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Keeping an eye on utility usage.

Jay Raphaelson says he runs a counter-cyclical business.

Since the real estate market took it nose-dive and forced owners to scrutinize building costs, Raphaelson's company has been called on more and more to measure and allocate and bill buildings' utility consumption through submetering and other services.

The president of Utilities Programs & Metering Inc., a division of Consolidated Technical Industries, estimates that his company has grown 50 to 60 percent in the past few years and his staff has grown by 25 percent.

"Before the market got real bad," Raphaelson said, "the question was |How much money can I make?' Now the question is |How can I keep from losing money?'"

Despite the economic downturn, Raphaelson said, owners have faced a 3 percent annual increase in utility costs, and consumption has increased as tenants load their offices with the latest technology, i.e. personal computers, laser printers. In addition to a greater use of electricity, the building's HVAC must work harder to cool the high-tech machinery.

"We try to find ways to handle that and reduce the demands on the building," he said.

And, after debt service and payroll, Raphaelson said, electricity - at $2 to $3 per square foot - is the highest expense for the building.

Utilities Programs & Metering Inc, submeters and bills electricity, water, steam and air flow usage in residential and commercial buildings. And, where more practical, they do surveys: Rent inclusion surveys - an inventory of all tenant equipment and usage to develop a proper electric rent inclusion value, overtime HVAC evaluations, and public light and power surveys.

Meters vs. Surveys

Many owners have opted for meters over the traditional survey method because surveys encourage complacency. If a tenant's pre-determined electrical use is included in his lease, there is no incentive to conserve energy.

The firm can tell owners how much power is being used in a building; how much each tenant is using; and how this relates to the total power available. And, they can verify the effectiveness of conservation programs.

"We use the information to help people understand what's going on in their building," he said.

These services, Raphaelson said, can help owners increase income through reduced expense. And, today after an owner, has given away so much through concessions, Raphaelson said, "In a lot of cases, this is the only income the owner has."

The can also be used by owners to prove usage and demand to Con Ed, which is bent on lower consumption.

"It is virtually impossible to get additional service from the utilities without demonstrating need," he said.

The company, Raphaelson said, helps ease the Catch-22 created by increased power requirements, rising costs, and Con Ed's desire to conserve energy.

Raphaelson believes that roughly half the commercial buildings in Manhattan are now submetered. Among his assignments are selected properties for: Rockefeller Center, Cushman & Wakefield, Silverstein, Mendik, Prudential Insurance, and Winthrop.

Tenant Needs

In many cases, Raphaelson said, it is the tenants who insist that owners submeter a building. Tenants don't mind paying for their utilities, he said, but they want to ensure they are getting value.

"Metering now gets people to pay for what they use and that wasn't happening, he said.

The company also installs meters for corporate tenants who want to measure use and budget impact for each department.

"Why should an executive area pay the same amount as the data processing," he said.

Raphaelson said they are sometimes called in by tenants to work with their architects and engineers during the site selection process and to help write the electrical clause in the lease. And they may sit in on negoti [NO CONTINUATION IN THE ORIGINAL DOCUMENTS] directly into the computer.

He sums up by saying that his services give owners a more concrete understanding of utility usage and helps them manage their asset better.

"It makes it less of an accounting exercise and gives people credit for what they do," he said. ations for either the tenant or the owner.

"The utility issues have been deal-breakers," Raphaelson said. " ... We've seen cases where brokers have given away more electricity than a building has."

Operations via Construction

Raphaelson got involved in utility monitoring in the early 70's. A physical education major who was working construction for Sylvan Lawrence, he was pulled off the construction site and put in the company's operations department with instructions to find a way to save on energy costs. He was later lured away by Cushman & Wakefield an in 1977 he started his own company.

When Raphaelson got involved in the business. All information was gathered with the rent inclusion surveys. Submeters had been outlawed by Con Edison in 1951, with all buildings that had installed meters before than grandfathered. In 1980, they became permissible again and a new industry was born.

Raphaelson said the firm is constantly looking to add new and more advanced products to its offerings. Today, meters can be read over the phone and loaded

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Article Details
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Title Annotation:Profile
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:Aug 19, 1992
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