 Aloha and welcome to another edition of Kondo Insider. I'm Richard Emory, your host today. Let me be one of many to wish you all a happy holidays. Our show is about association living in Hawaii. We bring interesting topics on the challenges and opportunities for associations, its board members, and its owners. One of the things I've heard about for years, and it's a little quieter right now because electricity costs and other utility costs have gone down, but there's been the value and the opportunity to sub-meter so that if you're in an association that does not have sub-meters and you want the owners who use the electricity to pay for it, are there opportunities that are affordable and meaningful and accurate to do sub-metering? So I invited today Tyler Law, the manager in Hawaii for a multi-family utility company, to come and talk to us about the new innovations and media reading and also some of the challenges for that particular process. So Tyler, welcome to the show. Thank you for having me. I'd like you to maybe share a little bit like we do with all of our guests about your background and how you got to Hawaii, how long you've been here, and tell us about yourself. Sure. I moved to Hawaii in 2006, about a year after I graduated high school from Southern Maryland. I've been here since then, and I've worked in a number of fields. Went to UH Minoa for molecular biology, and then I kind of fell backwards into a job to do sub-metering about five years ago, and I've been doing it since. And you like it? Yeah. It's a lot of fun and there's, I'm sure you know, the condo land is never boring, and so you're always meeting interesting people, interesting problems, and having to find creative solutions to meet them all the time. And you work for a multi-family utility company. Tell us about them. Yes. Multi-family utility is one of the industry leaders for utility sub-metering in the nation. Our headquarters is in San Diego, but we've had a local office here on Bishop Street for about the last seven or eight years. We've been growing steadily over the past few years, but we have clients in over 45 states. We have offices on the East Coast San Diego in here. And you do have the local presence with your service and your local people then too? Yeah. And the big issue, the time zones and the problems and understanding our culture. No, that's been very important to the company. Even our CEO set up the office here to be completely independent. So we have all of our customer service, all of our billing, and all of our account management staff on Island. So when we think about sub-metering, more often than not we're thinking electricity. Yes. But is that only what your company does, or do you have other types of like water or other types of sub-metering you offer? So in Hawaii, we do majority electric sub-metering because Hawaii has the highest electric utility rates on average compared to the rest of the country. But we also do water, which is what we've been doing a lot lately, here and across the nation. We also do gas, air conditioning, and heat, even though heat isn't really a big deal here in Hawaii. Well, I've seen a lot of hot air here sometimes, but not necessarily from the climate. When we look at these things. So when you look at the most common complaint I've heard, because there's some old buildings that have, I'm going to call it archaic sub-metering technology. Probably before we even had cell phones, this technology was out there. And people complain that my meter doesn't work, and so then they try to average the bill. How has technology changed for sub-meters? Let's focus on your electricity synthesis issue here in Hawaii. Electric sub-meters started being used in the mid-60s, and they used what was called power line communication back then, which was later used for communications for things like elevators and pumps. And so meters have kind of moved away from that and more towards more reliable and steady systems. Most of the equipment that we use communicate over radio frequency. So radio bandwidth that are the same that security systems use in banks. And other control systems that properties already have, either that or through ethernet connections. And sometimes I see associations where actually there's two meters for a unit, one for the air conditioning and one for the basic power. Are you able to accommodate those types of things? Yep, we have one of our properties. We have water meters, air conditioning meters, and electric meters all in the same property. And so we have up to 11 meters per unit, and all that is being collected by a single system and a single data collector and is compiled together and is actually published onto the condos website as well. And so we're able to accommodate as many meters or as few meters as a property needs. Are there ever any iPhone apps or something you can do and check on your own stuff? One of the meters that I use does have several apps that are out from the manufacturer and that they allow you to actually view your electric usage live. So you could be visiting friends in Europe and you can see whether or not your kids are using the Xbox or not on your phone any time of day. Walk me through a little bit more detail, what I'm going to call the technology, like what you put in the unit, how that kind of works and what it does, what it transmits to and where it goes to get to the billing queues. Sure. Kind of walk me through that. So there's two general setups for a building for their electricity. Either the units have their electricity access inside the unit, so you'll have a breaker panel in your unit, or you'll have a common