Overcoming Barriers to Time-of-Use Rates for Apartment Residents

Overcoming Barriers to Time-of-Use Rates for Apartment Residents Joseph S. Lopes Applied Energy Group, Inc. www.appliedenergygroup.com Herbert E. Hirschfeld, P.E. www.submeteronline.com

Background There are over 2 million residential apartments in New York City and Westchester County (northern suburb), with about 400,000 in master-metered multifamily buildings: For master-metered apartments, one utility master meter for all apartments Utility reads master meter and bills building, who collects electric charges from tenants Apartments are unmetered so electric use collections based on apartment size not use! Electric charges included in building common area charges and billed as rent or maintenance charges Con Edison offers a bulk rate for master-metered residential buildings that is 30% less than retail rate disincentive to convert to utility metering for apartments

Background Problem 1: master-metering without submetering: No meter, so no price signal for apartment residents So, they waste electricity (NYSERDA: 18-26%) Problem 2: For virtually all apartment residents, flat electric rate that varies only by season and fuel adjustments So, no incentive to conserve during system peak and other high-cost periods A Solution: Programs by New York State (NYSERDA, PSC, ISO) to respond to electric deregulation Advanced Metering and Demand Response technology program Incentives, including submetering Time-of-Use Pricing, Submetering and other Demand Response programs provide incentive to reduce/shift peak

Price Signals for Apartments Stage 1: Submetering Collect from apartment residents in proportion to their use, rather than apartment size after reducing rent or maintenance bills to reflect embedded electric charges Submeters often must be placed in apartments, but technology enables small submeters that can be read remotely by powerline carrier or wireless data communications With Submetering, residents pay for What they use (Fair!) Stage 2: Time-of-Use Pricing Most advanced submetering systems are capable of interval data collection, so TOU reading/billing is feasible at little/no additional cost With TOU, residents pay for When they use energy!

Submetering Price Signal Many perceive their electricity as free Submetering price signal is incentive for reducing waste and more efficient energy usage Tenants respond by using less and investing in efficient appliances over time savings persist! Month kwh 700 600 500 400 300 200 100 0 32 8 55 1 57 4 43 4 40 5 42 1 40 2 June 2004 ClintonHill - All Buildings: Time-of-Use Billing Average Monthly kwh: Shadow Period August 2004 July 2004 Sept 2004 55 1 53 2 38 0 Oct 2004 40 5 35 3 28 7 Nov 2004 48 8 Dec 2004 32 3 44 6 Jan 2005 34 6 46 8 Feb 2005 31 1 44 9 Mar 2005 42 0 28 6 27 2 April 2005 39 6 May 2005 Within the same building, submetered apts. Used 39% less than nonsubmetered apts. (renters) Owners/Participants (P) Renters/Non-Parts. (NP)

Time-of-Use (TOU) Price Signal Two residents using the same monthly kwh may contribute differently to costs Typical Apartment Load Profile Hourly Load by Temperature <--Utility Peak-> Building Peak kw <--------Peak Hours-------------------> <-----Off-Peak Hours----> <--Shoulder Hrs-> <--Shoulder Hrs-> 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 Weekend Hours are off-peak Pe ak U ser Off-Pe ak User

Time-of-Use (TOU) Price Signal Reduces building electric costs and utility costs if you shift/reduce demand Provide incentives for residents to shift away from both utility and building peak Building peak determines demand charges Residents need Information and incentive to help them respond: energy and TOU tips The right rate structure can provide the proper price signal Utility System Peak Period (2-6pm) - Weekdays Customer/building peak (6-10pm) Critical Day

Components of TOU for Apartments Apartment Meters Meter-reading data collection system (remote) meter-reading access for owner/billing vendor Billing system Customer Service / Dispute Resolution Information / Education Component for Apartment Residents Apartment metering system is like a mini AMR System Being informed and prepared is the key to overcoming barriers

Apartment Meter Issues/Barriers Type Electronic: smaller, more capability for communications & control (e.g. temperature sensors; shorter warranty (typically 1-5 years); failure rates uncertain (new) Electro-mechanical: less expensive, standard utility meters (rebuilt); longer warranty; failure rate > 20 yrs. Location Basement: unobtrusive, cost-effective only if existing meter pans (rewiring is cost-prohibitive) Meter Closets: Existing meter closets on each floor more cost-effective Apartment: Often only place to access apartment circuits; access issues scheduling. Submetering opponents (typically high users) use access or aesthetics concerns to delay implementation

