in operational efficiency. 

Navigating Benchmarking Regulations

Many major cities, including New York, Chicago, Boston and Los Angeles, have established benchmarking regulations requiring large buildings to report their energy usage data. Building owners must compile utility data, including tenant-specific consumption, and submit it to municipal agencies for compliance. This process helps cities track energy performance and encourage efficiency improvements.

To streamline compliance, it is crucial for building managers to integrate energy monitoring systems that accurately track electric, gas, and water usage for each tenant. Submetering not only facilitates precise billing but also aids in compiling comprehensive reports required by regulations such as New York City’s Local Law 97 or Chicago’s Energy Benchmarking Ordinance. These regulations require some degree of submetering to enhance energy management capabilities outside of just their utility bills. 

The submetering data might also be needed by the tenants as they are also required to report their energy footprints to their corporate team for their leased manufacturing or office spaces. This additional data will help tenants meet their internal reporting requirements. 

Tenant Billing Processes: Step-by-Step

1. Data Collection: Smart meters and submeters collect utility consumption data for each tenant in real time. This is where Emergent Metering can help identify the metering hardware and the data collection system needed to achieve the energy segregation. 

2. Data Management: The collected data is transferred to a centralized billing system where it is organized and analyzed. The collected data is visualized and key points extracted for the development of the tenant utility bill. 

3. Rate Application: Utility rates, which can vary based on contract terms or usage levels, are applied to calculate costs. Emergent will use costing details from the utility bills to develop the tenant bills. 

4. Bill Generation: Individual tenant bills are generated, typically on a monthly or quarterly basis.

5. Bill Distribution: Invoices are sent electronically or via mail, detailing consumption and charges.

6. Payment Processing: Tenants make payments, often through an online portal, which are tracked and recorded in the system.

7. Regulatory Reporting: Compiled tenant consumption data is submitted to local authorities as required by benchmarking regulations.

Challenges and Best Practices

One of the primary challenges in tenant metering is ensuring accuracy and compliance with local regulations. Building managers should use certified metering systems and regularly calibrate devices to maintain precision. Additionally, integrating energy management software can streamline the data collection and billing process, minimizing errors. From our experience, the biggest hurdle in an accurate tenant metering system is the installation of the meters. All meters will be factory calibrated as each manufacturer provides their calibration certificates but the key variable is within the installation process. 

Implementing Transparent Billing

To build trust and transparency, it’s important to clearly communicate how bills are calculated. Providing itemized breakdowns and allowing tenants to access real-time data fosters accountability. Automated billing systems with online dashboards can enhance transparency and make the process more user-friendly.

Benefits of Accurate Tenant Billing

• Fair Cost Allocation: Tenants are billed accurately based on their actual usage. 

• Energy Efficiency: When tenants see the direct link between usage and cost, they are more likely to adopt energy-saving practices, and invest in behavioral or operational changes to reduce operating costs. 

• Operational Efficiency: Automated billing reduces administrative workload and improves accuracy.

• Regulatory Compliance: Accurate reporting ensures compliance with city-specific benchmarking regulations.

Conclusion