Property managers have always grappled with challenges around energy cost recovery and reporting. These challenges are felt across the industry, which is why most large companies have adopted energy management systems.
Many small businesses, however, continue to struggle with manual processes. That means they’re doing monthly utility calculations, inputting utility invoices into custom spreadsheets and manually generating charges for tenants. This is time-consuming, prone to human error and may create issues around compliance.
Energy management systems automate these processes and provide better transparency into utility usage and expenses. For example, they can utilize crucial information, such as tenant move-in dates, to calculate and track utility costs. If a tenant neglects to transfer a utility account to their name after moving in, the platform can detect the oversight and automatically reallocate the associated charges.
That’s just one example of what energy management systems can do for property managers. Let’s explore what these solutions have to offer, so you can begin to think about whether they are right for you.
What modern energy solutions need to offer
Ultimately, energy management systems provide so much more than efficiency. They increase accuracy, compliance and financial performance for residential, affordable, manufactured housing and commercial properties of all sizes.
We’ll look at the key energy-related concerns that property managers face today:
- Regional & regulatory requirements
- Deregulated energy markets
- High demand for automation
- Streamlined payments
- Mandatory energy reporting
- Energy recovery & RUBS
- Switching to direct unit metering
Regional & regulatory requirements
Energy solutions must be able to adapt to regional requirements such as replacement timelines for utility meters. Energy management systems should provide comprehensive meter maintenance programs, including hardware and installation services to keep you compliant and maintain accurate billing.
Deregulated energy markets
In deregulated energy markets, such as those in Texas and New York, property managers have the freedom to choose their energy providers rather than being limited to a single utility. Advanced energy solutions should make it easy to purchase energy and offer competitive rates. They can also manage procurement efficiently and simplify the process of negotiating and switching providers.
High demand for automation
Late fees can be significant. In fact, Yardi has found that utility providers make up to 30% of their total revenue from late fees alone. One common issue faced by property managers is the incorrect allocation of payments by utility providers. This is most likely to happen when submitting lump sum payments for multiple accounts. To prevent this from happening, energy management solutions should enable one-to-one payments per metered account. This ensures full, accurate payments and avoids unnecessary penalties.
Mandatory energy reporting
Reporting energy usage is one of the most common concerns for property managers. Increasingly, property managers are required to report energy usage to programs such as ENERGY STAR® and GRESB (Global Real Estate Sustainability Benchmark). These reporting requirements may come from various sources:
- Financial incentives tied to sustainability criteria requiring energy performance reporting
- City, county or state mandates that demand detailed disclosures of energy usage
- Stakeholders and lenders wanting transparent sustainability metrics
All of the above reporting requirements can be time-consuming when done manually. They require precise data collection, careful tracking and timely submissions to different platforms. That’s why property management businesses of all sizes will benefit from energy management solutions that make it easy to generate reports from a single dashboard.
Energy recovery & RUBS
Beyond reporting, property managers have to deal with recovering energy costs. This is common in properties with master meters, which have a single meter that records energy use for the entire building.
Property managers use systems like RUBS (Ratio Utility Billing Systems) to fairly distribute these utility costs among tenants.
Without technology, RUBS systems come with their own headaches:
- Requires manual statistical analysis to determine a fair distribution of energy costs
- Energy consumed in common spaces cannot be billed back to tenants
- Complex laws may further limit how energy costs can be redistributed, increasing the risk of non-compliance
An energy management system takes care of these calculations for you. It keeps you in compliance with federal, state and local requirements so you don’t have to worry.
Switching to direct unit metering
Properties that use individual meters for each unit typically face fewer challenges in cost recovery, as the billing is straightforward. Each tenant pays for their actual consumption. However, transitioning from master-metered systems to individually metered units can be costly and logistically challenging.
An energy management solution makes the transition much easier to manage, keeping you in compliance and helping you navigate this tricky transition.
Is there an expected ROI from using energy solutions?
Energy management solutions can offer a significant ROI, especially when considering the overall cost savings and operational efficiencies they provide. The return can depend on the fee structure and the local regulations governing administrative fees.
Still, there are a few ways property managers see returns on their energy products. We’ll look at three common situations.
Cost recovery through administrative fees
In many regions, property managers can pass the cost of energy management solutions directly to tenants in the form of administrative fees. As a result, the net cost to property managers can be minimal or effectively zero. Certain areas may have restrictions against such fee allocations. However, this model is common and reduces the financial burden on property managers.
Labor & efficiency savings
Energy management systems significantly reduce the costs associated with manual processing. By automating utility billing and invoicing, delinquent payment tracking and reporting, property managers can achieve consistent accuracy with fewer resources.
Improved compliance & reduced penalties
Energy management solutions make it easier to report to programs such as ENERGY STAR and GRESB. As a result, property managers will spend less time navigating regulatory and loan requirements. It all amounts to fewer headaches and late fees.
Getting started on a tight budget
For property managers operating with a tight budget, implementing energy management solutions may seem daunting. The good news is you don’t need to jump in with every feature under the sun. Even basic automation can deliver significant benefits.
Capture missed revenue
If you’re currently not recovering utility costs or managing them manually, you’re potentially missing out on considerable revenue that could be recaptured from tenants. Automating this process, even at a basic level, can significantly enhance your bottom line.
Gain full support for setup & implementation
Transitioning from manual in-house energy management to an automated solution will require some upfront setup. Yardi Breeze Premier users can integrate Yardi energy solutions such as Yardi Utility Billing and Yardi Utility Invoice Processing. Our dedicated energy experts will be with you every step of the way, from setup and implementation to ongoing support.
The good news is that account maintenance is minimal. Automation significantly reduces time-consuming tasks, freeing up valuable staff time for other critical responsibilities. When all is said and done, clients report that the long-term savings in labor and the increase in productivity make the upfront effort seem small in comparison.
By starting small and leveraging automation, even teams with limited resources can make day-to-day work easier, reduce overhead and enhance overall profitability.
Any questions?
If you have questions about whether an energy management system is right for your business, simply contact us or start a live chat. We’re here to help!
Special thanks to Xander Black, senior account executive at Yardi, for helping us write this article. Without his incredible store of knowledge, this piece would not have been possible!
