Residential - Submetering
Are you in compliance?
*** These are the basic's of residential submetering. However, there are also HEFPA and shared meter regulations and requirements that are cumbersome and are not detailed in this summary. In the past the entire submetering process operated without oversight and guidance. In 2014 this changed and inadvertent omissions and/or ignorance of the requirements will no longer be tolerated. Protect yourself by becoming familiar with your responsibilities. While Urac does not provide submetering service we do consult with clients on these matters.
1. PSC Approval
All residential electric submetering in the State of New York requires a formal approval by the Public Service Commission. A property wishing to submeter must petition the PSC for this approval. The petition must conform to all the requirements of 16 NYCRR §96. Billing tenants without this approval will most likely result in a full refund to the tenants of all charges.
Do you have the proper approval from the PSC?
2. Proper tenant metering
Submetering is the process of redistributing the electricity that is provided by the local distribution company (LDC), through a master meter, to the tenants. The property purchases, installs and maintains its own sub-meters.
(a) Metering Equipment - new regulations promulgated on December 18, 2012, require that all equipment, new or replacement, after January 1, 2014 must, (1) comply with the provisions of 16 NYCRR Parts 92 and 93 (metering standards applied to the LDC) and (2) have a viewable register accessible to the resident.
(b) Meter testing - The property must test a "statistically significant sample of the in-service sub-meters" each year. This is a new requirement. In addition, a tenant is entitled to one meter test at no cost during a twelve month period upon a complaint about service. The costs for any additional test, that is without merit, is borne by the tenant.
3. Proper tenant billing
The amount you can bill a tenant for the electricity they consume is approved by the PSC in your petition to submeter. Normally, the rate is a straight cost per kWhr from the master meter applied to the tenants registered use during the same period, plus an administrative charge. This, in theory, provides the consumer with a discounted utility rate and reimburses the property for the tenants use. However, in reality the property actually loses money because the administrative charge rarely incorporates the amounts associated with the equipment and operating costs. It usually only covers the costs paid to the billing agent for reading and processing the billing each month.
(a) Rate cap - PSC regulations require that regardless of your master meter billing, you can not charge, demand or collect more than the tenant would pay for direct service from the LDC. Therefore, if the master meter costs per kWhr are higher than the cost for residential direct meter service, in any given month, you must bill for the lower amount. This provision has been historically overlooked and some property owners have suffered as a result. (See, Hazel Towers Tenant Association v. Nelson Management, PSC Case 10-E-0356, February 19, 2013).
(b) Information to accompany tenant billing - Again, historically the billing to a tenant only included the total kWhr's and the total cost. However, HEFPA and PSC regulations require that the tenant receive the billing periods, the meter readings (previous and present), the meter multiplier (if any), whether or not the bill is actual or estimated, and the sales tax.
(c) Sales tax - Our findings over the years is that many property owners pay the sales tax on their master meter bill and then collect that tax from the tenants. It is our understanding that the process is not in accordance with state tax laws. Proper procedure - The master meter LDC bill should be exempt from sales tax. The tax should be applied to each tenants bill and a bill should also be generated to the owner for the remaining kWhr's. That bill should also contain the proper sales tax. All the tax collected from the tenant and the owner should then be remitted to the State on form ST-100. There is also a gross receipts tax which should be done in the same manner.
4. Tenant complaint resolution process
Before we discuss this process you should verify that you have properly filled out and filed, with the PSC, a "Submetering Identification Form". The form will identify the proper contacts for billing complaints and is a requirement of the new PSC regulations. The new regulations give tenants the same protections as a direct utility consumer. In short, the tenant files a complaint with the properties' personnel, as designated on the Submetering Identification Form, and you have a certain amount of time to respond. The tenant, if not satisfied, can file a complaint with the Office of Consumer Service at the Department of Public Service. 16 NYCRR Part 12 (Consumer Complaint Procedures) is then followed.
5. Required notifications
HEFPA and PSC regulations require that each tenant be notified annually of their rights under the Home Energy Fair Practices Act and Energy Consumer Protection Act. This is simple enough with one mailing each year. However, historically this has been overlooked. The Hazel Tenant decision alludes to severe penalties for non-compliance.