Meter-Reading Data Collection System All systems require quality control Powerline Carrier (PLC) Uses building wiring, so meters can be read without requiring apartment access Meter read cycle/intervals affected by whether meter stores reads ( smart meter) or must be read each interval ( dumb meter) Each meter must be read in sequence, so dumb meter reading time depends on how many read from the same circuit High-rise bldg. (400 apts.) required 40 minutes to read all units Apartment complex had 2-3 buildings on same main circuit so had to operate in series (one after another); timestamp rounded to the nearest hour Reading frequency depends on TOU time blocks and Storage Reliability of reads for TOU periods (1, 4, 24 hr reads vs. once per month) can be a factor

Meter-Reading Data Collection System Wireless technology Reliability and speed of signal must be confirmed: interference, especially with pointto-point communications Mesh (peer-to-peer communications) technology can eliminate this problem More expensive than PLC - Building wireless network cost can be offset with other applications Temperature sensors, security, boiler interface More robust data Intervals down to 1, 5 or 15 minutes; hourly typical

Remote Meter-Reading Access On-site collector/pc Expensive, especially if each building is separate (e.g. garden apts vs. high-rise) Security, maintenance issues Software upgrades, hardware failures Vendor access reliability PC s may have to be re-booted Access frequency vs. data communications speed Dial-up vs. broadband/web-based options

Billing System Internal vs. billing vendor Is management prepared to provide administrative function? Experienced vendors are available, removing management from adversarial relationship Billing system requirements Separate bill vs. line-item on rent / maintenance bill TOU component must compare to flat bill, provide TOU period usage, rates and charges System must provide for missing reads (estimation) and possibly opt-out for hardship cases Collection of separate electric charges Leases / regulation must treat like rent

Customer Service / Dispute Resolution Is management prepared to support system and address complaints? Standard procedures are essential Housing regulatory and oversight agencies can/have developed standards for dispute resolution In New York, Home Energy Fair Practices Act (HEFPA) for utilities now applies to submetering Many provisions are onerous Billing/Installation vendor typically handles disputes considered independent, especially in rental properties

Information / Education Component Ignorance is NOT Bliss! Opponents (often high-users) use lack of information to scare others, especially elderly on fixed incomes Multiple methods of education are essential to cover all types of residents Web Site (e.g. www.apartmentenergytips.com) Workshops Handouts Expert reference source (during/after workshop) Providing results / feedback options

Summary of Component Issues Each installation is unique Existing infrastructure, future needs must be factored in Assembling a cost-effective mix of components requires technical expertise Understand and address expertise of staff and vendors Address specific demographics of resident population

Example Education/Information Rate Structure Design/ History Time periods: Peak, Shoulder, Off-Peak etc. Average prices from last 12 months / variation by season Peak period should be short enough to provide option for shifting (e.g. 2-6 pm weekdays, 2-10 pm critical days) Ratio of Peak to Off-Peak should be at least 2:1, preferable 3:1 or more to provide perception of benefit Absolute peak vs. off-peak price difference should be significant (e.g. 10 cents or more) Control Expectations Average resident would pay the same if they did not change their pattern of use Most Residents will pay a little less, some may pay a bit more if they have a very peak-oriented usage pattern Elderly stay-at-home on fixed incomes would not be significantly affected

TOU Program Rates Case Study TRAFFIC LIGHT GUIDE TO TOU RED: Stop; YELLOW: Caution; GREEN: Go! Weekdays ----------------------------- Peak Hours: 2-6 pm (red) Shoulder 10am-2pm, 6-10pm (yellow) Off-Peak 10pm-10am (green) --------- Weekends/Holidays No Peak hours Shoulder 6-10pm (yellow) Off-Peak 10pm-6pm (green)

TOU Program Rates Case Study TRAFFIC LIGHT GUIDE TO TOU RED: Stop; YELLOW: Caution; GREEN: Go! Critical Day (up to 5 peak days per month) ------------ Peak Hours: 2-10 pm (red) (extended from 2-6 pm) ~ 30 c/kwh Shoulder 10am-2pm, (yellow): ~ 20 c/kwh Off-Peak 10pm-10am (green) ~ 10 c/kwh

TOU Pilot Case Study Results During July shadow billing, 55% of TOU participants (below) would have saved (avg $2 = 3%) vs. only 46% of non-parts. Count by $ Savings Range 350 300 250 200 150 100 50 0 $ -11.00 to $-8.80 0.4% 1.7% 1.9% $ -8.80 to $-6.60 ClintonHill - All Buildings: Time-of-Use Billing Month ending early August 2004 (participants only) (831 apts) $ -6.60 to $-4.40 6.4% $ -4.40 to $-2.20 $ -2.20 to $0.00 37.6% 36.2% $ 0.00 to $2.20 8.3% $ 2.20 to $4.40 4.2% $ 4.40 to $6.60 $ 6.60 to $8.80 1.4% 0.6% $ 8.80 to $11.00 $ Saving Ranges Pay More Pay Less Count %

