Multifamily Utility Management Summit: Key Takeaways
Rapidly increasing energy prices and the lingering effects of the pandemic have amplified the obstacles multifamily operators are facing with their multifamily utility management efforts. In light of this, we decided to host a virtual Multifamily Utility Management Summit with sessions led by experts in the multifamily utility space from companies such as EnergyLink, Asset Living, and the Utility Management and Conservation Association (UMCA).
Watch the recorded sessions below to get a solid grasp on the state of the energy market, learn multifamily utility management best practices, and understand current utility billing regulations.
- State of Utility Market: Volatility & Rising Costs with Dan Snyder, VP of Product, Zego
- How Asset Living is Winning Multifamily Utility Management with Jenny Rosario, Director of Implementation, Asset Living
- Energy in Focus with Darren Novich, CEO, The EnergyLink
- Utility Billing Roadmap: Current Hot Topics with Falise Platt, Regulatory Counsel, UMCA
State of the Utility Market: Volatility & Rising Costs
Hosted by Dan Snyder, VP of Product, Zego
You have a lot to contend with when it comes to multifamily utility management. From external pressures like fluctuating resource pricing and pandemic pressures, to changing resident expectations. In this opening session, Zego’s VP of Product Management, Dan Snyder, sets the stage for a day of sharing multifamily utility management best practices and in-depth discussions around the state of the utility market.
Key takeaways from this state of the utility market session:
Utility costs have spiked dramatically
Utilities are the third largest operating expense that has slowly trended up and then skyrocketed with inflation and the effects of COVID-19. Energy prices are significantly outpacing inflation. It is staggering when you look at the data. In terms of inflation, energy prices have outpaced the price of goods and services – in certain cases at double or triple the rate.
There are a variety of factors driving this trend, including supply chain disruptions, the war in Ukraine, and domestic policies. For example, climate change continues to manifest in the form of intensified wildfires and a range of unprecedented weather events that strain resources impacting utility companies.
And, of course, the COVID-19 pandemic has shifted our way of life and will be a continued factor impacting energy prices. We saw an immediate impact during active lockdown and restrictions on movement. And for many, at least in the short term, the work from home trend will continue. NMHC reported that 73% of apartment residents expect to continue to work from home in the next year.
A rise in utility costs has initiated a new mindset…
There is a global trend by multifamily operators around sustainability. A majority of renter demographics care about the environment, so a focus on conservation is a meaningful property and brand differentiator.
For investors, sustainability can shape and influence property valuation. Additionally, depending on property location, there are tax savings, federal programs, state programs, and grants tied to energy savings initiatives. There are real benefits to companies that implement a multifamily utility management strategy.
Multifamily utility management comprises analytics, conservation, and compliance
Analytics help to benchmark and analyze usage across a portfolio, to identify opportunities to reduce use, prevent waste, and take corrective action by pinpointing usage anomalies. Quickly catch issues like leaks through submeter data.
E-billing enrollment helps with conservation. Residents can elect to stop receiving paper statements with the click of a button. Without paper statements, the entire operation including the delivery costs, the paper itself, the ink, etc goes out the window. And additionally, reporting on consumption helps to identify trends and catch variances.
Staying compliant with local and national regulations seems like a constantly moving target. However, consumption data is uploaded to the Energy Star database for reporting compliance.
How does multifamily utility management tie into the resident experience?
Multifamily utility management is an integral part of resident experience management. Encourage utility transfer through automated, pre move-in checklists. Communicate all property charges on one bill, including utilities. Clear and itemized statements provide transparency to help residents understand their exact usage.
In summary, billing solutions offer a seamless enrollment and then provide flexible, easy ways to pay. All of that helps to reduce the friction by making utility billing part of a complete resident experience program.
Operators who aren’t effectively billing back residents are leaving money on the table. They’re assuming risk exposure. Those rising and volatile utility costs are putting them at financial risk if their flat fee for utilities is too low. But if the flat fee is too high, it not only impacts residents’ finances, but also opens them up to legal risk.
