Installation of submeters to improve building efficiency

Short and Long-Term Benefits of Submetering: Improving Building Efficiency and Tenant Billing

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Last spring, New York City passed legislation that requires all commercial buildings larger than 50,000 square feet to contain submeters. Twenty-two states, three counties, and Washington, D.C. now have statutes, regulations, or rulings on utility submetering, intended to support equitable billing, conserve energy, and diminish the demand on existing infrastructure and resources. While the laws are a step forward in that they acknowledge the limits of infrastructure demands as population increases, building owners and managers must adapt quickly to be compliant.

Although it might seem like a lot of effort to implement submetering in your building, the benefits are vast – including building efficiency, cost, maintenance, and tenant relations. Read more about the short- and long-term benefits below.

Building Efficiency

Short-Term: When building owners charge flat utility fees, or fees scaled for variables like unit size, renters are less likely to conserve energy. As submeters are phased in, energy consumption decreases even when tenants are not responsible for individual energy usage. When tenants learn just how much electricity, water, or heat their businesses consumer they will naturally adjust their energy usage. Additional studies indicate what many renters and property managers already suspect: when renters are responsible for their own energy costs, behavior and consumption change dramatically. Tenants are more likely to install energy conserving lighting, use less water, and turn down the thermostat, which leads to higher overall business efficiency. These studies show that energy consumption decreases by roughly 20% after submeters are introduced to a property and tenants take on the responsibility of their own energy costs.

Long-Term: Sensors and submeters provide property owners with data. As data is collected and analyzed, patterns begin to emerge. You might notice that some areas that tend to use more heat than others, while other areas use less light. This data can be used as you need to retrofit different areas in your building. In the long run, data patterns function as tools to further increase building efficiency.

Individual Accountability

Short-Term: New York City's LL 88 law is being implemented in phases: landlords have until 2025 to install meters in their respective buildings. In the short term, landlords have the opportunity to rewrite leases and determine the best methods to hold individual renters accountable for their energy use. Some options are to continue charging tenants in the same manner as before, but informing them of their energy use, while another option is to phase in new charges as submeters are installed or as new tenants enter a space.

Long-Term: In an article in Energy Manager Today, Marc Karell notes that submeters will also reduce landlord-tenant disputes by more accurately determining electricity usage so there is a fairer distribution of costs.


Short-Term: Property owners may balk at the initial cost of providing each unit with a meter. Arthur Blankenship, former chair of Utility Management & Conservation Association, wrote that the installation cost – several hundred dollars per meter – may come from the reserves of a condo or co-op, or require a special assessment. Blankenship says the payback is only two to six months, and the reduction in usage can range from 15-50%. In other words, the return on submeter investment is high and this return on investment occurs rather quickly after installation.

Long-Term: Over the long-term, submeters and the data they provide assist property managers in identifying leaks and damage to enable them to repair systems and further increase the building's efficiency.


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