Hydro sub metering for Condominium Corporations is the implementation of a system that allows a condominium corporation to invoice Unit Owners for individual measured hydro usage.

I believe all Corporations, via the Board of Directors, engage the services of a Sub-Metering Company if they decide on sub-metering.

The Sub-Metering Industry is regulated by the Ontario Energy Board and has a Code which set out the minimum conditions and standards that a licensed unit sub-meter provider must meet when providing unit sub-metering services on behalf of exempt distributors.

Ontario Energy Board – Unit Sub-Metering Code (download)

I have only been asked once to review a Hydro Sub-Metering Agreement for a gas heated building.  Even with limited specific knowledge I could easily conclude that sub metering (assuming the agreement was typical and within code) should rarely be considered.

The idea and concept (User pays) behind sub-metering individual units sounds good but only if value for all Owners can be determined with hard facts and I don’t believe this can be done.

Sub-Metering Companies market their services as minimal cost to the Corporations and everybody wins.

I am always leery (as we all should be) of services or goods that are basically provided at no charge to the client (in this case the Corporation).

The expression “If it seems to be too good to be true, then it is not true” must be taken into account.

A participant update: Usually companies that sell products or services which are almost too good to be true pay a significant finder’s fees or commissions – it is important to understand who (if at all) is receiving the finder’s fees or commissions. 

So who is paying? – The Owners

I have done a bit of research and what I have learned about sub metering is disturbing.

The Sub metering industry estimates the reduction in consumption (savings) by basing their predictions on behavioral usage (a hope, a prayer) and not mechanical (a fact).

I have only found only one unbiased Paper on Sub-Metering and unfortunately it is 5 years old and the information studied much older.

University of Toronto Department of Economics – The Impact of Sub-Metering on Condominium Electricty Demand (download)

The outdated Paper suggests that all-electric buildings (no gas) consumption was reduced 20% when residents pay for their own hydro. No idea what the reduction would be for a building that has gas for heating – I would guesstimate the reduction would be around 5% which maybe on the high side.

The other item to take into consideration regarding this Paper is the data which was collected is old and does not take into the account the current public awareness of reducing energy.

Unfortunately, because of the various sub-metering company’s fees (the Paper also supports this conclusion) any savings will more than likely be eliminated and in the end the Owners will be paying more for hydro than they did before.

I have recently learned that Boards have the authority to enter into a Sub Metering Agreement without Owners approval. Quality Boards (Boards that follow the Condo-Ology® Principals) would never considering into entering into a sub-meter agreement without obtaining Owners approval. As a consultant I would even suggest the Board treat this as a substantial change and be looking for 66.6% approval.

A participant update: Regardless of the cost many Boards push sub-metering assuming the Units will look more attractive to potential buyer because condo fees will be lower.

Comment: Excellent point – from much of my reading it appears some Directors direct as if the main objective of the Board is to make the Units attractive to potential buyer. It is hard to criticize, especially for a past Realtor; the real issue is determining the best way to achieve desirability for the Units. Personally I do not think an unfavorable sun-metering agreement will assist in attracting potential new buyer, if anything,  it may reduce the attractiveness.

When my kids are looking for apartments one of the first things they ask “Does the rent include utilities?”  And if so, this is a huge benefit for the rental they are looking at. The benefit is not that they can leave lights on etc., it is because they don’t need to budget or enter into a hydro agreement, it’s all included. I assume this question is also asked when one is looking to buy a condo.

Bottom line –

Boards that enter into a sub-metering agreement without Owners approval should be considered a renegade Board.

Boards must carry out their due diligence before going to the Owners

Determine the approximate current average Unit’s hydro usage

In the situation which I reviewed there were no attempts in determining the current average Unit’s hydro usage. Why? I think if this amount were known the Sub Metering Company proposal would not of been contemplated at the initial suggestion.

Monetary information required

Amounts in (brackets) are directly from my review of the previously mentioned agreement.

  • initial cost to the Corporation
    • possibly wiring, providing a secure location etc
  • annual administrative cost to the Corporation
    • maybe the internet/direct line,
    • insurance for the equipment
    • sub-metering company fee
  • corporation’s cost of canceling the agreement diminishes annually
  • initial cost to each Owner
    • initial deposit ($100.00) or letter of reference
    • account set up fee ($25.00)
  • annual administrative cost to each Owner
    • the fixed amount  ($182.40)
    • additional banking charge
  • additional charges for Owner
    • late payment ($4.24)
    • NSF ($28.25)
    • disconnect ($50.85)
    • reconnect($50.85)
    • account set up fees($25.00)
    • collection fees –  (Collection Fees 36% of The Total Amount Owning)

Don’t forget; in addition to the last three items the Owners still has to pay for the Unit’s hydro usage.

Additional considerations other than monetary

  • Change/Interruption – generally speaking owners hate change
  • An additional confusing Code is introduced in the Corporation’s day to day operation.
  • A multi year commitment (15 years – with escalations provisions)

Final

Assuming all of the information has been verified and the Board remains positive about the Corporation entering into a Sub-metering Agreement.  Then the last step is to obtain a final review from a lawyer with experience with this type of agreement before going to the Owners for their approval.