Two key elements to successful multifamily utility management
Multifamily utility management offerings typically include an expense management offering that offloads the AP burden for you and your staff. A thorough audit of the incoming utility bills, and a prevention of late fees as timely payments are made on your behalf. And then most importantly, the identification and recovery of vacant unit costs.
On the flip side, resident billing involves the calculation and generation of resident utility statements. Utility billing providers like Zego help maximize recovery based on the jurisdiction and compliance regulations. This protects resident satisfaction by not over-billing them, and promotes conservation by holding them accountable for their usage.
Integration, automation, and analytics
At Zego, we pull all resident and property charges from your ERP, and integrate the charge data back into your ERP to provide residents with an accurate balance. Best-in-class multifamily utility management programs are also incorporating automation and analytics, enabling benchmarking conservation optimization. Based on our studies, this could save $1 million in annual expenses across a 2000 unit portfolio.
The future of multifamily utility management hinges on technology innovations to fuel productivity and resident satisfaction. Predictive analytics will use machine learning and AI to catch anomalies. Receive real time alerts to catch a leaky faucet before it becomes a bigger issue. On top of that, looking at year over year unit data and weather trends to help make budgeting and benchmarking as accurate as possible. And a seamless integration with existing systems such as your ERP or smart metering systems for maximum data capture and visibility.
How Asset Living is Winning Multifamily Utility Management
Hosted by Jenny Rosario, Director of Implementation, Asset Living
Learn best practices from a best-in-class multifamily utility management operation. From growing your income and staying in compliance, to the perks of utility expense management. Peek into the processes and procedures that drive better NOI at Asset Living.
Key takeaways from this multifamily utility management session:
What is our role in the process and why do we care?
We’re going to talk about the perspective of the management company, what our role is, and why we should be looking into these things. As the property management company, our main goal is to protect the client’s ROI. Our other important role is to lease units and collect rent month after month after month. Part of that is maximizing income, and that’s where utilities come in. How can we maximize our income, and how can we add value to the asset by just looking at utilities?
The two components of multifamily utility management are utility expense management and resident billing. On one side, keeping your expenses on track and within reason of budget. And on the other side, making sure that you’re recouping as much as you can. Let’s break these down to see what we can do to maximize all of our efforts, and make sure we’re getting the most income to maximize NOI.
Resident billing in 4 steps
Step 1: State legalities
When resident billing, you’ll need to check with your state legislature and see what the legalities are. Here in Texas, water is regulated, gas isn’t regulated, trash isn’t regulated, and pest control isn’t regulated. But because water is regulated, it means you have to have all your T’s crossed and your I’s dotted when it comes to the setup, the lease language, etc.
When it comes to resident billing, compliance is so important because the state will fine you per occurrence. Not per month. Not per year. They charge you per entry, per ledger. Here in Texas, we have a public utility commission, but some states don’t. Check to see which department you should be reporting to. In Texas, we have to register all of our assets, whether it’s an allocation or a submeter. Once you have all of your legalities set, and you register with the state, then you can start asking questions like, what can we bill back? Where can we bill back? Is there room for improvement? Have we looked at everything?
Step 2: Billable expenses
Next, you need to look at expenses such as water, gas, electricity, trash, and pest control (which some do not consider a utility). From these expenses, what can you charge back according to the lease, and according to what the state allows? Once you figure out what you’re going to be able to charge back, then you can look at opportunities to maximize recoupment.
A great example is water. Every month you get an invoice from the municipality that tells you how much you owe. But, water and sewer is one of the best utilities to bill back for. To get started, you’ll need to ask a few questions: Is there irrigation involved? What kind of meter is that on? Is it part of the whole bill? Is it on a separate meter? Because that makes a huge difference on a CAD, which is a common area deduction.
Step 3: Verify CAD on each utility
A percentage of the entire bill should be billed to the common area. That includes the pool, the laundry center, etc. This water usage doesn’t belong to the residents. Once you verify what your CAD is, which is commonly between 5% – 25%, you have to exclude that from the bill. Then you can set up the remainder of the bill for a billable expense.
