Many condominium corporations and owners of multi-residential rental buildings can expect higher electricity costs this fall when hydro accounts specifically tied to the common areas of larger buildings lose eligibility for the Ontario Electricity Rebate (OER). Late last year, the Ontario Energy Board (OEB) determined that the nearly 32 per cent rebate could be applied on all common area accounts during a transitional period that is slated to end October 31, 2020. After that, only accounts reflecting less than 50 kilowatts (kW) of demand or 250,000 kilowatt-hours (kWh) of annual consumption will qualify.
In practical terms, energy managers advise that most common area accounts serving multi-residential buildings with more than about 70 units will no longer receive the rebate. That will equate to a 31.8 per cent premium on the pre-tax costs for electricity consumption and regulated transmission/distribution charges. Common area accounts typically encompass many of the building’s most power-intensive services, including: elevators; lighting in corridors, stairwells and parking areas; ventilation systems; delivery of heating and cooling in buildings with centrally located boilers and chillers; and pumps for the delivery of water.
“For a 250-unit condo, it will be an extra $40,000 a year,” estimates Rob Detta Colli, manager of energy and sustainability with Crossbridge Condominium Services. “This will impact about 30 per cent of our client base. What makes this worse is condo residents who are paying directly for their own in-suite consumption are being penalized, while condo corporations that chose to remain bulk-metered, meaning the suites have no individual accountability for consumption, will continue to get a 31.8 per cent break on their common area bills.”
The OER is targeted to residential households, small businesses and farms covered in the provincial Regulated Price Plan (RPP), and began showing up on hydro bills in November 2019 to replace the previous 8 per cent Provincial Rebate. Multi-residential buildings enjoyed blanket eligibility for that rebate, but a two-sentence decree in the OEB’s December 2019 memo creates a new distinction to exclude some accounts from the OER.
“There have been questions regarding the treatment of the common area account in multi-unit complexes where the distributor directly meters the individual units and the common area account has its own meter. In this case, the common area would not qualify for the OER unless it has a demand of less than 50 kW or uses less than 250,000 kWh a year,” it states.
Detta Colli and other knowledgeable observers suggest there should be further explanation of how that decision was reached.
“It treats similar buildings differently, giving some an advantage or others a disadvantage, based on how the building is wired, metered and sub-metered,” observes Andrew Pride, an Ontario-based consultant specializing in energy management and strategic conservation planning. “That seems unfair, particularly since it relates to a wiring choice that was often made years ago.”
Differing interpretations of regulatory intent
Detta Colli argues the guidance contradicts the intent of the enabling regulation — under the Ontario Rebate for Electricity Consumers Act (ORECA) — which generally states that a common area account is eligible provided a multi-unit complex contains at least two “qualifying” units and at least 50 per cent of all units within the complex are also “qualifying” units.
“The wording of the regulation states that it (the rebate) is to be applied to the account that is ‘solely in respect of a multi-unit complex’ and common area accounts are absolutely in respect to a multi-unit complex. Before the OEB interpretation came out, the LDCs (local distribution companies) had actually concluded that a condo’s common area account would get the rebate,” he reasons. “However, after failing to get the ruling changed, we have moved on to explaining to our clients what will be happening.”
In addition to informing affected condo boards that they will need to budget for a jump in hydro costs, Detta Colli and his peers have reached out to Members of Provincial Parliament. Notably, although oversight of the rules generally rests with the OEB, the enabling legislation does give the Minister of Energy, Northern Development and Mines the authority to prescribe eligibility for the rebate.
“The MPPs seem confused as to why the OER won’t be applied to common area accounts in condos,” Detta Colli reports. “It might be easier to administer, but it’s clearly not equitable with the treatment of bulk-metered buildings.”
“The old rules treated multi-residential buildings as a whole property, which required more administration to apply the rebate. This interpretation drills down to the metered account, which streamlines the process,” Pride concurs. “Now it appears common areas are being treated like businesses that are either above or below the 250,000 kWh threshold.”
He speculates that could lead to some create manoeuvring. “What if building owners start breaking their common elements into more than one separately metered account so they can qualify for the 31.8 per cent rebate? It’s an absurd premise, but it could have a good payback,” Pride muses.
As with other sometimes baffling billing formulas — such as for the allocation of the global adjustment to Class A and Class B consumers — using less electricity remains one certain way to lower costs. “Regardless, this policy encourages owners and managers of large apartment buildings and condominiums to implement deep efficiency retrofits to drive down demand and consumption,” Pride says.
Barbara Carss is editor-in-chief of Canadian Property Management.