Leonard Frenkil Jr. is a big believer in heat submetering.
His company, WP&M Real Estate Group, LLC, manages 13,000 apartments in and around Baltimore and the company has installed submetering systems in every apartment where it makes sense.
Many apartments already are directly metered for heat. For example, four out of five of WP&M’s apartments around Baltimore are directly metered: They are typical garden apartments with individual furnaces or hot water heaters in every unit. The utility company has a gas or electric meter on the heating system in each apartment and bills each household directly for the energy they use.
But WP&M’s other 2,600 apartments are older, usually mid-rise buildings with a dizzying array of central heating systems. The utility companies charge WP&M directly for the energy used to run these central systems according to the building’s master meter. Many landlords eventually pass the cost of heat on to residents through the monthly rent.
But when the cost of gas rises suddenly, the property managers must pay the extra cost, unless they can figure out how much heat individual residents are using and bill them accordingly. The various methods property managers use to bill tenants for their own utilities are called submetering.
Heat submetering has gradually become more common as technicians have discovered techniques to measure the heat used at different kinds of apartments.
Now, companies like Energy Billing Systems, Inc. (EBS), have figured out how to measure the heat used by individual apartments, even in the oldest buildings.
Old-fashioned radiators used to pose a real problem to submetering companies. Devices that measured signals sent by an apartment’s thermostat were no help, since many radiators are operated by hand, without a thermostat.
EBS has created a temperature sensing device that can measure the energy used to heat an individual radiator, recording when the radiator is on and how long it is on. The device then wirelessly sends information back to a central computer.
This non-proprietary measuring system can be purchased and installed for about $200 to $250 per radiator, according to Phil Neeves, executive vice president for EBS. EBS even offers lending programs to help owners finance the work.
Many radiators can’t be turned off. EBS recommends installing new valves, which cost roughly $150 each to purchase and install, so that tenants can control the heat entering an apartment.
Armed with this information, a billing company can divvy up the heating bill for an apartment complex based on who used the heat.
The system is not as accurate as a meter. Heat monitoring can be off by plus or minus 5 percent, according to Neeves. Gas meters, in contrast, come within 2 percent of an accurate result.
Most states, including large, highly regulated states such as Massachusetts and New York, allow energy allocation billing as long as the cost of the energy is allocated by measuring the tenants’ actual use.
In addition, tenants tend to use less energy once they are billed.
“We invariably see a 10 percent to 20 percent drop in total consumption of utilities,” Frenkil said.
The conservation of fuel can help a property market itself as a green building that is good to the environment.
Utility Thieves Caught in Act
At 2 a.m. on a cold night in October 2005, an oil truck pulled up in front of an apartment community in the Bronx, N.Y. The driver got out and poured hundreds of gallons of heating oil into the building’s tank.
The unscheduled delivery was more than a little unusual. That’s because for years, many landlords throughout the Northeast have wondered whether or not they were getting all the heating oil they were being billed for.
“Theft has gone on in this industry forever,” said Michael Laub, principal for the Realty Group, based in the Bronx.
Most apartment owners have no way to precisely measure how much oil the delivery truck puts in their tank. As the value of heating oil has risen, some drivers may be tempted to deliver less heating oil to landlords than the building asked for in order to sell the excess oil to a third party. If the truck returns to the garage empty, no one would be the wiser.
But Realty Group has found a way to reverse the tide.
The company installed devices on the fuel tanks at their properties that measures precisely how much fuel is in the tank at any given time. So when the driver of the oil truck arrived for his scheduled monthly delivery and put less fuel into the tank than the building ordered, a message immediately appeared on the computer screens at the building’s property management office.
The manager called the oil company, which agreed to send an agent to check the tank the following day. But that night the driver returned and attempted to undo the damage by filling the tank.
Unfortunately for the driver, the device, called the Verifier and created by U.S. Energy Group, based in Fresh Meadows, N.Y., recorded the extra oil entering the tank, the odd time of the delivery, and once again sent a message to the property management office.
“Obviously, the driver got nailed,” Laub said.
