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Master-metered facilities are places where multiple users/stakeholders share a common meter and pay for their utilities (electricity, gas, otherwise) based on some measure other than their specific use. These can be apartment buildings, condos, shopping malls, office buildings (both private and government), and otherwise.  A sizable share of the U.S. and, in fact, global economy falls into this category. To give a sense of the implications, if a condo building shifts from master metering to individual unit meters, it is not unusual to see a 20 percent drop in electricity use virtually overnight as people realize the impact of their usage patterns.  

For a variety of reasons, however, such backfitting of meters is not a cost effective option for many master metered facilities.

Over at Get Energy Smart! NOW!, a series of guest posts ((list below the fold... latest here)) has been examining the challenges and benefits of work to foster energy efficiency within a master-metered condominium and, beyond that, on working to develop a community of master-metered communities to share lessons and seek leverage for energy efficiency and renewable energy programs to help them foster a cleaner energy future for themselves and their neighbors.

Two of the greatest conundrums, when it comes to Energy Smart practices, is 'who pays' and 'why pay'?

These are important issues to consider when tackling the Master-Metered dilemma.

When it comes to mastered-metered communities, every single person (owner, tenant, or otherwise) pays for the energy use in a communal process where everyone pays the same (whether by unit, by square foot, or otherwise) and has this 'payment' buried from visibility (whether by inclusion within the rent or within a monthly condo fee).  "Who pays" is, thus, everyone but without close regard to their own specific usage.  

We then turn to a 'why pay' conundrum.

Let's say you live in a 200 unit building, why should an individual owner spend more on energy efficiency lighting, dishwashers, showers, windows, toilets, or otherwise. After all, even if the 'real' payback were measured in weeks, sharing that investment with 200 friends and neighbors transfers the payback into hundreds (or thousands) of weeks.  And, well, who spends a $ as an investment to get back $0.001 per year?  Thus, there is a serious inherent obstacle to energy efficient behaviors and investments by individuals located within mastered meter communities (whether residential, commercial, or industrial). If you're not "paying", directly, the bill and sharing, equally, in any savings, the rational economic person asks 'why do this'?  

This drives something: mastered metered communities (like the vast majority of multi-unit buildings that are 20+ years old) and businesses (like the large number of office buildings that don't have meters for every tenant) have a serious incentive to invest significantly in energy efficiency. Sadly, too many of them do not know how seriously fast they could achieve savings and that those savings could add up quickly.  Investing in 1000 CFLs, for example, to simply give out to residents could save a typical condo association $10,00o+ per year.  Hmmm ... how many condo owners think that they have $10,000 to throw away ... year after year after year.

In the larger societal sense, as to 'who pays', there is that basic little question of 'who pays' for those pesky little externalities like poisoned water, increased cancer rates, destroyed eco-systems, and that oh-by-the-way little problem of Global Warming.  Just the Social Cost of Carbon (SCC) easily mounts, with a decent calculation, nearly to $100 per ton (or roughly 5 cents for every kilowatt of hour produced by coal) without concern mercury poisoning, coal ash pond pollution, etc ...  However, while a very real cost on society, how does an individual (or individual condo building or business) calculate benefits to themselves from their efforts to reduce carbon pollution?  Goodwill only goes so far.  

And, energy efficiency and renewable energy investments don't 'only' reduce pollution, they provide other very real and tangible benefits on a larger scale. Investing in energy efficiency, on a large scale, is far cheaper than building new capacity.  Renewable Energy systems protect against fuel price fluctuations and also offer the chance to foster distributed energy systems that, combined with energy efficiency, would offer greater resiliency in the face of natural or man-made disruption to the electricity grid.  

When we think about 'why pay', when a government has a program to foster energy efficiency, it can easily be seen and portrayed as some sort of 'unwarranted subsidy' open for political attack by those intent on remaining within a stove-piped vision of the world. Why should, for example, a homeowner who is doing their own energy efficiency investments (because of the payback via reduced bills) suffer with the government helping a condo association do the same thing?   This, however, is an extremely stove-piped perspective which loses sight of a simple fact: we all (oops, except for those intent on earning as much as possible through selling as much energy as possible) gain through an ever more energy efficient and cleaner energy economy.  We need to think return on investment rather than cost.  The benefits, for those not living in these communities, from fostering Energy Smart practices and capital investments in master-metered communities far outweigh the required investments that the larger society will have to make.  Fostering energy efficiency is simply one of the best investments that we can make.

Related posts

Originally posted to A Siegel on Fri Jun 01, 2012 at 10:43 AM PDT.

Also republished by Kosowatt and DK GreenRoots.

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Comment Preferences

  •  Total loaded cost accounting (4+ / 0-)

    is so critical to assure that people and businesses make good decisions.  That $0.05 per kWH is getting paid, the only question is by who.

    Somehow it gets forgotten that the entire reason for finance/money is to serve and advise actual reality.

  •  It can work the other way too (6+ / 0-)

    Once upon a time I bought a small master metered complex, originally built for just summer occupancy, in an area with cold winters.  Walls were cement block. Insulation value R1 (same as single pane glass).  I immediately insulated the buildings and season heating bill dropped to $4k from $12 the prior winter, paying for the insulation project the first winter.

    Neighboring complexes with the same construction but individual tenant metering never upgraded their insulation, because the landlords had no financial incentive to do so.

  •  Nobelist Elinor Ostrom on governing the commons (2+ / 0-)
    Recommended by:
    wilderness voice, RunawayRose

    The problem posed by this excellent diary is a crucial  instance of the challenge of sustainable, democratic management of common resources.  Ostrom won the Economics Nobel in 2009 for her work in this area.

    Ostrom uses the term "common pool resources" to denote natural resources used by many individuals in common, such as fisheries, groundwater basins, and irrigation systems. Such resources have long been subject to overexploitation and misuse by individuals acting in their own best interests. Conventional solutions typically involve either centralized governmental regulation or privatization of the resource. But, according to Ostrom, there is a third approach to resolving the problem of the commons: the design of durable cooperative institutions that are organized and governed by the resource users themselves.

    "The central question in this study," she writes, "is how a group of principals who are in an interdependent situation can organize and govern themselves to obtain continuing joint benefits when all face temptations to free-ride, shirk, or otherwise act opportunistically."

    The heart of this study is an in-depth analysis of several long-standing and viable common property regimes, including Swiss grazing pastures, Japanese forests, and irrigation systems in Spain and the Philippines. Although Ostrom insists that each of these situations must be evaluated on its own terms, she delineates a set of eight "design principles" common to each of the cases. These include clearly defined boundaries, monitors who are either resource users or accountable to them, graduated sanctions, and mechanisms dominated by the users themselves to resolve conflicts and to alter the rules. The challenge, she observes, is to foster contingent self-commitment among the members: "I will commit myself to follow the set of rules we have devised in all instances except dire emergencies if the rest of those affected make a similar commitment and act accordingly."

    From a 1998 review of her book, Governing the Commons

    Ostrom's 2009 Nobel lecture

    Ostrom on best strategies for managng the commons 2011 article.

    There's no such thing as a free market!

    by Albanius on Fri Jun 01, 2012 at 02:53:59 PM PDT

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