Do electricity meters measure enough?

Industries and professions across the country are firmly focused on reducing electricity usage, especially with the “cap & trade” CRC scheme which comes into effect in April 2010, but how can you meaningfully measure consumption?

It is safe to assume all buildings will have an electricity meter but what information can it provide? Simply, the information is basic providing just a measurement of units consumed. These days measuring usage is not enough as it is essential for companies to analyse their consumption “profile”. That is to say it is important to understand how the electricity is used and by what equipment. Once you understand this aspect you can then look at:

• Energy wastage – When all usage has ceased is there any equipment which is still on that may consume electricity but which is not required?
• High consumption data – When and what causes it? Is it necessary?
• Weather patterns – How do they influence usage?
• Benchmarking – Monitor regular usage and maintain a steady usage.

Larger users (where peak demand of electricity is above 100kW) will already have half hourly meters and the supplier company will be able to record usage every 30 minutes. However this data doesn't have any details attached to it so you can not record the consumption of individual items of equipment.  As a result more meters will need to be installed to measure the consumption of individual pieces of equipment such as pumps, chillers, lighting circuits and so on.  This will aide transparency of usage. The new “smart” meters will give more information to allow proper strategies to be adopted to reduce unnecessary energy consumption, and landlords are now moving towards installing this equipment. Hopefully savings will come from better use of this expensive commodity.

Your next Assessment.. How will you be rated?

The 30th September 2009 sees the publication of the new Rating List which will identify the Rates Liability of your premises, to be effective as of April 2010. The Rateable Value of your premises is re-valued every 5 years and the Valuation Office Agency use a date (The Antecedant Date) at which rental levels are assessed, and this process takes into consideration the prevailing market conditions at that time; for the forthcoming Re-Valuation. The Antecedant Date is 1st April 2008.

This date is of great significance because in many cases it represents just about the high rental point in the Property cycle and is to be compared to the low rental levels used at the last Revaluation in April 2003, which dictate your current Rating Bill.  Consequently your rateable value will probably see significant increases: with the Retail Sector seeing the largest average rises and London's West End Offices seeing the largest specific increases; most other sectors are likely to witness average rateable value increases of between 10-15%.

Space is limited to identify all of the likely Sector ''winners'' and ''losers'' but it remains clear that the 2010 Revaluation comes at a particularly unfortunate time when businesses are looking to reduce outgoings and will be faced with, in some cases, a doubling in their Rates assessments.

The message is to prepare for a likely increase in your Bills and budget accordingly; however as with past Revaluations the Government has introduced a scheme of Transitional Relief to spread the increases over the 5 year period...this has yet to be announced but is anticipated prior to 30 Sept ''.

The Green Lease Cometh....

As a conscientious EU Member state, the UK Government is obliged to implement all Directives issued and
commercial property occupiers are becoming subject to more and more EU and UK red tape with regard to Environmental objectives and how their use of commercial space affects carbon emissions and the knock-on effects thereafter.

We are becoming increasingly aware of Energy Performance Certificates/Display Energy Certificates that have emerged from the Energy Performance of Buildings Directive 2003 and now the Government's proposals for Carbon Reduction Commitment (CRC) from the Climate Change Act 2008, as just 2 examples but there is now an emerging trend for the Landlord and Tenant relationship to enshrine responsibilities and obligations towards better Environmental behaviour within the body of a Commercial Lease agreement.

The model for such a move has come from Australia where 8 Green Lease Schedules have been encouraged to be adopted in new leases which deliberately place burdens on both Landlords and Tenants to undertake certain measures; compliance by a Tenant, for example can be financially rewarded in terms of Service
Charge reductions, and should a Landlord fail in his obligations he could find a Tenant withholding Rent until matters are corrected.

The general thrust of all of this is to reduce energy consumption and improve efficiency, by-products of which can include assisting Business performance, improve Corporate image and help meet the CSR requirements of both parties. UK bodies such as The Centre For Research In The Built Environment (CRiBE, http://www.cribe.co.uk/) and The Better Building Partnership (BBP, www.lcca.co.uk) have both issued Guidance and the BBP, in particular is suggesting a set of principles and guidelines for a partnership approach rather than actually being prescriptive about actual Lease clauses. 

Owners and Occupiers can therefore agree which principles can be adopted in individual circumstances. They believe that collaboration is best documented in a legally binding and transferable Memorandum of Understanding (MOU) which can implement best practice recommendations into new leases and a set of
principles adoptable into existing lease agreements. 

The MOU should at least consider the sharing of data for Energy Efficiency, establishment of a Building Management Committee and cooperation on reduction strategies. Other general headings to be incorporated should include Water and Waste Efficiency, Service Charge (green rewarding benefits), fit-out and refurbishment, onsite renewables and CCHP, reinstatement and dilapidations, Managing Agents 'green' duties, transportation initiatives, inter alia.

One leading UK Asset Manager, Hermes,(http://www.hermes.co.uk/) has taken the Sustainability issue to the core of its UK business and believes that through Responsible Property Investment(RPI) it can both protect and enhance the value of its assets and this is now further reinforced by Research from the RICS (www.rics.org) which suggests for the first time that Green Rated buildings in the USA attract a higher market premium when being sold, than those without.

Clearly a benefit for Landlords/owners but it is clear that a trend is emerging linking value to behaviour and Landlords will need to offer up benefits to Tenants for 'green' activities if it can now be shown that Capital value can be gained upon Sale by so doing. If the Landlord gains, then Green leases should offer up Tenant
benefits too.