Step 4: Lease settings
Lease settings are very important, because that’s what everyone refers back to. First, you have to determine if the property is submetered or allocated? Every once in a while you’ll have a property that is partially submetered and partially allocated, but those are your only options. If the units aren’t submetered, allocation is the default.
If the property is submetered, you can skip the CAD process. Each resident is going to be billed for the exact usage on their meter. If you’re allocated, then your resident billing provider determines how much each unit should be charged for their usage. The billing company uses a formula to figure out how much to bill your residents according to your lease set up.
In some states (especially in Texas), it is required by law to include the method of calculation for the allocated utilities within the lease. Calculations vary based on square footage per number of occupants, or ratio of occupants, or square footage alone, or simply per unit. Whatever the method of calculation, you’ll need to ensure that it is clearly stated in the lease. If your residents don’t sign any allocation documents in their original lease, or any addendum to their existing lease, you may not be able to legally bill them.
You also have to provide a statement of the average monthly bill for all the units on any of the allocated utilities for the previous calendar year. And, you will have to decide whether the late fees apply to the utility charges, and include that language in the lease. Lastly, for some utilities such as stormwater, you are able to charge an admin fee. Be cautious, and only charge admin fees on the utilities that the lease allows.
Utility expense management for time sensitive invoices
How can you decrease expenses? At Asset Living, we’ve noticed a commonality between the municipalities no matter what state or city you’re in – they don’t give you a long period of time between when the bill is received and when it is due. So, if you’re on vacation or at a conference, you could incur a late fee for missing that short pay period. By using a utility expense management provider, you don’t have to worry about missing the pay period. The bills go directly to them. They make sure that all bills are paid in time.
Vacant cost recovery
They also help recover your vacant costs, which often get overlooked from the site level when we’re caught up in day-to-day tasks. A provider will monitor those bills and break them down and to make sure that you’re recouping all of your vacant expenses. And not only are they going to bill out those vacant charges, they’re going to alert you when you have substantial charges on your vacant units. The only charges you should have on your vacant units is a little bit of electricity from the makeready team, the maintenance team, the office staff during final walkthroughs, etc. But there shouldn’t be high usage, so it helps to have a company monitor that.
Maximize resources and streamline processes
It takes a lot of manpower to enter in utility invoices. You’ve got people verifying rates month over month. You’ve got people reviewing the bills, making sure that everything looks right, entering the bills, etc. If you’ve got more than one Accounts Payable, there might be a difference of opinion on what the invoice number is. There might be some duplicate entries. These situations happen, no matter how hard you try to avoid them. Part of having a utility expense management company is to maximize your resources in-house. It helps streamline those processes. It really cuts our Accounts Payable team a lot of slack, because they don’t have to deal with the utilities across the entire portfolio.
Comprehensive bill audits
Another cool thing about having a company that audits and/or manages your expenses is the comprehensive bill auditing. I’ve been asked to report on our utility usage over the last 12 months. That’s a lot of work that involves pulling invoices, building spreadsheets, making charts, etc. A great utility expense management provider will do this for you. They also handle disputes for you. That saves a lot of time in-house. If there are fees from the city or the municipalities, your provider will go to bat for you. They fight to recoup all those errors and fees.
Say there was a spike in your utility usage. What was that spike for? Are the meters all working properly? Are they being read properly? A utility expense management team will do all this legwork for you, saving you a ton of time and headache. They give you the heads up that there was some unusually high usage. Then, they help you look into the issue, whether it’s early leak detection or meters not being read.
I’ve experienced this first hand when we took over a property and the meters weren’t working. None of the reads were accurate. They were billing residents on estimated billing. You can do that for a short period of time, but you can’t do it month after month after month. That creates a huge liability for the management company. So you get peace of mind when you have a company analyzing it for you. Then you don’t have to pause your day to day operations.
