Turning off the lights, setting the programmable thermostat and buying energy star appliances and CFLs; for the last 8 years I have been making these decisions largely driven by my conscious for resource conservation, not my wallet, due to the collective way I pay for utilities in my condo. Essentially all utilities are pooled and then owners pay a percentage of the total based upon the square footage of their unit. This creates a casebook example of moral hazard, meaning there is little or no relationship between the risk, or cost, someone bears and their usage or action.
Summertime Sweaters
I knew that this situation had to be fixed as electricity costs were the driving force behind increases to our monthly homeowner association fees (HOA fees), which are currently over $600/month for a 2-bedroom unit. When you take into account that the HOA fee includes all utilities, insurance, common building maintenance – including the pool and gym, as well as services like the concierge and security it is really not too bad. But seeing residents wearing sweaters in the summertime because their air-conditioning is cranked all the way up to a chilly 68, I knew that was not the behavior of someone who was paying for their own electric usage.
Knowing is Half the Battle
I am hopeful there is a straightforward solution to this problem: sub-metering of electric. Last December our management company, Wentworth, at the urging of the Energy Committee, of which I am a member, invested in an electric sub-metering system that measures the use by each resident and then allows them to bill based upon actual usage, not square footage. After 18 months of fits and starts we are on the cusp of rolling the program out and I could not be happier. I recently got a “sample” invoice in the mail and while there is lots of room for improvement, I am at least happy to see that residents’ electric costs will now be tied to usage.
Understanding is the Other Half
While it is great that Wentworth has sub-metered the building and will be tying resident costs to their usage, the biggest issue here is communications and context, essentially marketing. As you can see from my sample invoice above there are at least 3 areas in which it could be improved
1. How does this compare with the reduction I will see in my HOA fees?
- As it turns out through my extensive investigation these reductions are already known. As such they should be communicated and compared to the bill residents are getting to show reductions/increases vs. what they were previously paying as part of the HOA fees.
2. How does this compare with other units like mine?
- Again this information is available but not being communicated. The Wentworth team, through the Intech 21 system, has access to the entire building’s information including a comparison to each unit in a vertical section of the building.
3. What can I do to reduce my costs?
- Here is a missed opportunity. ~50% of the residents will be paying more than their HOA reduction. That is not good news for them, understandably so. But instead of provoking anger, for any resident that will be paying more than they are saving in HOA reductions, Wentworth should be offering turnkey ideas on how to lower their usage such as: programmable thermostats, energy efficient appliances and lighting (CFLs), and blinds for south-facing units to limit solar gain in the summer. Also offering to do a walk-through audit if requested would go a long way in building goodwill.
The lesson from this is that the technology part of the solution is just the first part; thinking through the challenges of how to most effectively communicate those changes is the critical second half, and unless Wentworth addresses the issues I have raised in the roll-out I am expecting an outcry by the residents. Never doubt the importance of good marketing.
Resource Links:
Sub-Metering Company: Intech 21
CityView Management Company: Wentworth Management
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