Client in Missoula has a retail space in a strip mall that uses master meter billing through NorthWestern Energy. They're being charged based on square footage allocation but claim their energy usage is much lower than neighboring tenants. Property has been master metered for 15 years but tenant wants to challenge the allocation method. Anyone dealt with retrofitting submeters or changing allocation formulas in existing leases?
Submetering vs master meter allocation - client wants to challenge method
Noel - this comes up pretty regularly. First question is what the lease actually says about allocation method. If it specifies square footage, you're stuck unless you can prove the method is fundamentally unfair or miscalculated. I've had success arguing for load factor adjustments when you have a low-usage tenant like a jewelry store next to a restaurant or salon.
Had a similar case with Avista here in Spokane Valley. Landlord agreed to install submeters after we showed the clothing boutique was subsidizing the pizza place's electric bill. Cost about $2,800 per unit to install but my client's monthly electric went from $340 to $180. Payback was under 18 months. Key was getting other tenants to agree to the change.
Ernest - that's encouraging. My client is a small office space (1,200 sq ft) but they're paying the same rate per sq ft as the nail salon next door which runs equipment 12 hours a day. NorthWestern Energy charges about $0.095/kWh on the master meter but allocation makes it effectively $0.12/kWh for my client. Definitely worth exploring submetering.
Noel, check if Montana has any utility commission rules about master meter allocation. Some states require "reasonable" allocation methods. Also, you might request a temporary study period where landlord tracks actual usage for each tenant before committing to submeters. Could give you ammunition for a fairer allocation formula if submetering isn't feasible.
One more thing - NorthWestern might offer incentives for energy efficiency upgrades that include submetering. Worth calling their commercial programs department. Sometimes the utility will partially subsidize the installation costs.