Key learnings from Asset Living
The key takeaway on the resident billing side is to maximize your recoup. See what you can do within your state’s guidelines to maximize your recoupment. You want to protect the client’s investment by making sure they get the best return possible, which adds value to that asset. Also, reduce your expenses with a utility expense management provider. It has been a lifesaver here at Asset Living. We’ve saved, we’ve cut overhead, we’ve been able to recoup a lot of faulty late fees that should not have been assessed, and we’ve had leaks detected months before we normally would have found them.
I encourage you guys to dig in, and look into what your state requires. Reach out to your resident billing provider and ask how you can further maximize recoupment. And don’t forget to review your lease settings. I hope that these tips help you save your management company money, cut some overhead, and reduce the time that you’re spending on reviewing and auditing your utilities.
Be sure to watch the recording of Jenny’s session to hear her answer many thoughtful questions from an audience of fellow multifamily owners and operators.
Energy in Focus
Hosted by Darren Novich, CEO, The EnergyLink
Inflation spiking to 7.5% and the war in Ukraine have brought energy costs to the forefront. Rising prices for natural gas, electricity, and oil have forced customers to revisit their budgets and energy procurement strategies for their multifamily portfolios. Darren Novich, CEO of The EnergyLink, breaks down what’s impacting energy prices today, and what will continue to challenge us in the future. You will also learn how customers are dealing with the rise in energy costs during this volatile period.
Key takeaways from this energy in focus session:
Let’s dive into the energy market, specifically natural gas and electricity, as it relates to energy procurement. I also provide some insights of how we plan and pivot during certain market conditions.
Past, present, and future
The markets have been very volatile lately. Over the past 30+ years there have been a lot of spikes in the market. We leverage this data to advise customers when to hedge, when to lock in, and when to wait for the next opportunity. As a technical trader, I track the trends. The fundamentals are what I would consider the headlines as far as capturing the short term attention in the marketplace. We try to help our customers avoid certain knee jerk reactions to the market.
We’re obviously in a bull market now for natural gas, but we’re still tracking for any pullbacks where there may be buying opportunities. Some people want to hedge during the shoulder months, but the shoulder month rule of thumb no longer applies because of the volatility in the market.
What is impacting prices right now?
Looking at the natural gas storage report, it’s at the lowest point it’s been in three years. A lot of gas was pulled out of storage to meet demand. Usually the summertime is the injection season where we try to rebuild that storage. So, storage is a key factor that we’ll be looking at. From a technical standpoint, there is a $9 resistance on the top side of the market. I anticipate at some point during this summer, the markets will have a short term rise to that resistance and bounce off.
Obviously, the war in Ukraine is transitioning us to become more independent. They’re relying on LNG. The issue is that there are not a lot of LNG terminals in Europe where they could accept that natural gas. We’re actually building LNG infrastructure on both sides of the pond. We’re probably a little farther ahead over here. If you look at Europe, it was really only Poland that had committed to LNG. So right now, you’re still seeing European countries relying on Russia for energy. But I expect that to wean off in the future.
How did we get here?
At one point, natural gas was all wet supply – meaning, offshore off the Gulf of Mexico. That has changed drastically because of the fracking revolution – what we consider dry supply. We’ve actually become the Saudi Arabia of natural gas because of fracking. Once fracking occurred, more supply allowed prices to fall drastically.
Natural gas has always been a domestic commodity. But, there’s an arbitrage opportunity which still exists today between Europe, the United States, and Asia. Producers are looking to capture that arbitrage spread between the countries. But the transition was occurring rather slowly. You have to build out the infrastructure, but with the invasion of Ukraine, that process is going to increase expeditiously where they’re going to build more LNG terminals.
Unlike with oil (which has always been a global commodity), we’ve been sheltered with natural gas because we couldn’t get it out of the country. It was domestic, so prices would be trading at $2 or $3 a dekatherm here, but it would be priced overseas at $20-$30 a dekatherm. The current market actually is trading here at around $8.45 per dekatherm.
Cue the sticker shock!
