Feature
by Robert Lansburg
As gas prices head upward, so, too, do utility bills. PG&E electricity fees went up in January, and then again in April. This was on top of the natural gas increases we already saw last winter. It's not just gas and electricity costs that have risen, but also water and sewage costs. San Francisco, for example, just raised rates 35% to cover the cost of overhauling the Hetch Hetchy water system.
In fact, overall utility costs are rising at an alarming rate—they have doubled from just a year ago. The question is: what can be done to temper these rate increases?
The Interpretative Dance
The fact is that utility rules and regulations are open to interpretation. This is particularly true with PG&E, but also with water and sewage rates for many cities. For example, with PG&E you are given a smorgasbord of rate schedules from which to choose, but there are subrates within those rates and subrates within the subrates.
Why? Because Northern California has several microclimates. On the same day in San Francisco, the Bay Area's microclimate champion, the Marina could be bright and sunny, while Cole Valley is foggy and the Richmond has rain. So how does this affect utility costs? Well, microclimates are one big factor that determines which rate (or subrate) is best for you. Properties a few miles or even a few blocks apart could possibly choose entirely different subrates. Sound complicated? It is.
While most people assume the utility suppliers automatically give customers the lowest rate available, this is not the case. For all practical purposes, the utility companies set their own rates. This is true whether it's PG&E or Southern California Edison.
This statement from the Georgia Public Service Commission clearly states a universal policy throughout the United States: "This commission does not require the utility companies to guarantee commercial and industrial consumers the lowest available rates for a given operation."
But wait, it gets even more interesting: "When two or more rate schedules or types of service are available it is the customer who must make the final decision as to which type of service he desires," the report continues. "If the customer guesses wrong as to what type of service will be most economical, the utility company cannot be required to reimburse him for his mistakes." If the customer guesses wrong? Yes, now on top of everything else, you are expected to be an expert on the complex rules and regulations for the utility companies.
Backbilling Makes a Comeback
What about billing errors? With all the computer technology available, you'd think that at least that would be a problem of the past. But in March 2004, The Sacramento Bee reported a rash of billing errors by PG&E. The article noted that "frustrated apartment managers are trying to untangle a complicated web of PG&E billing changes, delays and mistakes…. Apartment managers call PG&E's general toll-free customer service number, which is geared toward residential customers." Clearly, apartment managers need access to account services representatives who specialize in business customers, and they aren't getting it.
Karen Dowd, the manager of the California Public Utilities Commission (CPUC) consumer affairs branch, pointed out that the primary complaint was backbilling (a sudden accumulation of charges after the utility company somehow failed to read the building's meters for a number of months). Of course, when people see the large bills for past charges, Dowd claims that their response is usually, "How am I going to pay all of this?"
Solutions
So what is the solution for apartment owners? Generally speaking, if you have a small property, with 15 units or less, your common area bills are probably not so large that it's a big issue anyway, at least as far as gas and electricity are concerned. For water and sewage, it really all depends on the city in which the property is located but, no matter what, be sure to read all the rules. With some cities, the rules are very straightforward. For others, the rules can be very complicated. Page one may say one thing, page five another and page nine will seem to contradict everything that was said before it.
What if your properties are 50 units or larger? You really have three choices: do the research on your own, go to your utility provider and have them analyze the bills, or hire a consultant. Of the three options, the least attractive is to go to the utility provider because you actually may be underpaying or paying rates that have been grandfathered. If you have a grandfathered rate, or a protected rate that is no longer available, the utility company would like nothing better than to convince you to go to a different rate. Once you've changed, you can't go back. Also, if you're underpaying, the last thing you need to do is alert them.
Bottom line: you do have options to lower your utility bills without having to install expensive fixtures and equipment. The first step is to question the bills and not just accept them.
The opinions expressed in this article are those of the author and do not necessarilyreflect the viewpoint of SFAA or the San Francisco Apartment Magazine. Robert Lansburg is with Auditek, a utility consulting firm located in Novato and can be reached at 415-354-6140. For more information, check out www.auditek.net. Copyright © 2006 by the San Francisco Apartment Magazine. All rights reserved.