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RobW (California)
Posts: 279
Posted:
And I won!

For all California HOAs: If your HOA has common area electrical meters, and you are paying residential rates (very common for HOAs), you may be eligible to switch one or more of the meters to commercial rates, and cut your electric bill.

Prior to 2003, all California HOAs were required to pay residential rates for electricity, even if the HOA had significant common area electrical usage, and had a separate account with the local utility company. In 2003, ECHO went to Sacramento to fight this, and after a series of hearings with the California Public Utilities Commission (CPUC), successfully argued that an HOA's common area meters should be considered commercial, and therefore qualify for commercial rates.

ECHO won this fight, and all HOAs were supposed to have been sent a letter that explains that they have a one-time option of switching any common area meter from residential to commercial rates. My HOA either never received this letter, or our management company or BOD dropped the ball, but either way, we never switched. And there is no expiration date on this option!

I discovered that we have 14 common area meters in our 177-unit complex (156 condos, and 21 townhouses). These meters serve street lights, hallway, lobby and garage lighting, pool and spa heaters, sauna, ventilation fans, elevators, gym equipment, etc.

I contacted Pacific Gas & Electric (PG&E) and inquired about this. One rep said we are a residential community and did not qualify for commercial rates. I hung up and dug deeper. That's when I discovered that ECHO has a copy of the original letter that was sent out to HOAs. I requested a copy. Armed with the facts, I went back to PG&E, and after exhaustive round of being passed from one rep to another, I finally climbed high enough up the food chain to get PG&E to not only agree that we qualified, but to actually crunch the numbers for us. 7 of the meters were identified as likely to benefit from switching to commercial rates. I wanted to see what we would have paid in 2010, had those 7 meters been on A1 commercial.

PG&E sent me a spreadsheet, with all of the amounts we were billed on the residential rates, vs what each one would have been billed, for each month in 2010.

Here's the bottom line:

Net billed to our HOA in 2010 for these 7 meters (E8 residential rate): 122,960.23
PG&E est. net billing to our HOA in 2010 for these 7 meters if they had been on A1 commercial $57,133.60
Estimated amount we would have saved in 2010: $65,826.63

My recommendation to all California HOA members 9and it may be true in other states as well): Find out if you have common area meters in your complex, and whether or not your HOA is paying residential rates. If you are paying residential rates, recommend that your BOD or PM ask your utility company to do a rate analysis of your residential rates vs commercial rates. You might save a huge chunk of change.

Rob
JonD1
Posts: 2,350
Posted:
Rob

Thanks for the information.

Should save those HOAs in Cal. tons of cash and they certainly could use it.

Now to find out what other states might operate in a similar manner.
SusanW1 (Michigan)
Posts: 5,202
Posted:
Congratulations on saving your HOA big bucks!!
DJ1 (Ontario)
Posts: 798
Posted:
SO would it be fair to say that if your bill goes down someone else's goes up so they make the same amount of money? Wonder who's goes up.
HeatherB4 (Florida)
Posts: 51
Posted:
Gosh DJ, only someone from Canada would say something like that.

Congrads... I will be checking on this soon, I will let everyone know what I come up with here in the great state of Flordia...USA!!!
RobW (California)
Posts: 279
Posted:
DJ1, I actually don't know the answers to your questions, but you seem to be implying that we should simply pay a rate that was unfairly imposed on the HOA until 2003, and unfairly paid by all of us who live here since then due to a lack of information.

I look at it this way:

Our local utility company offers a range of rates for both residential and commercial customers. These rates are optional, and are totally within the customers' power to choose one from another.

Philosophical questions aside, it is simply fiscally responsible for any individual to pay only what is necessary for any service or product. it's a matter of individual choice. But it is required of Boards of Directors to spend the homeowners' money wisely. Boards have a fiduciary responsibility to be good stewards of the funds entrusted to them by the community.

The bottom line is that all of us in my community spent nearly a half-million dollars since 2003, for no other reason except ignorance. That is simply insane.

Rob
BarbaraB10 (California)
Posts: 117
Posted:
Rob

Thanks for posting your success story. At least the reduction in utility fees will help offset the financial strain from the foreclosure fiasco and such.

Good job - wish you were on our board of directors! ;)

RobW (California)
Posts: 279
Posted:
Thanks for the kind words, Barbara. I'm actually on an ad hoc financial committee, the chair of which was appointed by the president of the BOD. We have an energy subcommittee (I'm the chair.), a reserves subcommittee, a vendor subcommittee, a water usage subcommittee, and a sort of grab-bag miscellaneous subcommittee.

Collectively, we're looking at every expenditure, searching for legitimate places to save money. Our deliverable is a report containing a list of recommendations based on solid numbers. I tried to raise the bar for my fellow committee members by going the full distance in digging to the very bottom of our electric bills. Considering the number of person hours committed to this project already, I can safely say that Boards need standing committees such as this one, that do nothing but periodically analyze what's being spent, and whether there might be less-expensive options.

The strongest HOA's in the US are those with strong standing committees who help keep their BODs on track, and relieve some of the burden they carry on their (volunteer) shoulders.

You're absolutely right: if people are defaulting, income is down, and expenses have to be reduced. If you get enough eyeballs looking at everything, you may be able to help the BOD find less expensive solutions that will maintain the community without giving up quality of life. That's our committee's goal.

Rob

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