It wasn’t long ago that being on a variable rate for your energy procurement, your natural gas, electricity contracts, etc made sense. There wasn’t a lot of risk, especially during COVID. During COVID, we had high supply and low demand. Fast forward to the current environment, and we’re looking at high demand, low supply. This is called a ‘whipsaw’ in the trading industry. We were whipsawed in a very short period of time.
A lot of customers were caught off guard by that. In the past, they may have not paid close attention to their energy contracts, because they were floating at the low end. But because of the recent sticker shock, there’s a lot more interest in what we’re doing now.
Using this data to determine buying opportunities
So what’s next from a future standpoint as we look at the market? With natural gas moving from a domestic to a global commodity, I do expect prices to continue to rise short term – meaning over the summer. But there may be certain pullbacks. If somebody is monitoring the market for you, there could be a pullback opportunity to hedge the volumes. So in the short term, especially over the summer, I anticipate prices continuing to rise. But as both sides of the pond continue to build out LNG infrastructure, we will see the prices start to come down a little bit.
What is going to impact demand, probably during the latter half of this year, is interest rates and inflation. Eventually, those two will drive the market down as far as demand. Walmart and Target recently posted losses. Inflation has taken a huge bite out of their profits. We’re already seeing demand curtailment occurring in some markets.
From my perspective, we’ll see more supply being brought online. Any time gas is trading at over $8 a dekatherm, it just makes sense to pull it out of the ground. The numbers pencil out from a producer standpoint. And then we’ll probably see demand start to come down as we possibly hit a recession the latter half of this year or into 2023.
What’s impacting pricing right now?
One thing I mentioned earlier that is impacting the market is storage. From a historical perspective, storage is the lowest it’s been in three years. If there is any type of spike in demand, there’s not going to be that storage buffer. The big question is, what will the weather be like this summer? Will it allow for a good amount of injections into storage to create that buffer going into next winter? If we head into the fall and we’re still short on storage, that could be a bad situation going into next winter. But like I said, demand should curtail a little bit. It’s just really going to be dependent on how hot of a summer we have around the world now that natural gas is becoming a global commodity.
As far as natural gas transportation, there’s a lot of investment going into LNG. But it takes a lot of time. On an interesting note – of the fracking that was invested over the last 15 years, the cash flow in 2022 has been the highest. That means some fracking producers that invested their money into infrastructure 15 years ago are just now realizing profits and gains on those investments. Because of that lag time, transportation could take some time to be put in place.
The green perspective
The wheels are already in motion as far as the Green movement. I think the war and the current situation with brown energy prices rising for oil, natural gas, and gasoline are just going to reinforce the Green movement. Did the numbers pencil out two or three years ago? Not so much. But now, with prices being really high, some of those green projects will pencil out.
There’s all different types of angles to Green energy. You can get your own supply via rooftop solar. But we’re primarily looking at Green energy as it’s being produced by utilities, such as big solar farms and wind farms. We anticipate more investment on that side, even more so to offset what’s going on in Ukraine. And then obviously, the political party that’s in power always impacts the incentives from a federal or state level. When folks open up their bills, a lot of them over the last couple of months were thinking: how do I get off the grid sooner?
The EnergyLink approach to the marketplace
From the EnergyLink standpoint, one thing we tell our customers is to plan and pivot in a volatile energy market. We don’t panic when the market’s up, we’re sellers. When the market is down, we’re buyers. So hedge if you have to, but don’t take on any additional cost increases unless your contract is expiring and you have to hedge for a short term. Pivot your strategy to minimize your risk.
But it depends on the asset requirements. For example, if you have a hold on a property for an extended period of time, you may want to lock in longer terms beyond 36 months or 48 months, or even 60 months. But our approach is to look at the type of energy asset, and use the market behavior to determine the strategy. We’re going to try to buy on those dips and stay away from the market at those highs.
