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Ont private sector readies for energy reporting

Building industry advocates endorse benchmarking, but question compulsory disclosure
Tuesday, December 8, 2015
By Barbara Carss

Proposed amendments to Ontario’s Green Energy Act signal the government’s intention to mandate reporting of energy and water consumption in privately owned buildings. Tabled in late October as part of Bill 135, the Energy Statute Law Amendment Act, the legislation includes provisions to require verification and disclosure of information and to ensure that electricity, gas and water utilities will provide access to the data that customers need to fulfill their reporting responsibilities. Building owners/managers could also be compelled to prepare conservation and demand management (CDM) plans.

More details will follow in a draft regulation slated to be posted for public review on the provincial Environmental Registry and then pass into law 45 days after the review period. However, the Building Owners and Managers Association (BOMA) of Greater Toronto is already positioned to offer informed insight, drawing on consultation and collaboration with members and outreach to policy makers at Queen’s Park and Toronto City Hall.

The association has released its own analysis and recommendations to help steer provincial decision makers through the complexities and potential sensitivities of the pending measures. As an early and active CDM proponent, BOMA Toronto strongly supports the philosophy of energy reporting and benchmarking (ERB), but stresses that it must be premised on a fair comparison of properties that encourages continuous improvement rather than shaming weaker performers.

“In order for any ERB policy or regulation to be successful, the governing bodies must understand the various nuances that exist within the commercial real estate industry with respect to the different building types and how those buildings are managed and operated,” says Susan Allen, BOMA Toronto’s president and chief staff officer. “BOMA Toronto has taken the leadership to work with the Province and the City to make sure that all such nuances are given due consideration. We would also like to acknowledge the contribution of our board members and our industry task force who represented all the major owners and landlords in the Greater Toronto and Hamilton Area. A project of this scope would simply not be possible without this tremendous level of collaboration.”

Legislation in step with other jurisdictions

The proposed legislation comes as little surprise. A growing number of jurisdictions in the United States prescribe some form of energy labelling or disclosure of energy consumption for commercial buildings, and the City of Toronto had launched earlier work on requirements of its own before pulling back to align its efforts with the Province.

In Ontario, a regulation under the Green Energy Act currently requires public sector entities, including municipalities, school boards, universities and health care facilities, to develop CDM plans and report their annual energy consumption and carbon emissions. The Act, which became law in 2009, has always contained flexibility to widen the scope of these activities to “prescribed persons” the Minister of Energy would designate in the future.

Bill 135’s slate of amendments now give shape to that possibility. The proposed Act establishes the Province’s authority to make new rules for the private sector, while the pending draft regulation will spell out what’s involved in compliance.

“BOMA Toronto’s ERB policy document represents our industry’s position, and it is great to see this unprecedented collaboration between us, the City of Toronto and the Province,” observes Keith Major, executive vice president, real estate services, with Bentall Kennedy.

That document makes several recommendations related to the logistics and practicalities of reporting energy and water consumption, outlining some concerns about how government overseers and/or the general public might misinterpret information. The potential for skewed data also underlies objections to publicly disclosing gross consumption tallies, particularly in the absence of a mechanism to account for differing building uses, occupancy levels and climatic conditions across Ontario’s vast breadth.

BOMA Toronto advocates an incremental rollout of reporting, beginning with larger office and multi-residential buildings. Using Energy Star Portfolio Manager as the standard metric, it endorses reporting of: energy use by fuel source; energy use intensity stated as equivalent kilowatt-hours per square foot; water use intensity stated as litres per square foot; greenhouse gas (GHG) emissions; Energy Star Portfolio Manager score; and any current green building certifications.

“Of all the buildings that are proposed to be covered under this policy, commercial office buildings will pose the least number of challenges,” the BOMA document states. “Starting with this building type would ensure that the policy is enacted with the least number of challenges, and would promote wider acceptance by the sector. This would ultimately lead to the greatest success of the policy.”

Accuracy challenges for building-to-building comparisons

In enumerating the challenges for the other building types, industrial and retail landlords would face major obstacles in gaining access to utility data that is delivered directly to tenants that typically have their own meter and accounts with a local distribution company (LDC). Even if the data could be easily obtained, there is no standard acknowledged normalization formula — in contrast to those that Energy Star or REALpac benchmarks apply to enable accurate building-to-building comparisons in the office sector — for these building types.

