Energy Reporting: It's the Law

Laws mandating energy use disclosure are gaining steam in the U.S. as more cities and states seek to leverage these transparency requirements to drive energy savings and job creation. Instead of heavy-handed requirements that existing buildings get system upgrades or improve operations, local governments are attracted to policies with a much lighter touch: exposing energy performance to the light of day. They hope that just disclosing energy use patterns will lead to changes in behavior, and there’s reason to believe that they may be right.

Benefits of Benchmarking and Disclosure

Energy reporting mandates pick up where codes leave off. While energy codes mandate increasingly stringent levels of energy efficiency in new buildings and major renovations, they don’t address existing buildings that are not otherwise being renovated, they don’t ensure that the properties are managed for efficiency, and they don’t encourage performance beyond the code minimum.

Disclosure laws in the U.S. either require regular reporting to the government or make energy performance data available when a property is sold or leased. Most government reporting programs include a provision for that information to be made public at some point—and it is these public disclosure mandates that really get the attention of property owners and managers.

Fear of a scarlet letter

That disclosure can bring a lot of benefits to high-performing buildings that win bragging rights, but owners and managers of other buildings might not appreciate them. The public disclosure component of the new energy reporting law in Philadelphia passed over the objection of the Building Owners and Managers Association (BOMA) of Philadelphia, whose president testified that a building could be unfairly branded with a “scarlet letter” due to the actions of an energy-intensive tenant, according to a report in the

Philadelphia Inquirer.

In the age of Facebook, that “scarlet letter” fear might not be too far off the mark. Although data like these in the past might have been buried in a file cabinet somewhere, websites like HonestBuildings.com are making data public and easy to find (see

"No More Secrets—‘Facebook’ for Buildings Tells All,”

EBN July 2012). As data gets released from New York City this fall, and from other cities in years ahead, we can expect to learn that a lot of prominent buildings—some of them new, “green” buildings—use a lot of energy.

Concerned that the Energy Star benchmarking algorithm doesn’t account for certain high-energy demands in a building, a number of New York owners lobbied to have certain buildings excluded from the scoring entirely. New York’s Local Law 84, which mandates benchmarking and disclosure, exempts buildings that have at least 10% of their floorspace devoted to data centers, trading floors, or broadcast studios from receiving an Energy Star score. These “high-intensity buildings” will still have their energy use intensity (EUI) disclosed publicly, but they won’t have the embarrassment of a low Energy Star score derived by comparing them to standard office buildings.

Empowering the real estate market

Benchmarking Policy Impact Projections

Advocates of disclosure laws, such as the Institute for Market Transformation (IMT), emphasize the financial benefits for the real estate market. Cliff Majersik, director of IMT, points out that energy efficiency has historically been undervalued in real estate transactions because appraisers have not been well equipped to assess it or understand its impact. IMT recently published a report with the Appraisal Institute describing how appraisers can use energy data when assessing comparable properties.

The new laws also have the potential to bring the benefits of green building to a wider group of owners. Chris Cayten, managing director for CodeGreen, an energy consulting firm in New York City, argues that while the Energy Star program has long been available as a voluntary label (with particular appeal to high-performing buildings), reporting mandates have “brought the idea of energy efficiency and Energy Star scores into classes of buildings that were not historically looking at these issues.”

Programs like LEED and Energy Star have given some owners goals to stretch for, but to cut fossil fuel use and carbon emissions for the entire building stock, we need more tools to raise the bar for all buildings. It’s too soon to tell just how effective public disclosure laws will be at driving energy savings, but in New York City they have already done a lot to raise awareness of energy use, according to energy consultant Adam Hinge. “There are many senior managers and owners who are now aware of their Energy Star scores and EUIs that didn’t know about them before,” Hinge reports. Hinge has noticed that the pre-dawn skyline in New York is noticeably darker than it used to be, suggesting that building managers are starting to take steps to save energy.

Hinge is also seeing “a new level of cooperation between landlords and tenants,” who share a concern about the potential for bad publicity if their building is exposed as being an energy hog. These are all indications that the disclosure mandate is having a real impact.

