Submeters
The utility submeter system, for gas, electricity and or water, is an equitable solution enabling multi tenant property owners to convert an uncontrollable expense into net operating income. Submeter systems are fair to property owners as well as residents or tenants. The incorporation of a utility submeter system into the asset management of any project is a wise decision.

Utility expenses are never fixed and are viewed by owners, lenders property managers as estimates in operating budgets at best. Automatic Meter Reading (AMR) Submeter systems are considered by ownership, lenders, property managers and residents or tenants as an equitable means to transfer the unknown utility expense to the consumer. Most important in this equation, is the consumption of the Utility Submeter system will allow close to exact billing, because they charge for consumption and nothing else.

Each submeter system can be divided into two main component parts; the flow meter or event counter and the communications vehicle. The flow meter is nothing but and event counter. In water, the flow meter counts the amount of water in gallons or cubic feet, passing through the measuring chamber. The flow meter records this data on its dial face. The flow meter cannot communicate with the outside world. However the flow meter, by the operation of its internal parts, creates a pulse. This pulse, as produced, is converted to a digital signal and picked up by the communications equipment, which is attached to the flow meter. The communications equipment transmits the pulse information by radio frequency to a site receiver and data storage computer. This onsite data collector is outfitted with a telephone modem, allowing access to the submeter system from remote locations beyond the project perimeter.

The communications part of the equipment works on a fixed based radio frequency and is comprised of the following equipment. All flow meters are connected to a radio frequency transmitter. Conservice Metering Solutions uses and recommends the Inovonics Communications system on all inside submeter systems. This transmitter converts the flow meter pulse into a digitized signal for transmission. This signal is passed to stronger transmitters known as repeaters. A repeater is required for approximately every 24 apartment units in most situations and is placed strategically throughout the site. The repeaters grab the signal from the flow meter transmitter, verify and amplify the signal to peak power and send it to the site receiver and data collector. The receiver becomes the catcher's mitt for all signals and loads that information into the Inovonics Data Concentrator and Collector, the DCC. The DCC decodes the transmissions from the receiver and stores the data for retrieval by the read, bill and collection management effort.

Submeters are individual meters placed inside the demised units and serve as a means to determine utilities consumed by individual occupants. Offsite billing companies provide third party monthly read, bill and collection (RBC) management services to multi tenant property owners on a local as well as a national platform. These RBC companies specialize in post installation management of utility submeter systems. Each RBC Company is allowed to add a billing charge to each bill produced and mailed. This fee is not a part of the utility bill, but an add-on to the utility costs. Submeters are not to be considered a profit center. Owners my only charge consumers for what has been consumed, but this does not include any type of mark up to the consumer. RBC fees are considered part of the utility cost.

Consider what an owner gains through recapturing only the expense of the utilities consumed by residents or tenants. Attached you find a work sheet explaining the value added through the incorporation of a utility submeter system into a properties monthly operations. As an owner, you will need to determine your own value added based on a capitalized value factor for individual sites or full portfolios. But assuming a 10% Cap rate, the value added to each apartment unit from the recapture of utility expenses is very easy to determine.

Utility costs vary region by region as well as seasons; however the industry has been able to come close to national averages for water consumption. Even so, water can be subject to outside conditions which will increase or decrease these averages. Generally speaking water consumption nationally runs at $25 - $30 per apartment unit for a two occupant unit. This equates to an annual expense of $300 - $360 per unit. Depending on capitalization values this equates to a loss of value, per unit, of $2,500 to $3,600. When a project is submetered and the cost of this utility is passed through to the residents, the income is retained in the projects cash flow and therefore the value of the project can be increased in value by the same amounts.

An owner, in addition to eliminating domestic utility costs from the income stream of his project, provides a means to bring about conservation of the utility being metered. It has been proven nationally, anytime consumers pay for a utility, they use less. In some areas the conservation approaches fifty percent. But usually the conservation patterns average thirty to thirty five percent.

Another benefit realized by owners of submetered properties has to do with the non-transient nature of the resident population. Residents appreciate the ability to control their living expenses. The owner through submetering provides residents an opportunity to reduce living expenses through their individual conservation efforts. This is not the case when the owner allocates expenses based on factors such as number of occupants in and apartment or the square footage of an apartment. These considerations do nothing to promote conservation and no matter what a resident does to conserve, they remain subject to living patterns of other residents. Residents who are afforded the opportunity to contribute to the reduction of living expenses do work towards that end. At the same time they show their appreciation by remaining in the unit for longer periods of time thereby reducing turn over in the resident population.