As far as fundamentals go, we’re analyzing weather, the storage chart, supply and demand, and geopolitical influences. We take into account savings opportunities. We may aggregate certain properties by extending contracts, but we always analyze the length of the contract against the energy markets. Like I said earlier, if you’re in a situation where your contract is expiring, then you may want to do a short term hedge. But the thing about this market is that you have to react quickly. And it sounds pitchy, salesy, but if the market does dip and hit a certain support line, then you’ll want to hedge pretty quickly.
The goal for the EnergyLink was to help customers who didn’t have in-house expertise or the wherewithal to understand the energy markets. We provide them with an energy expert to help them make decisions and navigate certain markets.
Utility Billing Roadmap: Current Hot Topics
Hosted by Falise Platt, Regulatory Counsel, Utility Management and Conservation Association
In this session, Falise Platt, Regulatory Counsel of the Utility Management and Conservation Association, discusses hot topics in utility billing regulations. Utility billing isn’t easy – especially in an ever-changing regulatory landscape. Listen and learn about hot topics, the utility billing roadmap in multifamily, and critical ins and outs for 2022.
Key takeaways from this utility billing roadmap session:
Utility billing is an important strategy for all multifamily companies and commercial companies. Decades ago, when I was at a very large real estate management company, before utility billing was the standard, we were charging ahead where we didn’t have a roadmap. We did it mid lease, with no notifications and hoped for the best.
I ran a program where I had to quickly understand the regulations, which back then weren’t as tested. Utilities didn’t know what we were about. And then we had PUCs and PSCs in various shades and shapes across the country. It continues to remain a difficult roadmap to travel because you can’t go find this roadmap anywhere online or even on paper. So it continues to challenge us in that way.
So I thought it would be helpful to talk about some current hot topics in the industry as well as what the UMCA is involved in today. This association became a place where parties could get help, communicate, navigate and network. The UMCA always welcomes inquiries, and new members with like-minds who are managing portfolios.
The UMCA serves the multifamily and commercial real estate industry. The UMCA is made up of mobile home park parties, property management companies, third party management companies, service providers, manufacturers, and more. It promotes conservation while helping reduce costs through accountability. We work closely with the NMHC and NAA – we love having that partnership. Also, we’ve always kept a state by state research database that’s specific to submetering and billing regulations.
We always engage in lots of thoughtful conversations, because you can have a law, but then there’s practice. That’s why I encourage everyone to share. If you are receiving a notification from an agency, share it at your local Apartment Association meeting because united, we stand; divided, we fall. Companies are depending on these monies. It’s one of the top five (top two in most places), revenue streams. That is why UMCA continues to thrive and exist because it’s important for all of us, for our bottom line.
Utility billing isn’t easy, especially in an ever-changing regulatory landscape
It feels even more challenging relative to the recent events of the last few years. Whether you’re a supplier or a management company, or a third party, you’re having to deal with rent control, various protections, and so much more.
I polled some of the other UMCA members about what topics are on their radar. Oregon is definitely out there in the utility billing space and seems to not be going away. There are two plaintiffs attorneys that continue to bring actions that result in settlements of very large numbers. And then we will talk about the never ending rent control bills. And then I’m also going to talk about some recent UMCA activities that I think are interesting.
Oregon keeps me up at night because they have a rule in place in called 90.315. If you have properties in Oregon, it’s important how you roll your program out and how you sustain it. You’ve got to follow appropriate disclosure, lease completion, rules and regulations, periods for billing, and everything else that’s laid out in 90.315. Oregon seems to be fruitful in the area of plaintiffs attorneys catching folks that aren’t being careful.
If you’re part of the association out there, it’s always a topic of conversation. The local Apartment Association in the Pacific Northwest is on it. They have a special utility addendum in place, specific to 90.315, which is terrific. But I do a lot of lease audits, and I see people not filling out that lease appropriately. Wherever you are, if you’re using that beautiful Blue Moon lease, just be sure to fill it out correctly. It’s also really important to have that match whoever is doing your billing for you.
I highly recommend that you work with local councils as they might have more insights on the continuing settlements that occur regarding violations that are found in the programs. There is a roadmap for Oregon. We just don’t always have the manpower or time to focus on it. I encourage you to audit your leases, get in touch with your local counsel, and make sure you’re a member of the Association there.
