Energy and utility management can be challenging, but operators are learning to partner with experts for the best results.
Scott CaseyStudent housing owners face many challenges when it comes to successfully operating a community, but among the top of the list is always energy and utility management concerns. As a top monthly expenditure of time and money, community operators are looking for ways to manage the chaos that comes from billing and utility management. To do so, many operators are turning to third-party vendors and discovering the rewards of partnering with energy and utility management experts.
Energy and utilities are an important line item for student housing communities, and one that can easily cause issues for a management company. Reducing energy and utility usage throughout a property can be very beneficial to a property’s bottom line, but there’s more to utility management than just the financials.
Time and staff effort is also a concern. Many utility companies have antiquated billing systems that result in property teams sifting through inches of paperwork to determine resident’s usage and bills. Even properties that include utilities in the rent must spend extra time and effort to comb through bills in search of overages and inaccuracies.
Utility management can be overwhelming and costly for communities, so many owners and operators are reaching out to the experts for help. Letting go and having experts handle a community’s energy and utility management can be a tough decision, but ultimately the third-party vendors deliver huge savings and peace of mind to property owners.
Jon Ford, director of ResidentUtility Operations for Lehi, Utah-based Property Solutions International, explains that the benefits of using third-party management are tri-fold.
“Firstly, it frees time for on-site staff to focus on resident relations and the frontlines; secondly, reporting provides insight into actual recapture and the impact on the bottom line,” he says. “Finally, billing back the utility expense helps promote conservation and reduces overall expense.”
Additionally, third-party management can help owners recover expenses, for example from inaccurate billing, that would otherwise be deemed lost income. Logan, Utah-based Conservice helps clients pay expenses and recover lost income by receiving, processing and paying all the owner’s utility bills for them. The company also audits each received bill to ensure accuracy. If a bill is erroneous, Conservice’s team of experts works with providers to correct the mistake and recover any lost income, notes Maliece Sorrows, national account manager.
One aspect that is typically unique to student housing is renting by beds instead of units, and this approach can create an added obstacle to billing and utility management. However, third-party management also offers solutions to the per-bed issue through the use of submeters to create utilities by bed calculations.
Operators have two basic choices for utilities — keep the utilities in the property’s name or transfer the utilities to the residents. Even though many communities require residents to set up utilities in their own name, the usage is still calculated by unit and the property receives bills based on unit usage not resident usage, which is frustrating and time-consuming for operators.
However, the approach may be changing. Mike Jones, CEO of Waco, Texas-based SimpleBills, has noticed a shift toward billing students for “actual usage,” a service that SimpleBills provides. The company offers billing management, including billing students for actual usage, collecting payment from multiple roommates, paying the utility providers, and pro-rating bills based on move-in and move-out dates, as well as handling any utility bill conflicts that may arise.
Some operators, like Philadelphia-based Campus Apartments, have already partneredMiles Orth with energy/utility management companies and are reaping the benefits, while others, like Memphis, Tenn.-based EdR, are currently vetting companies to find the best fit for their needs.
Both Campus Apartments and EdR turned to third-party management companies to help reduce energy and utility costs and streamline billing processes. As nationwide operators, the companies need to partner with a management team that has experience in the student housing space and multi-state knowledge of rules and regulations.
One way communities are saving money is through water conservation and management, particularly through the use of submeters and bill monitoring.
“A study conducted by the National Multi-Housing Council and the National Apartment Association found an 18 to 39 percent reduction in water consumption in individually metered apartments compared to apartments that include water expenses in rent,” notes Bill Kirk, executive vice president of Branchburg, N.J.-based Byram Laboratories.
Lowering water usage and expenditures for a community is tricky, but Campus Apartments has found ways to save across a few properties since partnering with Conservice, which offers nationwide service. For a community in Maryland, Conservice evaluated the property’s water usage and discovered an irregularity in the billing that lead to a recovery of $158,000 in overpaid utilities for the property. Additionally, Conservice’s full-service offerings helped Campus Apartments single-out a water pressure issue at a North Carolina property that was creating disparities in unit usages.
“This is one of those fields that requires a certain level of expertise and knowledge,” says Miles Orth, COO of Campus Apartments. “We operate in 26 states and need the knowledge to know what works in each state—something that’s right in one state may be a violation in another, which can put your properties in jeopardy.”
EdR is currently vetting energy and utility managers to find services that best fit the needs of its national portfolio.
“We typically spend somewhere in the neighborhood of $8 to 10 million a year on utility expenses portfolio-wide,” says Scott Casey, chief technology officer and senior vice president of strategic business development for EdR. “By partnering with a third-party vendor, we hope to see a significant reduction in energy and utility spending across our entire portfolio along with implementing programs to simplify the overall process for our property staff.”
