Skyrocketing Common-Area Utilities Bills

Our HOA just paid our final common-area electric bill for 2010: a total of $127,000 for the year.

As the chair of our newly-formed energy committee, I contacted PG&E (our local electrical utility) to ask if they had any suggestions for cutting this bill down. The rep looked at our bill and exclaimed that we are paying residential rates, when we should be paying commercial rates. Our HOA has 177 townhouse and condo units, each with its own residential meter. Our HOA, on the other hand, owns the land, the pool building, the recreation center, a visitors parking garage, tennis courts, fountains, landscaping, street lights, garages (all with lights), an automatic front gate, fire alarms, etc., and the corporation itself has a separate utilities account with PG&E, with 14 separate meters for all of the above.

I spent an hour on the phone with PG&E rep, who calculated what our HOA common-area total for the year would have been, had we paid commercial rates, and guess what? $64,000! He said he would send a report to our management company that outlines all of this, and as you can imagine, I was wild with joy!

Well, today we received the report, and there was nothing at all in it about what our rates would be if we switched to commercial from residential. Instead, it was a report for each of the 14 meters, showing a rate comparison between the residential rate we currently pay, and the other residential rates we might choose from. Everybody get this? Where did the $64,000 go?

I called PG&E today, and was told that we don't qualify for commercial rates, because we're a residential community. I pointed out that the first rep was really excited about how much money we could save, spent an hour doing all of the calculations to prove it, promised a report, and then sent a completely different report.

They are obviously trying to get out of cutting our common-area electric bill, by wriggling out of classifying us commercial.

My question for all of you: Have any of your HOA's been successful in establishing a commercial account for common area utilities, and if so, how did it work out for you?

Thanks,

Rob

That's my position, Janet. But I think it's going to come down to the utility company deciding whether or not our HOA qualifies for commercial utility rates. That decision is going to be based on some internal set of guidelines, an arbitrary decision by some employee of the utility company, or by the local utility commission.

No matter how they decide, I was told - on the phone during a conference call with the owner of a solar energy contracting firm here in California - that we have the right to choose between residential and commercial rates. I confirmed yesterday that we would, in fact, cut our electric bill roughly in half. As I mentioned, that would mean a savings of approximately $64,000 this year. If I can pull this off, I'm going to be a hero.

Think about the ramifications for the utility company, though. There are nearly 50,000 HOA's in California. I'm going to assume that most of them are paying residential rates for electricity, even though it could be argued that many (if not all) of them would qualify as commercial entities under certain circumstances, even if they are non-profits.

Imagine if I am successful at cutting our bills in half, and word gets out to the rest of the 57,000 HOA's...

Rob

Except for the garages, I'd say all those you listed would fall under commercial buildings.

You may have to fight this meter by meter.

Good luck.

I Tweeted this. This is a great idea and thanks for sharing.

Hi Ricky,

Appreciate the offer, but I won this particular battle, and our electrical bills have dropped by 60%.

Best regards,

Rob

In order to win this particular battle,you don't need ECHO. All you need is to call your PG&E customer service rep, and refer him or her to this page on the PG&E website:

http://www.pge.com/about/rates/rateinfo/rateoptions/

Note two caveats, though, concerning switching from residential to commercial rates. In order to switch from residential rates to commercial rates: 1) Your common area must be metered separately from your residential units, 2) your complex must have been built prior to January 16, 2003, and (3) it may not save you anything to switch a meter from residential to commercial, and once you switch, you can't switch back. You need to request that PG&E generate a full report showing what your common-area electric bills were for each meter for the year prior, and what your bills would have been had the same meter been billed on commercial rates. Each meter can be switched, or not, depending on the lowest projected cost. Keep in mind also that since you can't switch back, once you go commercial on any of these meters, future changes in how PG&E establishes rates for commercial meters may hurt you. there's no way to predict this.

If your complex was built after January 16, 2003, the rules are a bit different. (See below)

Toward the bottom of the page find this:

Multi-family Common Use Areas

Common areas can be shared or used by occupants within a multi-family facility, and include, but are not limited to, outdoor lighting, hallway lighting, elevators, laundry rooms, recreation rooms, swimming pools and tennis courts.

Common-area accounts that are separately metered by PG&E were granted a one-time opportunity by the California Public Utilities Commissions on January 16, 2003, to switch from the electric residential rate classification to the electric commercial rate classification. These customers may still change to a commercial rate schedule, but they may no longer return to a residential rate schedule.

Customers with multi-family common use service constructed after January 16, 2003, have the option to take service on either a residential or general service rate schedule. If the general service rate schedule is chosen to establish service, they will have a one-time, two-month window of opportunity to return to a residential rate schedule, starting 14 months after service is established. Once the two month window has expired, these customers may still switch to a commercial rate schedule, but they may not switch back to residential.

Good luck!

Rob