Even if your multifamily utility management strategy does not involve utility billing, you can’t get away from rent control. Rent control is listed everywhere. New laws are passing every day. Oregon, a dominant headache in the utility billing area, passed the most sweeping rent control law ever at the state level. But there is no mention of utilities. And one of the fears was that in the months and years to come, that would be tested. That potential rent control would include utilities. But that hasn’t happened yet.
We also feared that would cause a cascade of other parties nearby. And obviously, California took a plunge. They opened the door to allow localities to enact their own rent control. There are currently 112 localities with rent control (at the time this presentation was put together). It is something to be aware of. If you do utility billing in California, whether you’re metering, RUBing, etc, you need to be aware of SB7, which went into place in 2018. It introduced regulations to submetering, not RUBs. But now I think parties are using some of these rent controls that do not include RUBs to potentially speak to RUBs or allocation billing. So keep an eye out, and stay close to your local apartment associations. Everyone is very focused on what is happening in California relative to rent control.
Rent control in Iowa & Minnesota
Iowa is interesting. They have rent control, but they introduced a bill this year relative to making utilities, rent. There are two sides to that coin. Some parties are excited because now they can evict for it and they can enforce it in a way they couldn’t before. The bad news is, if Iowa is calling utilities part of the rent (and they have rent control), in the foreseeable future utilities could be governed by whatever rent control rules, regulations, caps, and limitations are in place. That is another angle we worry about, think about, and monitor at the UMCA.
In Minnesota, St Paul enacted the first rent control ordinance in that state and parties expect Minneapolis to follow. It’s 3% a year, and it does apply to all rental properties across the city, regardless of size or age of the building. Rent control often has carve outs related to affordable housing or the age of the building. But in this case, there are no carve outs. We did get an update that parties in Minnesota are not all in agreement, and some parties think that people overstepped their boundaries. So with elections coming up in many places, we’ll see where things fall.
Recent UMCA activities
As far as recent multifamily utility management conservation activities, Oregon, Connecticut, Massachusetts, North Carolina, Texas, Indiana and Florida are all states that I think would be of interest to cover.
In Oregon, we’ve been working for years to try to overturn or change 90.315. It is a relentless group – every session they try to introduce a new bill. The most recent attempt was SB327, but the session closed without consideration. We’re always looking for someone to help us navigate this. If anyone has connections in Oregon, please contact the UMCA.
The public utility regulatory agency in Connecticut, known as PURA, made a ruling that prohibited RUBs in Connecticut. However, it was remanded back to this PURA organization to rethink, which is a very positive move. But there has been no movement. We’ve got parties that are members in the court action, so we are able to monitor this pretty closely. And PURA does not cover every water provider in that state.
PURA also (in regards to commercial electric submetering) approved a request to open the docket to streamline the application process. But there’s been no movement on that agreement. So currently, commercial electric metering is allowed, but the application process is very complicated. We have members and clients that are very involved, so we’re able to track it and have more visibility to what’s going on.
In Massachusetts, you have to go through a certification. You have to install submeters by a licensed person, and you have to install conservation devices. You have to go through a lot of steps. I think it’s the only state that has eight agencies that speak to it. So there is a process. Once you get through, you have to certify to be able to bill water and sewer. That process through the Department of Public Health was ridiculous, and parties couldn’t get a signature on the certificate. And you technically should not bill without it, which puts you in a very difficult situation. You’re waiting for the certificate, but there is money, pressure, budgeting, etc.
Earlier this year, we got together with the deputy general counsel at the DPH. We let him know our issues, and he agreed to make the changes. And so now, instead of waiting for a signature that may or may not happen, you just submit the form and the submission is your certification. Now, you don’t have to wait for some kind of approval, but you do still need to submit it.