area panel, say in the hallway, where you're able to cut off the electricity outside. So if the panel is on the inside, then where you put a meter directly next to the electric panel and then it communicates via radio frequency once a day usually, but we can actually set it up so it communicates every hour if we'd like. That goes through radio frequency, goes to a central data collector on property, and then that data collector collects for the entire property and then publishes those reads online where they're able to be accessed by us, by the resident manager, property manager, or individual tenants and owners if they'd like. Now that particular meter you put in the unit, is that big or unsightly? Is that something that's going to cause the unit owner to be unhappy because we all think of the normal HECO electric meter, which is quite big, right? So what is this and how does it work? Just like all things computers, they've just been shrinking and shrinking over the past 30 years. Old meters were pretty large, maybe the size of a laptop or a magazine. Now meters are very, very small. Half the size of like an iPhone and that will go into a flesh mount box that goes adjacent to the panel. It's streamlined against the drywalls. You can still hang a painting or a calendar or something over it. And so that will be inset in there and then all the conduit and the electrical equipment will go inside the electric panel. So there's nothing unsightly that you would see that you can't just paint over. And could an owner turn it off so they're not getting charged for electricity? Could they turn off that submeter? They could, but it does alert us when it does that. And so then you're able to generally advocate for boards to put in some kind of fee in case a unit turns off their meter inside the panel. But you would know because the technology would tell you about it. Yeah, we get an alert immediately and then we check with the resident manager or a site manager and then we're able to talk to the owner directly. So kind of summarizing to get to my next point. You put in the meter. It reads the electricity usage. And it sends to a radio frequency to a server on site or to a panel on site to accumulate all the data. And then from there, electricity rates change, right? How does it get built? So you can have either... We have multiple buildings that do it each way. Generally for us, though, we read the meters each month and match those reads to your utility bill, HECO, in this case. And so if you're billed from the 20th of January to the 20th of February, we get your meter reads for that same period. That way you're able to know how much everybody used and then build them accordingly. Now, either you can have your management company just added onto your maintenance invoice each month as a single line item, or if you're internally managed, you can send out your own invoices, or you can have a company like Multifamily actually send the invoices to the owners or tenants. And what is the most prevalent way in Hawaii? What do people mostly do? Most people in Hawaii go through their management company since they send out those monthly maintenance statements. However, we are seeing an uptick in going through a third party. So that way the management company can do what they do best, which is management of the property and management of funds. And then we can do what we do best, which is answer tenant and owner questions, help people reduce their usage, and then work with the owners so they can build their tenants accordingly. And probably a tough question. I'm sure there's no uniform answer. Let's just assume you have the issue of billing through the management company or billing through you. Of course, sometimes owners don't pay their maintenance fees and they want to file a lien and they have to foreclose and the electricity is a common expense. How do you make sure all the data from your side and the association side included? Do the lawyers work with you? Or does the management company come to you and say, we're going to foreclose? Are they delinquent in their electricity? They're paying you directly. And I presume you're writing a check to the management, to the association. How does that all kind of sink out and work? So every month we do send in a report to the association as well as the management company saying who's paid, how much they've paid, and how far behind everybody else is. And so the management company is where 30 days, 60 days, 90 days out that somebody has not been paying their utility bill. And so far 100% of the time, if they're not paying their utility bill through us, they also haven't been paying their maintenance fee for years and years and years. And so the association is already taking a lean out. And so when that gets to the court, they talk to us and we let them know they owe this much money. That way the association does get all the money they're owed at the end of the day. And besides what I call the foreclosure or the delinquent owner, you have people buying and selling property, right? And escrow is going to want to have a closing time. So do you know offhand whether they say we're going to close on this state, read the meter on the state and tell us what they used or do they just pro-rate the bill based on the number of days you were there? All of our meters are what we call smart meters. And so they're read on a daily basis. And so we can tell you up to the day. So if you have a tenant move out or a sale, we can tell you up to that moment what your electricity usage is. And then we produce a final bill and distribute it. So if you're doing the billing, you're