Deregulation has started to make things exciting again. Sure, the first wave of information about deregulation brought a flurry of activity (and uncertainty). But then legal challenges in several states caused some delays, and many started to lose interest in all the hype surrounding deregulation.

With deregulation now a reality in California, new opportunities are being revealed that could help others around the country. Right now, the hot new opportunity is metering. Whoever thought that a meter could change the way you do business? But a variety of companies out there are looking at the meter as a way to help building owners get better electricity rates, refine billing practices, lower energy consumption, and improve maintenance procedures.

While the meter should not be looked at as some kind of magic bullet, it is interesting to think that a technology that has always been there can now be used in a totally different fashion. There really is no question that metering technologies can help building owners/managers in a variety of ways. The only question that remains is: Will people actually want to spend the money for better metering?

Figure 1: This electrical panel contains E-Mon's (Langhorne, PA) split-core current sensors. No rewiring or downtime was necessary to install the current sensor configuration.

Creative Metering

Metering is obviously nothing new. Ever since utilities started being delivered to buildings, meters have been there to track usage. What has changed is metering technology. Lauren Pananen, lead meter engineer for Pacificorp (Portland, OR), an electric utility serving customers in five western states, says that very inexpensive and accurate solid-state meters have come on the market just in the past 10 years.

“Before that point, solid-state meters were only used in the very highest of high-end metering, in addition to substation and interchange points.”

All of a sudden, that new, low-cost technology has provided a way to do a number of tasks in one single chip. And it’s been very cost effective to go to solid-state three-phase meters for commercial service. One of the big advantages of the new technology is the ability to include complex tariffs in the meter, such as time-of-use. It is also possible to allow automatic meter reading via radio or satellite communications.

But commercial buildings aren’t really taking advantage of the new technology. Yes, the new and improved meters are on the sides of many buildings, but most building owners/managers just leave it at that: one master meter, which only states how much energy the entire building has used. There is usually no breakdown from tenant to tenant, or from area to area. The building owner/manager simply divvies up the bill (usually per sq ft) and incorporates that into the rent. The rent also includes utilities used for common areas, such as restrooms, lobbies, and hallways.

A whole host of manufacturers, energy service providers, and utilities wants to change that. Many of these entities would like to see commercial buildings incorporate submetering into their infrastructure; that is, metering each tenant space, as well as the common areas. Larry Bartley, president of Bartley Energy, Inc. (Kailua, HI), a company that specializes in the design and evaluation of submetering systems, says that there have been tremendous advances in electricity submetering over the past 15 years.

“Innovative companies have lowered the meter cost, improved the reliability, increased the versatility, and reduced reading costs dramatically. Most offer remote reading capabilities, data logging software, billing software, and billing services,” says Bartley.

Dave Matasek, director of utility services for Johnson Controls (Milwaukee), says that it used to be only the occasional customer who would ask for submetering information to be incorporated into a building automation system.

“Typically the information didn’t flow outside of the customer’s bas network,” says Metasek. “The paradigm today is totally different. Now the information is coming to people like us, and we’re performing services through a service bureau, which is remote from the customer site. We’re building an energy information services business.”

Matasek adds that Johnson Controls has identified six ways in which most commercial building owners could benefit from having submetering information incorporated into their bas:

  • Load profiling. “Just seeing your load at fifteen-minute intervals has tremendous value,” says Matasek, “because you have savings from awareness. You need to have load profiles at the submeter, the master meter, and the enterprise level, so you can aggregate and disaggregate loads to your advantage and take advantage of the best energy supply deals out there.”
  • Turning those load profiles into cost (e.g., calculating a bill).
  • Independently validating or verifying utility or power marketer bills.
  • Savings tracking.
  • Exception reporting. “This is cool,” says Matasek. “This is where you can automatically identify an exceptional occurrence in usage or demand or cost.”
  • Performance contracting measurement and verification.

Figure 2: Factory-installed communication devices allow meter readings to be downloaded to a non-dedicated PC for automatic meter reading, tenant billing, and demand profiling.

Getting The Best Rates

There’s no doubt that most are going to think the main advantage to submetering is to get better energy rates. As Matasek noted, submetering will allow building owners/ managers to profile their loads and present the data to utilities and energy service providers in order to start negotiating for better rates.

Don Millstein, president of a submetering manufacturer called E-Mon Corp. (Langhorne, PA), says that submetering is a definite asset to endusers, who can then go to the next level and start negotiating with utilities. “We are trying to make the enduser proactive in deregulation, meaning they can now go and get a load profile of their electrical usage for either one site or multiple sites. If there are multiple sites, they can aggregate them together.”