We’ve had some recent activity in North Carolina, including the governor signing H217 on May 17, 2021. It allows billing of electricity or natural gas used by a central system. Previously, that was not allowed. And then we still are waiting for a full integration to happen. But it is legal, and that’s positive. North Carolina is a tough state because you can only meter, you can’t allocate. You have to register there as well, and you have to do your reporting. The NCUC has been around forever regulating it, and they are very knowledgeable about it. So this is a great step forward.
The other thing we are working on is H844, but it’s been at a standstill since last May. It provides clarification of property types for water and sewer submetering. We have the largest Government Affairs Committee (GAC) we’ve ever had at the UMCA, which allows multiple people to be working on different regions of the country, instead of three people trying to attack the whole country.
The other thing we’re trying to do is to include Mobile Home parks in the actual language. It’s always our intention to have things line up that we can all point to, and that certainly helps our programs be defensible. We all want the income coming from this. We all want people to use their resources more respectfully. But we obviously don’t want lawsuits because leases haven’t been filled out properly, or we don’t have the right laws supporting what we’re doing. So we’re always looking for the underlying support to provide it to everyone in the industry as much as we can.
Updates to the rules and regulations that govern utility billing practices are underway. The TCEQ used to stand on its own, but the Public Utility Commission of Texas absorbed it a number of years ago. Now that is all changing, entity and branding. A lot of people have been working to submit comments to capture all the things we think were not clear, and then we are closely monitoring the process and hope to have a seat at the table as this continues forward.
And again, a lot of things are more stalled than they would normally be. All of these governmental agencies also have been pivoting in a way that they never had to before. And so we are just thankful, the slow process gives us time to be prepared, to create a quorum, to get everybody’s submissions, and to be organized. Sometimes slow can be good.
Honestly, until a few years ago, I had not really heard about the Indiana Utility Regulatory Commission being very active. With that being said, they started trying to seek some amendments to their rules. And so we wanted to be there at the table to speak to whatever they were looking to do. Mostly disclosure, some limitations on fees – mostly consumer protection. Right now, we’re not aware of any movements forward. But again, that slow roll can sometimes give us time to prepare and get associations and everybody on the same page, which is always powerful when you’re looking to change.
Inside of a mobile home park bill, they passed clarification language to traditional multifamily that you now can add a 6% fee for sewer as well as water. Originally, when the exclusion in Florida happened, it only allowed for water. And that may be because when Texas first changed their rules to allow the 9% for water, they did not have sewer in their rules either. So now that changed, which is exciting.
Miami Dade is not the friendliest place in utility billing. You have to register there, you’ve got to pay some money, you’ve got a cap on what you can pass back, etc. They told us they were open to seeking some changes, and not much has happened. But there have been a lot of changes, even in staff, so we’re hoping that we can pick that up again next year.
Starting June 1st, 2022, there is a landlord and tenant consumer protection bill that passed relative to what’s required when you’re doing allocation in Maryland. It’s not really a surprise because years ago Maryland tried to outlaw the whole thing. But, this is a statewide rule that just calls for disclosure, which is good because that stabilizes what is required. So people can’t just pull things out of their hat. At the same time, though, it also allows local laws to control ratio utility billing. We’ll see what that looks like down the road.
Back in October, the AB1061 furthered the SB7 rules about submetering in the mobile home park space. That it’s legal, that the admin fee can be $4.75 or 25% (whichever is less), and that recurring charges must follow the SB7 guidance. So it’s exciting to again have mobile home parks included in that conversation.
And then Santa Clara imposed further inspection and reporting for water submetering. California now requires submeters based on SB7 for anything built after 2018. And they have imposed further rules for testing. You have to have your meters tested by weights and measures in every county, and they’re not all the same. If you live that life, you know what I’m talking about.
2022 Multifamily Utility Management Summit wrap-up
Thank you to Dan Snyder, Jenny Rosario, Darren Novich, and Falice Platt for bringing us four amazing sessions chock full of interesting content and best practice information. Thank you to our attendees who joined us live, asked thoughtful questions, and engaged in meaningful conversation. If you were not able to attend the sessions live, we highly encourage you to watch them on-demand, especially the Q & A portion of each session.