taking the period and trying to match it with HECOs period. And then you're looking what HECOs charge at a rate for that particular bill. So you're applying real data, a real cost and real expenses against that bill you're going to bill to the owner. Yes. And so the PUC, the Public Utilities Commission, is very strict on how utility billing is done even in a sub-metering situation. And so if the property is paying, let's say 30 cents a kilowatt hour, they can only charge their tenants up to 30 cents. They can charge them 28 or 25 and give them a discount, but that's the ceiling where they have to charge. There's probably going to always be some difference because you have the common element electricity right, which is even though some associations have multiple meters, more times than not the common element electricity which everybody has to pay. So it's probable that the amount you bill, the residents or the owners, are going to be lower than the total bill just because of the common element electricity. For the tall condos, condominiums, where they are unable to get solar, yes, always. But we also do the statistical analysis to make sure that the residential percentage of the total HECO bill does fall inside of industry guidelines. Some buildings, depending on amenities, will be higher or lower. And so, not to put you on the spot, but is there an average cost per unit to do the billing of the electric meter? If you're doing all the work, because you have to have a stamp and an envelope and mail it and someone's got to do the work and someone's got to read it and take the bill and calculate it and compare it. So is there an average cost or a range of costs? A range of costs, yeah. It usually ranges between $5 and $6 per unit per month. It depends on building size, what they want on the bill, how much work we have to do. For more complicated bills, if we're adding multiple meters, there's multiple systems at the property, some buildings will have the developer put in one system, we'll put in another, and then a third party will put in a third. And to compile all that together, that'll be, of course, a little higher. So in just general terms, a hundred unit building would be $5 to $600 a month barring any complications that were, you know, really adding a lot of work to it. The benefit of that, too, is if we're doing the billing and the collections, on some properties we just send out the invoices in other buildings, we send out the invoices and collect the funds. Most of the time we'll just bill that $5 or $6 to the unit specifically, so that way the AOAO doesn't have any out-of-pocket expenses. Oh, interesting. And so when we cut out their reimbursement check, it's able to be taken directly from that. All right. Well, we're talking with Taiwan Law of a multi-family utility company about sub-metering. We're going to take a short break and be right back. Aloha. How are you doing? Welcome to Hibachi Talk. Gordo the techs are here. We're here every Friday from 1 o'clock till about 1.45 when we talk tech with many, many great guests. I got Andrew the security guy who helps me co-host, and I got Poppy Chulow who comes in once in a while to help us through the show. So please come join Hibachi Talk every Friday. Angus will be here, too. So remember, like we say at the end of every show, how are you doing? Aloha. I'm State Senator Russell Ruderman. I represent the Pune and Kau district on the Big Island and the host of Ruderman Roundtable. We're here on Think Tech Hawaii every other Tuesday at 2 p.m. You can join us at thinktechhawaii.com. You can find a link there to a page where you can see past episodes. And we talk here about good government, environmental issues and issues of the day facing the state of Hawaii. I'm Russell Ruderman. Please join us for the Ruderman Roundtable. Mahalo. Well, we're on condo inside, and we're talking with Tyler Law, a multi-family utility company, about sub-metering of utilities. And we're talking about not just electricity, but water, sewer, gas, and I guess not sewer, but water and gas. And about the opportunities for boards to actually build the unit owner directly for his actual usage, recognizing that common element costs are always borne by the association. And we were talking with Tyler, we were talking about the billing process. And basically, you were saying there's lots of options to deal with the individual needs of a building. And we were talking about maybe five to six dollars a unit average barring complications, hidden conditions to do the billing, which for 100 unit billing would be five to six hundred dollars. But you're doing the whole thing. You're calculating it based on the actual electricity amount. You're calculating it based on the actual owner's usage based on the meters. How reliable are these meters? If they are meters that multi-families put in, they're covered by at least a 10-year warranty. And so for the first 10 years, at the very least, if a meter does act up, it gets replaced almost immediately. One of the benefits for multi-family is that we actually have meter techs that are on island that are experts in these. And so we're able to not only do the billing, but identify issues and get them fixed very quickly. Are you able to identify these issues even though the owner didn't complain in the census? Does the technology allow you to kind of monitor the system that's working properly? 