Urban residents among latest to join fight against submetering’s costs
The people gathered in this living room could have talked for hours about why it is great to live Downtown.
But they ended up focusing on one big reason Downtown living can be lousy: high utility bills from submeter companies.
“We can’t in good conscience say ‘come Downtown’ and then put them into these submetered places where they just get hammered,” said Rick Colby, a board member of the Downtown Residents’ Association of Columbus. “It’s very much an economic-development issue.”
He and other board members and other Downtown residents put their heads together recently to figure out how to persuade city and state leaders to do something about submetering. The fact that this group has decided to enter the fray could mark a shift in the years-long “I applaud the courage of the Downtown Residents’ Association of Columbus for voting to take a position against submetering. Other residents groups could do the same and join the cause.”
Rep. Mike Duffey, R-Worthington debate over the issue.
Most of the new apartments and condominiums Downtown use submetering. This system has a company buying utilities in bulk from a regulated provider, such as American Electric Power, and reselling the service to individual households, often with markups. The Dispatch has written about these practices since 2013.
The companies — with names such as Nationwide Energy Partners and American Power and Light — say they are providing a valuable service to landlords and residents — and want to work with customers to resolve concerns.
But the residents said they have tried to work with the companies to little avail. They think people have been slow to mobilize because many do not understand what is happening.
“Most people didn’t seem to realize that when you have a 600-square-foot apartment, a $90 electric bill is out of line,” said Jim Moreau, a board member. “The bill looks like an energy provider, so you just assume it’s (AEP) or someone that’s regulated.”
His building used to be served by a submeter company, but years ago it switched to being served directly by the regulated utilities. He is active
on the issue mostly to help his friends and neighbors who are still affected.
The bills may be high for any number of reasons. For example, some residents are paying for lighting and water in shared spaces, such as lobbies and outdoor commons, as a fee on their utility bills. That is something a submeter company can do but a regulated utility cannot. The Dispatch has found examples of these fees that reach up to $15 per month.
Also, the submeter companies sometimes add fees for the costs of billing and to pay for equipment that are separate from common-area fees.
These costs are in addition to the markups on the wholesale level. Some submeter companies buy utilities in bulk at a commercial rate and resell them at the regular rate for households, keeping the savings for themselves. AEP has said in regulatory filings that the difference between rates is about 45 percent for a typical apartment.
The number of Ohio households served by submeter companies has been estimated at about 30,000 by AEP. The utility is one of many companies and groups that have urged regulators to place limits on markups.
In December, the Public Utilities Commission of Ohio took a step in that direction, with a ruling that said a markup limit was coming, pending further investigation.
But critics of submetering say the PUCO’s action does not go far enough, and they lament that the Ohio General Assembly has taken no action.
“There are some big forces aligned to keep the status quo, so we will need to be a voice of consumers,” Colby said. He lives in Olde Towne East after leaving his Downtown condo in part because of high utility bills. He remains on the Downtown group’s board.
The “big forces” he refers to are property developers, some of whom have ownership stakes in submeter companies. For example, the owner of Lifestyle Communities also is co-owner of Nationwide Energy.
Rep. Mike Duffey, R-Worthington, who has introduced several bills on the topic, and Columbus City Council member Mike Stinziano attended that recent gathering of Downtown residents, invited by the residents association.
“I applaud the courage of the Downtown Residents’ Association of Columbus for voting to take a position against submetering,” Duffey said in an email after the meeting. “Other residents groups could do the same and join the cause.”
If the state government does not act to change submeter rules, the city could, but that does not appear likely.
Robin Davis, a spokeswoman for Columbus Mayor Andrew Ginther, said the PUCO “is the proper organization to address this consumer issue.”
Nationwide Energy, the subject of many of the residents’ concerns, offered this response on the matter of submetering:
“NEP supports efforts to protect consumers from being charged unreasonably high energy rates and, in keeping with our current business practice, we recently recommended to the PUCO for a zero markup on residential rates,” said Gary Morsches, the company’s CEO, in an email.
He is referring to the PUCO investigation, in which his company has said submeter companies should charge no more than the regulated price for households. However, that would not include fees for common areas or other items.
“As part of our goal to increase community engagement, we recently reached out to (the Downtown group) to start a dialogue on submetering and energy innovation,” Morsches said.
The Downtown meeting was hosted by Mark Whitt, a lawyer who has played a key role in challenging the practices of submeter companies. In 2015, he filed a formal complaint with the PUCO about submetering in his condo. That case helped to inspire the PUCO actions in December.
“It is very easy to get into people’s pockets for $4, $6, $8 per month because that flies under the radar,” he said.
Whitt also is one of the lawyers behind a proposed class-action lawsuit in Franklin County court, filed last year on behalf of consumers against
■ Lawsuit in Franklin County Common Pleas Court, case number 16-CV000143, proposed as a class-action. The case is in the “discovery” phase. A trial has been tentatively scheduled for July.
■ PUCO investigation, case number 15-1594. The commission ruled in December that it has authority to regulate submeter companies and that it will place a limit on utility bill markups. The specifics of the limit will be set after additional investigation. The ruling is still subject to revision and several parties have filed testimony for and against the PUCO effort.
■ State legislation. Rep. Mike Duffey, R-Worthington, says he is planning to introduce a bill that would regulate certain practices of submeter companies. Several bills proposed in recent years did not have enough support to pass. Nationwide Energy.
Next, the Downtown group plans to make its case to the legislature and the PUCO and to educate residents on utility issues.
“I’m very optimistic,” Colby said, adding, “We’re out to say, ‘Guys, you can’t do this any more. This is outrageous.’”