SAN FRANCISCO - The California Public Utilities Commission (PUC) has adopted new rules for Pacific Gas and Electric Co. (PG&E) that will permit the submetering of tenants in high-rise commercial buildings. According to officials, submetering will offer building tenants a new tool to improve their energy efficiency and participate in demand response.

Prior to this decision, building owners were prohibited from charging tenants based on the individual tenant’s electricity usage. Instead, bills were generally allocated on the basis of square footage. A tenant who used a lot of energy could pay the same as another tenant that had taken advantage of energy efficiency measures and decreased their energy usage. This rule ran contrary to the state’s current energy efficiency and demand response policies, and was not consistent with the state’s focus on reducing greenhouse gases, the PUC determined.

To rectify this, the PUC modified PG&E’s rules so that building owners can submeter their tenants in high-rise commercial buildings. The tenant would have to agree to be submetered in its lease.

“Energy efficiency and demand response can be a big win for California consumers, utilities, and the electricity system in general. To the extent that it results in both peak demand reduction and a reduction in energy consumption in general, it is also a win for the California environment. Long-term, I believe that this may be the most important benefit of all,” said PUC President Michael R. Peevey. “The inability for commercial building tenants to reap in the benefits of investments made in energy efficiency and demand response has been a hurdle in achieving the full potential of our preferred resource program goals. All it takes is price signals and a customer willing to make an investment in order to take advantage of the potential cost savings.”

“The prohibition on submetering in commercial buildings has been a barrier to energy efficiency for decades,” said Commissioner Dian M. Grueneich. “I am pleased that this barrier is being removed in PG&E’s service territory. This decision sets an example that the other utilities and the rest of the country can follow.”

The new rule resulted from an agreement between PG&E and the Building Owners and Managers Association (BOMA). BOMA’s California members alone manage 600 million square feet of office space that have an estimated demand of approximately 3,500 to 4,000 megawatts. Up to 1,600 megawatts of demand is controlled directly by building tenants, not building owners and managers. A 20 percent demand reduction in this portion of load, which has been achieved by buildings, would yield about 320 megawatts, equivalent to the capacity of a mid-sized gas-fired power plant.

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Publication date:10/22/2007