99% of the time we catch the problems before the owner even notices. We'll find power spikes or power drops. And then we're able to go in and fix it. And then we let the owner know, hey, there is this problem. It was already fixed. Here's your bill. So that's pretty solid stuff then, you know, for making sure. So is this an expensive system for an association to put in? I mean, what is the... I mean, you're going to have a retrofit kind of building, one that has the old 1960s technology versus a new building maybe coming up that's just too expensive to put the meters in directly. I'm assuming you do both now. And is it expensive to put in? Does it vary by whether it's a retrofit or a new building? It varies mostly on the electrical infrastructure of the building or the plumbing if you wanted to get water meters. If you have a... The ideal situation is when you have a central panel that has individual breakers for every single unit, and then you're able to put a multi-meter in that panel that's able to monitor multiple units all at one time. But no, it's not terribly expensive. And then one of the big features of submetering is that you get conservation immediately. And so you see your money get paid back over time. And so in a range, what do you say it is per unit to put in electrical submetering? If it's got no super hidden conditions or problematic issues? Is there kind of a ballpark for our listeners? Or we can say this is kind of what it is? So for an easy situation, it would be around $600 per unit. And for a more difficult, as long as it's still possible, it's around $900, $950. And that includes a rebate that's offered right now through Hawaii Energy, which is $150 per unit to install meters. Now you have to go from a, what's called a master meter to a submeter. And so if you already have submeters, then you don't qualify for the rebate. So I understand the $600, $950, whatever the number was, depending on those issues. Is that after the rebate or before the rebate? After the rebate. So the $600 is like $750 before the rebate. You see a lot of buildings doing this? We get inquiries pretty much weekly on retrofits. And then every time we go to a condo show or any kind of building show, we get a lot of inquiries from resident managers who are seeing their common area expenses skyrocket. A lot from board treasurers who are watching their utility bill accounts and seeing them very month to month and making it very difficult to budget when it comes budget time at the end of the year. So we get pretty constant inquiries in. It seems to me that the logical issue is to support the concept is that the owner pays for what he uses. And it's not an average or percentage of common interest where you may have people who don't use their unit full time and those who do and have 12 kids and 12 air conditioners and 52 televisions and refrigerators or whatever. Exactly. They use quite a bit more. We actually run into that a lot where you have one unit that's the same square footage as another but one is the unit was purchased and hasn't been used in 30 years but they've paid for electricity. Everyone else is electricity every month. All the neighboring unit is a vacation rental that has four air conditioners, two fridges and a wine cooler that is broken so it's drawing a ton of electricity. Well one of the arguments has always been that the owners know what they're paying for electricity. They'll be more conservative. Have you seen buildings save money out of this? Oh absolutely. One of our properties reduced their electric usage by I think 17% which is over the course of one year and so you're paying for about a fifth of the year electricity costs from that year compared to the year before. And that's primarily because you change the user's habits as far as how they use electricity. Yep. A lot of time when we first put in the meters we'll see people use five, six, seven hundred dollars per month then after they get their first bill that'll drop down to two or three hundred dollars. That's a good support because does your company provide financing for putting in these meters? We can do internal financing. We do have a financing partner in Hawaii. It's always best for properties to purchase everything outright but we do have multiple options for the property. And so then if an owner does have concerns about their bill I think you said you have a customer service department locally here in Hawaii's time zones to take the call and try to deal with it. Yep. And then their desk is sitting right next to our tech manager and so they're able, if the owner wants to get their meter checked our tech manager will be out there within the next day or two to check the meter to put on a check meter if they need to which is a secondary meter that verifies the first meter's readings and then since we can do daily meter reads and some of our meters are live we are able to run a number of reports to support the figures that we're presenting to the management company or that we're billing out ourselves. How do you do, I'm just going to call the reading and meters of someone else's meters like the old retrofit meters of the 60s? We can read pretty much any meter on the market. The meters that we run into a lot from the 60s and 70s we do have a number of those buildings and we are able to read them and service them as well. So if you have a building that had meters put in 1968 for example we'd be able to come in fix a few of them some of them will not be able to be replaced or not be able to be fixed and then replace those over time. Now, can you have the old and the new blended together where you're only replacing the ones that aren't working into a new system and then expand it so you kind of do it over time? It may not make economic sense in some ways but can you do that? Yep, we actually just finished a property in Makiki where we