Energy Efficiency Grades to be Posted by all Large Buildings in NYC

Jan. 11, 2018
New York City’s first-of-its-kind building efficiency public grading requirements are noteworthy for utility decision-makers involved with energy efficiency programs

If you are the sort of person who checks the Health Department rating of a restaurant before eating there, you may be pleased to hear you’ll soon be able to check a similar letter grade benchmarking the energy and water efficiency of any large building in New York City. 

NYC’s Energy Efficiency Benchmarks for Buildings

While restaurants have been posting letter grades based on Health Department requirements, it was on Jan. 8, 2018, that New York City enacted the first law in the United States requiring owners of large buildings to benchmark and post letter grades for the Energy Star ratings of their buildings.

As such ratings become a more widespread trend, increasingly important opportunities for new services and programs will be presenting themselves to savvy utility decision-makers.

Consider how advanced metering has, for years, enabled water utilities to notify customers of usage patterns indicative of major leaks (e.g. burst frozen water pipes for a vacation home).  Similarly, monitoring of IoT data behind the electric meter, or sophisticated analysis of meter data for real-time fluctuations in real and reactive power and related harmonics, can enable electric utilities to offer increasingly sophisticated services to customers to reduce energy waste and identify appliances in need of replacement or repair before breakdown.

“New Yorkers deserve to live in a city dedicated to sustainability and affordability for all,” said Mayor Bill de Blasio. “Today’s legislation re-affirms our commitment to a greener New York.”

“Our City has been a leader in green energy, and energy efficiency and sustainability will be of great importance as we continue to tackle the environmental issues of the twenty-first century. Today’s legislation is just one example of our dedication to making a greener New York a reality,” said Speaker Corey Johnson. “I thank Mayor De Blasio for his partnership in creating a more sustainable city, and the New York City Council is committed to ensuring that our city continues to set an example by leading in clean, efficient, and affordable energy.”

Since the code amendment was passed by the New York City Council in December and enacted into law, New York City has become the first city in the United States that will require property owners to post the information about a building’s energy efficiency in a conspicuous place.

Utility Industry Considerations

From a market development point of view for electric utilities, the initiative with New York City adopting more stringent energy efficiency guidelines for large buildings is significant in an additional way, since it represents a non-financial sort of “brand” value being placed on buildings’ energy efficiency level.

At the risk of bringing upon this article a barrage of “yes but” comments, it is worth noting a shift here, by asking the following question:  In contrast to rebate-driven investments in energy efficiency, if investments to meet sustainability and energy efficiency goals are good, due to a common interest in the population of an entire nation, why should those investments be lower in regions which happen to have lower electricity prices?

By definition, so-called “externalities” are supposed to represent indirect cost impacts not in need of consideration for a near-term investment, but in terms of actual cost impacts, going with lower first-cost less efficient solutions for utilizing (or generating) energy can lead to direct negative cost impacts anyway.  For one thing, such costs can now include customers taking their business to an “A” rated building rather than businesses in buildings with lower ratings.  Another source of real direct costs, at the level of each utility company’s service territory on a state-by-state basis, involves the potential for legal liabilities (e.g. considering the lawsuit per this December 26, 2017 Reuters piece "Northeast states sue EPA over air pollution from Midwest").

Another “risky” question to ask:  Why should sustainability policy involve pitting of regions with higher electricity costs against those with lower electricity costs?  What a CFO in one region could viable call an “externality” and exclude from an energy-efficiency ROI calculation, a market-savvy thinker in another region may see an ability to attract and retain more value-driven residential, commercial, and industrial customers..

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