TOU Pilot Case Study Results Annually, about 57% of participants would have saved on TOU rate vs. flat rate last year, based on shadow billing: More save in Spring/Fall, less in Summer. ClintonHill - All Buildings: Time-of-Use Billing Percent Savers under TOU Rate (vs. flat rate): Shadow Period Percent Savers 70% 60% 50% 40% 30% 20% 10% 5 5 % 4 7 % 5 9 % 6 0 % 5 9 % 5 0 % 5 1 % 4 5 % 4 3 % 4 2 % 6 5 % 5 5 % 5 6 % 5 5 % 5 5 % 5 5 % 5 5 % 5 6 % 4 8 % 4 3 % 4 0 % 4 0 % 4 2 % 4 1 % 0% June 2004 July 2004 August 2004 Sept 2004 Oct 2004 Nov 2004 Dec 2004 Jan 2005 Feb 2005 Mar 2005 April 2005 May 2005 Owners/Participants (P) Renters/Non-Parts. (NP)

TOU Pilot Case Study Results Building with High Percentage (87%) of Participants vs. Building with Low Percentage (57%) of Participants Average Weekday: Bldg with more participants has lower overall use and lower kw peak Weekday - Master Meter kw/apt 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 Clinton Hill Apartments Submetered vs. Non-submetered Building Analysis 05 / 30/ 2 005-06/ 28 / 200 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Building 355 - Master Me te r - H igh % Pa rticipants Peak Period-> Building 193 - Master Me te r - Low % P articipants During Shadow Bill Period Average Weekday load profile dips for high participant building at 2pm start of peak period

TOU Pilot Case Study Results Building with High Percentage (87%) of Participants vs. Building with Low Percentage (57%) of Participants Peak Day (91 degrees): Bldg with more participants has lower overall use and much lower kw demands during peak and evening Peak Day - Master Meter kw/apt 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.40 Clinton Hill Apartments Submetered vs. Non-submetered Building Analysis 05 / 30/ 2 005-06/ 28 / 200 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Building 355 - Master Me te r - High % Pa rticipants Peak Period-> Building 193 - Master Me te r - Low % Pa rticipants During Shadow Bill Period Reduction in usage more significant on Peak Day than Average Weekday Peak Day load profile dips for high participant building at 2pm start of peak period

TOU Pilot Case Study Results Building (355) with High Percentage (87%) of Participants Weather sensitivity of Coin Peak (2-6pm) kw = 1.82 kw/cdd65 Avg 2-6pm kw 100 90 80 70 60 50 Building 355 - Master Meter Avg 2-6pm kw vs. Cooling Degree Days: June 9-28, 2005 Max kw = CDD65 * 1.82 + 44; R2 = 69.7% Actual Predicted During Shadow Bill Period 40 0 5 10 15 20 25 CDD65

TOU Pilot Case Study Results Building (193) with Low Percentage (57%) of Participants Weather sensitivity of Coin Peak (2-6pm) kw = 2.19 kw/cdd65 20% more weather sensitive than high-percentage participant building 100 90 Building 193 - Master Meter Avg 2-6 kw vs. Cooling Degree Days: June 9-28, 2005 Max kw = CDD65 * 2.19 + 44; R2 = 70.9% Base demand the same as High-Participant Building (44 kw) Avg 2-6pm kw 80 70 60 50 Actual Predicted During Shadow Bill Period 40 0 5 10 15 20 25 CDD65

CONCLUSIONS Barriers to apartment time-of-use barriers can be overcome with expert assistance, resident education & case studies Submetering provides an essential price signal to apartment residents worth 20% or more in energy savings Time-of-Use (TOU) Pricing adds a valuable additional price signal that can affect both energy and demand Apartment-dwellers, with fewer end uses and options, can respond to price signals and TOU rates Critical Peak Pricing element provides additional help for multifamily buildings with demand charges Submetering and TOU rates, especially with Critical Peak Pricing, encourages conservation, efficiency and investment in more efficient appliances, lighting and timers

Acknowledgements Peter Douglas, Project Mgr. NYSERDA Staff Zach Stern Elemco Building Controls Bob Friess American Metering and Planning Services Clinton Hill Apartments Management and Board of Directors

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