replace six meters every quarter and so over the course of two years we've been replacing the entire property but that was so the association didn't have to eat the entire elephant at once and they didn't have to go out to get a loan or get financing for the project. And in that project were they going cold to metering or were they have the old retrofit meters? They had first generation meters. Submeters were invented and then a year later this building had them put in. And are there systems out there where the meters can't be fixed and you can't read them that you have to do something else to figure out the bill? So a lot of the time those are proprietary systems and so those are the meter manufacturer makes it so only they can read it so nobody else can read that system. So when we run in those buildings there's nothing we can really do besides replacement but then in buildings where the entire system needs to be replaced we'll generally advocate either to repair it on mass, replace it on mass, or to do metered approximations. So those are educated best guesses on each individual's electric usage. What other surprise things have you found about what submetering has discovered or how it's helped an association beside the mere fact that maybe owners use less electricity? Well we had one property that they had two chillers in operation to feed all their fan coal units. We found through the metering that one of the chillers was drawing an extreme amount of electricity from the property despite not actually being on. They turned the chiller off and then they immediately started saving $10,000 a month and so they were able to replace that after a year and this electrical savings paid for the new chiller. But then we've also run into a condominium on Maui where we found a marijuana grow house thanks to the electrical readings coming from the unit and then we've also found fire hazards where there were electrical outlets popping or exploding inside of the drywall and we were able to find that in the electrical readings and then fix that before it set fire to the building. I think you were telling me when we were just talking a story about one case when you submetered that you found that someone was illegally occupying a unit. Yeah, we found that too. That was a property on one of the outer islands where the owner only was here for about a month out of the year and then the way that their system worked is that they let security know that they're leaving so that way they can secure the unit. Then one of the security staff entered the unit and lived there for about 10 months out of the year and then they switched metering to us from their previous vendor and then we were able to find that. We reported it to the owner and then they were able to take legal action against the individual that had entered their unit illegally. So there's a lot of technology today. It's just like everything else we see in technology. It's so far improved. You get lots of options. The opportunity to reduce your electric bill and have accurate readings and somewhat fail-safe to the extent technology to allow you to read this and see this even before the owner might notice is a difference in all of that. Is there any downside to submetering? The downside is that the board might have to lower the maintenance fee once. Once you get the electric bills out, now you might be double charging so you actually have to lower your maintenance fee instead of increasing it for one year. It's not really a downside, but sometimes you'll have to increase the next year instead of keeping it at the lower rate. I would guess the answer would be that if you have people and there's a bill, that's a finite bill, and you're now reading it, this guy's paying more and this guy's paying less. The guy who's paying more is going to say none of the meters work, because that common old meter or the average doesn't apply to him, but with the technology and the backup you have, it's just the truth, and then they'll start adjusting their habits so that they don't misuse all of this. And the way it works is it's always a board member. Is that right? Yep, it's always board members. That's the one that has three or four air conditioners running in their unit, and so their meter read can't be accurate. That's kind of logical. If you aren't having to pay for it, people will just not turn them off when they go out shopping. They'll just let the things run because they get the same bill every month, and I'm not saying they do it intentionally or viciously, but it's just out of pocket or out of mind. They don't really think about it, so they just leave it on and they get that bill and they think they're using the right amount. They're getting charged the right amount, but they're not, which is an issue. And then you'll see a lot, maybe it on Craigslist One ads for apartments that in master meter properties where you don't have tenants or owners paying for their bill, they'll actually advertise. We are not sub-metered. You can run the AC all day with the windows open and nobody will ever notice. And so that's actually something that's happening in a lot of properties, and so that's driving their bills up. Well, we've been talking today with Tire Law, a multi-found utility company about sub-metering. And they were one of the largest companies in the U.S. as well as in Hawaii. I appreciate all the wisdom you've shared with us about how that works. Our show next week, we're going to be following up on last week's show with the Hawaii Civil Rights Commission. Again, I want to wish you a happy holiday and thank you for tuning in to Kondo Insider. Aloha.