Multi-unit residential buildings (MURBs) also tend to defy straightforward comparisons, particularly given the role tenants’ behaviour plays in supporting or subverting efforts to conserve. Some buildings have recorded as much as 30 per cent reductions in energy consumption when units are sub-metered for electricity, but Ontario’s residential tenancy law requires that landlords get sitting tenants’ consent before sub-meters can be installed. A generally higher grade of amenities in the condominium sector also makes comparison of the two tenure types difficult even if they house relatively the same number of people.

“Some MURBs have central air conditioning, while many do not. Some MURBs have pools, fitness centres or retail areas included within the building, all of which result in a higher energy intensity for the building compared to a building without these features,” BOMA Toronto states. “In addition, the Ontario Residential Tenancies Act makes implementing energy retrofits more challenging than in other asset classes. It is concerning to have mandatory provincial public energy performance disclosure when there is a provincial Act that makes implementing energy efficiency measures in this building type more challenging.”

Thus, BOMA Toronto recommends disclosure of energy and water consumption in the multi-residential sector be restricted to the parties of sales transactions. Even within the office sector, BOMA Toronto counsels discretion in cases of financial distress, vacancy rates above 30 per cent or occupancy of new buildings partway through the year. It also calls for sensitive consideration of both building owners’ and tenants’ strategic business needs for privacy.

Ultimately, as with academic report cards, BOMA Toronto asserts the goal should be to encourage and guide individual participants rather than judgementally rank them. “While monitoring and tracking of energy use and  benchmarking buildings are low-cost ways to identify buildings that are good candidates for energy audits and retrofits, and are shown to improve building performance over time, there has been no empirical evidence to suggest that publicly disclosing energy performance leads to the same outcome,” BOMA’s policy document reasons.

Urging a focus on performance, rather than bureaucracy

The spectre of compulsory CDM plans is another concern for BOMA Toronto. As proposed in Bill 135, building owners/managers could be asked to prepare plans “in accordance with prescribed requirements”, submit them to the Ministry of Energy and possibly make them available to the public — steps, BOMA argues, that would be needlessly redundant for many of its members who already have energy management systems in place and burdensome for the Ministry itself.

“There is no value in expecting landlords to submit copies of their CDM plans or energy assessments as the government has neither the resources to review such submitted materials, nor does it have the resources to ensure such plans are implemented,” the policy document states.

Likewise, although BOMA Toronto endorses third-party professional verification of reported information, it calls on the government to recognize building owners/managers’ internal energy management systems and professional engineering staff as credible sources, and suggests the government could maintain quality control through periodic random audits of reported data.

While eschewing public shaming, BOMA Toronto sees merit in intervention for persistent weak performers. It recommends ASHRAE Level II audits, or an equivalent, be carried out when a building that is at least 50,000 square feet records an Energy Star Portfolio Manager score of less than 50 for three consecutive years.

Besides providing landlords with guidance for improvement, this exercise might also be welcomed in cases where tenants contribute to the low scores. “In fairness to the landlord, under such circumstances, the building should be exempt from disclosure if the landlord provides evidence of reasonable efforts to inform the tenants and obtain their energy consumption data,” BOMA recommends.

At the other end of the scale, commendation should be due for buildings with Energy Star scores of 75 or higher. BOMA suggests they should be recognized as a “Top Performer” without divulging the actual score.

With the thorough policy document in hand, BOMA members and building owners/managers in general will be well positioned to assess and respond to the pending draft regulation. “BOMA Toronto applauds the efforts and the interest shown by the City of Toronto and the Province of Ontario in keeping us and our membership fully engaged in discussions and workshops leading up to the draft ERB regulation,” Susan Allen notes.

“Energy reporting and benchmarking is an important issue facing our industry and we are confident that through BOMA Toronto’s involvement we will reach a solution that meets everyone’s interests,” concurs Steven Sorensen, vice president, operations, of Cadillac Fairview Corporation’s Toronto office portfolio.

Barbara Carss is editor-in-chief of Canadian Property Management.

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