Turning water metering to your advantage.

There is much hysteria and misinformation flying about the New York City Universal Metering Program. The general belief seems to be that conversion to metered rates spells financial disaster. For some buildings, this may unfortunately be true-but for the majority of NYC properties, metering can be a break-even situation and even a financial windfall!

After analyzing expenses for more than 300 client properties encompassing tens of thousands of units, we have found that the key to dealing with water costs is to have adequate information. If you know what you are facing and what to do about it, you can often find ways to turn conversion to metered rates into a financial advantage.

Even in properties that are already metered, it is often possible to reduce water/sewer costs by more than 30 percent.

Water Consumption Analysis

The most important thing in controlling water/sewer costs and exploiting potential savings is to know how much water your property should be using.

Sometimes metering is not anywhere near the disaster you might erroneously anticipate. And if you know in advance what to expect, you can make intelligent decisions on whether or not to meter voluntarily, and what sort of conservation measures (such as the NYC Toilet Rebate Program) might make economic sense.

By developing a physical and demographic property profile, and using statistical data adjusted by experience factors, it is possible to accurately predict how much water a building should use and how much it should spend annually on water and sewer costs. Comparing this estimate to current water and sewer usage and charges gives quick indication of potential areas for savings - both in metered and even in unmetered properties.

Savings Through Water Metering?

If, for example, your property will use water costing $10,000 less per year than your current flat-rate "frontage" charge, it makes sense to install a meter and convert to metered rates as soon as possible. Each year you wait for the City to install that meter is $10,000 down the drain!

And though it is far from automatic, many recent analyses of co-op properties have shown good potential for savings - sometimes more than 30 percent of the annual "frontage" cost - just by installing a meter and switching to metered rates! One 268-unit building in The Bronx is now saving over $30,000 per year - even without an active conservation program!

Savings by Not Metering

Even if you expect your costs to be higher after metering, it is still important to find out what effect metering will have on your building well before the meter is installed.

In some cases, cost analyses have unfortunately found properties that could expect substantial cost increases once their meters are installed. One such property expects costs to rise 40 to 50 percent - in their case over $200,000 per year. But by finding this out in advance they will save over $16,000 for every month they are able to delay being metered.

And also by knowing this in advance, they will be able to reduce that potential budget disaster to a much more tolerable 10 percent increase once the meters are installed - a potential savings of $160,000 per year.

Intelligent Conservation Retrofits and Toilet Rebates

And by knowing what to expect in advance, that same building can clearly see the financial imperative of an intelligent conservation retrofit, and will know what results they can reasonably expect. Water Use Analysis can provide important guidance in selecting the most appropriate and effective devices, helping to make the retrofit transparent to the tenancy and often resulting in an upgrade in services.

This can also help prevent a conservation retrofit from backfiring and actually increasing water consumption. And it can pinpoint the financial impact of any contemplated participation in the NYC Toilet Retrofit Program.

Instant Savings for Metered Buildings: Increasing Water Use Efficiency

In the case of metered buildings, it is even more critical to know your building's "normal and acceptable" water consumption. If you should be using X gallons per year, but you are actually using X-plus, you have just discovered a source of additional cash flow dollars. A property's historical water use pattern provides no guarantee that it has not been pouring water (and dollars) down the drain during its entire existence. But a consumption analysis quickly determines usage efficiency and accurately targets areas of potential savings.

And, in the case of buildings already metered, this information can begin to pay you back instantly by quickly indicating methods of reducing water/sewer costs.

Allocation of Charges

Many commercial or hybrid buildings apportion water and sewer charges based on square-footage. This is often totally inadequate.

A tenant in one commercial building (occupying only about 10 percent of the property's square footage) volunteered to submeter his premises and generously agreed to pay $2,000 per year to cover his share of the $10,000 annual water/sewer bill. It was fortunately soon discovered that his fair share was really over $7,000 per year - 70 percent of the entire building's annual water/sewer budget.

In another combination property, a commercial cleaner was consuming over 50 percent of the building's total water use. And they were being charged arbitrarily for only 10 percent. Correction of this error increased cash-flow by over $10,000 per year - another case of magically turning wasted water into dollars.

Turn Metered Water to Your Advantage Find Out What You Are In for

Knowing how much water your property should be using is the simple key that can help you: find ways to efficiently exploit any potential savings under metered rates; reduce the impact of any possible cost increases; detect and reduce waste and unnecessary expense under metered rates; and allocate and recover costs properly.

With the apparent inevitability of metered rates, the only sensible thing to do is to find out what you are in for and take the appropriate pre-emptive action. Particularly with the double-whammy New York situation of conversion to metered rates combined with increasion water and sewer costs, a little knowledge goes a long way toward finding windfall savings or preventing budget disasters.