Aggregation is basically grouping multiple loads together to combine electrical usage. This, in theory, will lower a customer’s costs. If, for example, a customer owns 100 buildings in 10 different utility territories, he or she can take all 100 buildings and “pretend” they’re one building. “Then it’s possible to take the load profile to whichever utility or energy service provider you want and say, ‘How much are you going to sell me for all these buildings?’ That’s a much better position to be in,” says Millstein.

But make no mistake — submetering is definitely a benefit to utilities and energy service companies (ESCOs), which can then “cherry pick” their customers by offering better deals to the companies with the best load profiles.

“This one-size-fits-all utility rate system that we have in a utility-regulated paradigm is going away. Why should a really goodlooking load that’s very flat and has a nice load factor subsidize a really ugly-looking, choppy load with a terrible load factor?” asks Matasek.

Millstein even foresees the day when a utility or ESCO will be able to aggregate certain floors of a building with other sites. “Right now, you can’t do that because the utility has that whole building. But when deregulation is implemented nationwide, there will be the ability to go and grab this floor and that floor of a building and put them all together. It’s going to be a little more difficult if the landlord still maintains the whole building, but tenants are going to force him to submeter in his leases.”

If you think this all sounds a little futuristic, think again. McDonald’s recently decided to purchase electric power for all 800 of its California locations from one utility — Pacific Gas and Electric. Aggregating its restaurants gave the company the muscle power to get a good rate for all its California sites.

Non-Negotiable Benefits

Even if a building owner/manager has no interest in negotiating for better electricity rates, there are still benefits to submetering. Probably first and foremost, the practice lets owners/managers get a better handle on their electricity bills. “Owners don’t know what their bills should be. For example, they might get a $5,000 bill every month, but they really don’t know if it should be $2,000,” says Michael McDonald, vice president of sales, Digital Metering (Kirkland, WA), a developer and manufacturer of automation technology.

Knowing what the bill is supposed to be can alert owners/managers to maintenance problems. “A lot of companies have said they know how much electricity an elevator should use, for example. But with submetering, we can monitor those elevators, and if one is using twice as much electricity, there might be a maintenance issue — there might be bad belts in the elevator shaft,” says Millstein.

Submetering each space also allows owners/managers to know what the tenants are doing — basically, who seems to be wasting energy. Knowing who the wasters are can help owners encourage those tenants to conserve energy. According to Bartley, older U.S. Department of Energy studies indicate about a 17% reduction in consumption habits when a space is monitored.

“Often times, tenants or facilities managers really do not know where the power or water is going. Submetering fills this knowledge void and affords real opportunities for dramatic savings. Experience shows that attitudes change when individual users start paying for their consumption habits.” Bartley adds that reduction in energy usage by commercial buildings is particularly helpful since power companies have been operating closer to capacity in recent years. “This will lead to stiffer charges during peak demand,” he says.

Submetering spaces can also allow owners/managers to advertise a lower rent amount, then charge the tenant for actual electricity used. This is a somewhat fairer way to split the bill. In this scenario, the tenant who has multiple copiers, computers, and printers will pay more than the tenant who might just have three manual typewriters in his space.

Billing tenants individually can be a tricky issue, though. Many utilities do not allow the resale of electricity, except through submetering and simply splitting the electric bill according to consumption. “In those markets, no one can make a profit from the electricity — no markup to cover submetering or billing costs is allowed,” says Bartley.

Bartley adds that if building owners are considering getting into the electricity billing process for their tenants, they must make sure they have the legal leverage to collect. Also, the billing and accounting must be set up to avoid local sales taxes.

But some utilities won’t allow submetering at all, says McDonald. He says one utility won’t let him put submetering equipment in buildings that they serve, even if the owner doesn’t plan on billing tenants directly for electricity usage. “There are certain utilities that won’t let us touch any building in their area. I don’t know how legal it is for them to say, ‘No you can’t put submetering in, even though it’s your property.’ I find it hard to believe, but it does happen.”

The Obstacle Course

Local utility restrictions are just one of the obstacles a building owner/manager might face when trying to implement submetering. Cost can be another obstacle. If you can’t recoup the submetering equipment charges from your tenants, is it cost-effective to install the equipment in the first place? It depends on who you ask.

Pananen says that retrofitting an existing building with submetering equipment can be expensive, depending on the size and age of the building. And it may not be worth it to owners/managers who are already paying low electricity rates, such as what they have in the Pacific Northwest. “We have seven-cent power here. Across the river over in Washington State, it’s four cents.”