The company is in talks with Vancouver, Canada-based Energex and Haddonfield, N.J.-based Blue Sky Power to see how EdR’s properties and bottom line can benefit from the services each company offers. In fact, EdR has already seen a 10 percent cost reduction at one of its properties in Raleigh, N.C., through the implementation of a system focused on reducing usage of the in unit HVAC systems. EdR is also looking at heading off energy and utility issues by consulting with energy managers during the construction process to develop properties with initiatives to ensure energy savings from the start.
Another simple solution for managing utilities is implementing submetering for electric and gas services. Kirk notes that the use of electric and gas submetering systems have resulted in reductions up to 35 percent at some properties. Being able to have constant and consistent monitoring helps residents and operators to visualize daily consumption and adjust accordingly to bolster conservation.
Not only does submetering assist with monitoring a resident’s usage, it also can be implemented to monitor the electrical consumption of equipment throughout the property, including HVAC, indoor and outdoor lighting, refrigeration and kitchen equipment, for energy management purposes. By monitoring individual equipment, operators are able to make adjustments to reduce energy consumption on the property level as well.
Reducing energy costs and water usage is not the only benefit to utilizing utility managers. Many of the companies also offer billing services that streamline bill delivery, tracking and payments to ensure utilities are paid in full and on time.
Jamespoint Campus Communities’ Reveille Ranch Apartments in Bryan, Texas, which caters to Texas A&M University and Blinn College students, streamlined its utility billing system by outsourcing the process to SimpleBills. Jones explains that the property experienced complications with utilities in residents’ names, especially during move-in and move-out; but with the implementation of SimpleBills, utilities remain in the property’s name and SimpleBills pro-rates based on move-in and move-out dates.
“This eliminated any rebilling by the property for utilities not in the student’s name,” says Jones. “Furthermore, SimpleBills managed the payment of utilities for any vacant unit, which provided management with better energy cost control over the vacant units.”
Property Solutions also offers services to help ease the moving transition for residents and properties through its Entrata platform and ResidentUtility product. Property Solutions offerings are comprehensive and work seamlessly together to create a solution for the needs of most any community. Ford notes that the company’s services enable operators to better manage their utilities and give on-site staff access to real-time data while also making things simple and convenient for residents and parents.
Navigating energy and utility management can be a daunting task, but Orth and Casey both agree on the importance of partnering with an expert.
“My strong advice has always been to work with the best companies,” says Orth. “When you’re dealing with energy and utility—it’s a very complicated area—so you want to work with the best company, people with the broadest and deepest talent.”
Selecting a third-party partner is a critical decision that owners have to make as an operator in the student-housing space. Additionally, Orth notes that properties should focus on finding ways to take advantage of utility deregulation.
“If you’re operating in one of the deregulated states, you have to find ways to take advance of the opportunity to lock in prices to give your financial and concession statements certainty,” explains Orth. “If you don’t then you’re subjecting yourself to the whims of the market, which can be good or bad – like an adjustable rate mortgage.”
Casey agrees that a deep knowledge of utility management and taking advantage of regulation issues is vital for a successful energy and utility management plan, but oftentimes it can be cumbersome for an in-house staff. His advice to dealing with this necessary evil of student housing is to partner with people with expertise.
“There are definitely opportunities out there to see significant reductions in your cost, so don’t be afraid to partner with the right expertise to help you,” says Casey. “No matter how big or small your company, you’re going to see a quick return on your investment and gratifying results.”
Also, Casey points out, it’s not just older properties with leaky windows that are high-energy users. There are opportunities to see reduced energy costs with new developments—even the best-developed properties have opportunities to reduce costs.
Advice from energy and utility managers echoes that of the operators and owners, particularly when it comes to finding a company with expertise and experience that fits the needs of an operator.
The top four things to consider when selecting a utility management, says Sorrows, are industry experience, included services, strong customer service and a proven track record of reducing expenses and improving NOI.
Additionally, it’s important to stay transparent and ahead of the game in the quickly advancing technology industry. Residents want user-friendly, transparent and up-to-date systems that offer consistency and accurate bills, so it’s important to choose a provider that supports software integration, but also has the flexibility and innovation to adapt to the needs of the portfolio, explains Ford.
Having the best data collection and minimal involvement with utility providers and the billing process are two goals that can help refocus staff to managing and caring for residents. Kirk suggests moving toward automated meter reading, which offers reader-read data that allows for a more detailed understanding of energy, water and utility consumption. By using this information, operators are able to quickly pinpoint issues and make the needed corrections and adjustments to ensure conservation and energy savings.
Partnering with third-party energy and utility managers not only helps properties see reductions in energy costs and savings through audited bills, it improves the quality of management for operators and residents alike. The partnership allows property staff to refocus on their expertise of managing, marketing and improving the resident life, while the utility managers utilize their expertise to discover ways to improve conservation and rein in costs.”
— Amy Bigley Works