We live in a society focused on statistics. We measure every conceivable statistic on sports from baseball to our everyday use of gas in our cars. Yet for some reason we seemed shocked and worried that it has finally reached a level where energy accounting is becoming a mandated requirement for commercial buildings. Yes, here in California, thanks to AB1103 there will be mandated energy accounting requirements for all commercial buildings.

Energy accounting is not a new idea and goal. To give you a little history, as early as 1985 the Federal government has been pushing energy accounting for their buildings. In fact as of 2006 the Federal government has already been requiring even more stringent requirements of energy accounting than our recent California AB1103 legislation:

• 30% reduction in energy by 2015
• 7.5% or greater use of renewable energy by 2013
• 16% reduction in water usage by 2012
• 30% lower energy consumption than ASHRAE standards for new buildings
• Metering in all buildings by October 2012

We are not alone in energy accounting and creating mandates for buildings. The United Kingdom already has energy mandates on both residential and commercial buildings based on Energy Performance Certificates that use a scale of A to G grades on minimum performance standards based on their 2006 building regulations. This also mandates the same requirements to disclose and make public your energy accounting information that we are looking at in California.

In the United States, along with California, in September 2009 the city of Charlotte, North Carolina implemented a Home Energy Rating Systems (HERS) that uses a 100 to 0 scale, with zero being a net zero home.

The problem in the U.S. has been that we have subsidized energy costs, especially in the commercial sector. Think about the cost of the energy commodity required to create electricity in a commercial building, “crude oil” and your cost of the refined version gas in your car. Back in the late 1980’s crude was about 11 to 12 dollars a barrel and now oil has risen to over well over $100, yet commercial energy costs were about 10 cents per kWh in California in 1989 and now they are about 0.15 cents. Thus, even though the commodity increased to levels almost tenfold, the cost of commercial energy has never moved in correlation to the cost of crude oil. Our cost for gas at the gas pump changes on a daily basis based on the price of crude oil!

With the global awareness of energy and social responsibility to our planet it was inevitable that energy accounting would occur. The subsidizing of commercial rates and the lack of attention on energy conservation measures that our government had hoped would occur in the market has created these mandates for energy accounting. If we did not subsidize the costs of crude oil in our commercial sector, maybe the free market would have caused energy efficiency to be more prevalent, but that has not been the case.

California Assembly Bill 1103 passed last year and originally set to start in January 2010 will finally be a required mandate this summer. Under AB 1103, California now mandates all commercial buildings to input their energy usage and related building data (building size, number of occupants, hours of operation, number of computers, types of equipment and other parameters) into the EPA Portfolio Manager System, disclose the EPA Energy Star benchmark data and ratings for the most recent 12 months to a prospective buyer, lessee, or lender. 

The hopes of these mandates are to:

1) allow comparisons to similar buildings,
2) aid owners and operators in managing their energy costs,
3) motivate owners to take action to improve a building’s energy usage,
4) help investors justify financial investments, and
5) enable energy efficiency to be valued as other building assets are valued within a real estate transaction.”

Energy reporting is continuing to increase as most cities in California have created and/or are writing legislation mandating sustainable LEED related performance requirements into their building permits. These mandates have struck fear for most building owners. The reason is that most people assume their buildings are efficient. As a result, they assume that these mandated energy accounting is going to be expensive. Yet most buildings are wasting 20-50% in energy, and energy accounting will actually help you find that hidden waste and become more efficient and profitable.

To tap into those dollars, the first step is to understand your metrics now that everyone will be measuring their consumption using the EPA Portfolio Manager. The EPA awards the top 25% most efficient buildings the distinction of Energy Star Award certified buildings. The Energy Star Portfolio Manager combines the basic usage and building data into a 0 to 100 point scale and if you are scoring at least 75 you would be potentially eligible to be Energy Star Award certified.

What are some more specific metrics to determine your building’s energy efficiency? An efficient office building on the West Coast is 10-16 kWh/sq. ft./yr. and 0.08-0.15 therms/sq. ft./yr. If your building is more than say 20% higher than these metrics, a proper energy auditshould be performed.

There are many types of energy audits. ASHRAE has defined a number of levels and a proper audit should be more of an ASHRAE level III audit. A quality audit will use real trend log dataand examine all aspects of the building (HVAC systems, lighting, generation technologies, LEED and Energy Star certifications). An energy audit needs to be performed by a company that can take sole source responsibility and turnkey the entire process from energy study to implementation. A quality energy audit process will easily be able to bring the building down to best in class metrics and even achieve Energy Star & LEED O & M certifications with paybacks usually between one to two years. The savings should be measured and verified at the utility meter level with penalties if the savings are not achieved.

The solutions to energy accounting mandates include simple benchmarks of your energy consumption, finding out the industry best in class levels, and looking for cost effective ways to get to those levels. Bringing a building to those levels can easily be done with paybacks typically under two years. Thus, these new mandates should be a positive influence and motivate you to bring your building to low metrics and as a result become more profitable as a building owner or tenant.

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