Hussein Hassoun, executive vice president of the metering services company Utility Systems and Applications Inc. (Salem, OR), agrees. “Theoretically, there should be a lot of interest in submetering. But a lot of building owners and building maintenance people don’t want to bother with it – it’s just another headache. Because of the low cost of power here, submetering in this part of the country is not very popular.”

He and Pananen both say that submetering will probably be more popular in areas with higher electricity rates, such as in the Midwest and East. Pananen adds that we’re in the beginning of a “metering boom,” the likes of which he hasn’t seen in the whole time he’s been in the electric business. “Even our ceo and management now know what a meter is,” he jokes. “Before deregulation, they didn’t care.”

Others claim that it’s not an expensive technology to install, and owners/managers should be interested because of the benefits listed earlier. Millstein says submetering can be relatively inexpensive to achieve. Unlike the socket meters that were used previously, today’s submeters are all electronic for the most part; they’re little computers on the inside.

“We use what are called split-core current sensors, and what that means is we go to an electric panel and we can just snap around the electric cables — we don’t have to cut them. We don’t even have to turn off the power in the tenants’ facilities. So it makes it very easy from an installation standpoint. It also allows you to put the meters wherever you want,” says Millstein.

He adds that meters can be put in electric rooms, even though the panels may be all over the building, in the basement, or in each tenant’s facility. Millstein notes that the submeters give the owner/manager a lot of flexibility, and the average cost for a kWh meter costs about $500. “Not too bad, especially if the building has high electricity bills. It’s all relative, obviously.”

Matasek says that there are extremely low-cost and extremely high-cost solutions to submetering. “If you can install the equipment and there’s an acceptable payback that meets the customer’s criteria, then the customer is going to do it. If there’s no value derived, even if the metering system is free, it’s not going to get done.” But cost is absolutely a factor, he says.

If prices seem steep, it might be worth approaching a utility or ESCO. Some are willing to partner with attractive load profiles — er, buildings — in order to sign them up or retain them as customers. A utility or ESCO may offer the value-added service of providing submetering equipment or at least analyzing energy usage once a submetering system is in place. Of course, there will be a price. They’ll expect the owner/manager to sign up for power for a certain length of time in exchange for the service.

Despite all the obstacles, there are definite benefits to the technology. Everyone agrees that metering options will continue to grow as deregulation becomes a reality nationwide. Matasek sums it up best when he says that tenant metering, tenant billing, and reconciliation of cost to energy pricing will become an enormous market.

“It’s going to happen. It has to. Why fight this one? It would be like swimming upstream.” ES

What Does Submetering Mean For...

Facility engineers.Submetering should make their lives easier, says Don Millstein. Not only is the technology low maintenance - they don't have to think about it except for once a month when they read the meters - it also gives them information to make changes in their facilities, as well as lower their costs. "The big thing is peak demand. They might be using 1,000 kilowatt hours no matter what they do. But they might be able to move the peak demand around without really impacting the building. Maybe they don't have to turn on that furnace until 2:00 p.m. instead of noon. That may help them save 25 kilowatts at $25 apiece."

Facility engineers must also be aware of security issues in order to maintain faith in the submetering system, says Larry Bartley. "Without the clout of the utility company behind the system, building management must make sure that not only is the submetering system secure, it must appear secure to all those who are sharing a utility account. Steps may include locking panel covers (not switch panel doors) to prevent tampering or innocent mistakes."

He notes one problem he has had is innocent tampering by uninformed electricians who are working in panels that are outfitted with submetering current sensors. "They sometimes remove the sensors and forget to replace them, or put them back with the wrong orientation or the wrong wire."

Consulting engineers. They need to know the technology and where it's applied, so when they're either redesigning a building or working on a new building, they can advise their clients about where the technology should be installed, says Millstein. He also says to be aware of the local utility wanting to put in their own meters or socket meters, which can take up a tremendous amount of space compared to electronic meters.

Bartley adds that consulting engineers are now designing submetering systems into condominiums on Hawaii, where floor space is extremely expensive. "Submetering systems that fit the electric riser scheme with the panel and submetering within the apartment are more cost-effective than dedicating a meter room on each floor," he says.

Dave Matasek also notes that consulting engineers should be looking at submetering as a profit opportunity. And it's also an opportunity to get deeper into the value chain of the customer. "Focus on the customers' needs, wants, and desires," he says.

- by Joanna Turpin