Lessons from Europe

The European Union is often perceived as being ahead of North America in energy-efficiency measures, and its 2002 Energy Performance of Buildings Directive would seem to corroborate that view. The impact of that directive in the U.K. “is not turning out to be as great as I had hoped,” reports Bill Bordass of Usable Buildings Trust in London. In the Netherlands, on the other hand, researchers Nils Kok and Maarten Jennen have found that buildings with lower ratings achieve 6.5% lower rents than their better-performing counterparts (as published in April 2012 in the journal

Energy Policy).

Europeans use both “asset labels,” which rate the predicted performance of a building based on how it’s designed and built, and “operational labels,” which are based on actual energy use. Most European countries require operational labels only for publicly owned buildings, while private buildings only have to offer asset labels. That focus has led Europeans to underestimate the importance of plug loads and other energy uses driven by occupant activities—which supports the choice in the U.S. to focus on actual energy use, supported by robust benchmarking.

A virtuous cycle

With the release of its LEED 2009 family of rating systems, the U.S. Green Building Council introduced a reporting requirement for all LEED-certified buildings. (Previously such reporting was only used in establishing LEED for Existing Buildings certification.) Even though the new reporting requirement involved neither public disclosure nor any threat of action if the use exceeds predictions, it raised significant concerns among some building owners. Now that municipalities are mandating reporting and, in some cases, public disclosure, those concerns are dissipating, and owners are gaining valuable feedback from their participation in the reporting program.

The spread of energy reporting is also creating “building blocks,” in which cities and states can build on each other’s programs and municipalities can learn from each other, says Rebecca Baker, energy benchmarking program manager for the City of Seattle. The State of Washington first enacted a transactional disclosure-based law (with disclosure required only when selling or renting the building), says Baker, which Seattle was able to build on with its annual reporting law. The laws have spurred the development of a vendor community competing to gain customers for benchmarking; the vendors then can offer broader energy-efficiency and building management services. These developments also contributed to the 2030 District springing up in Seattle (see “Building Owners Embrace Sharing Economy with 2030 Districts,”

EBN Apr. 2012) as a voluntary, private initiative providing real-time energy and water data for 25 million ft

² of building space within Seattle’s core, and aiming for a 50% reduction in energy use, water use, and transportation-related carbon emissions by 2030.

For those reviewing building performance data for insights, there are new troves of data just waiting for analysis. For example, Cayten cites new confirmation of the long-held idea that older buildings can perform really well. “We’ve found a lot of Class B office buildings that score well with Energy Star,” he says. “Some of these great old buildings that are solidly built, with simple systems, are pretty energy-efficient, and [their owners] didn’t know that.”

What Is Required

Requirements typically vary based on building size and ownership type. How information is disclosed also varies.

Which buildings are covered

As cities roll out disclosure laws, public buildings often pilot reporting and disclosure systems and demonstrate to the private sector that the public sector walks the walk. In Washington, D.C., for example, the law applied first to government buildings over 10,000 ft², which had their (rather embarrassing) energy use disclosed to the public for the first time in 2011 (see “D.C. Energy Performance Ratings Set National Precedent,”

EBN Feb. 2011). With the exception of certain laws applying to homes, disclosure laws apply mostly to large buildings; at least 10,000 ft²in some cases, 50,000 ft² in others.

Public disclosure vs. transactional disclosure

Laws differ as to how publicly information about specific buildings is trumpeted.

Public Disclosure

Beginning in the fall of 2012, data on nearly 3,000 individual buildings will be released in New York City, revealing the following metrics from Portfolio Manager reports:

•site energy use intensity;

•source EUI, weather normalized;

•carbon emissions;

•Energy Star score, for building types that Energy Star supports.

In 2013, the disclosure will include more than 12,000 buildings, including apartment buildings and condominiums. It will also include water use data.

More than 10,000 buildings, including multifamily properties, have already reported their data to the City; a report due out this summer will aggregate the findings. Laurie Kerr, senior policy advisor at the Mayor’s Office of Long-Term Planning and Sustainability, told

EBN, “This is the first time so much energy data has been available for any locality in the U.S. and, we believe, in the world.”

Washington, D.C., San Francisco, and Philadelphia have similar plans to release their data. Seattle won’t make the data it collects public other than by releasing it to tenants and buyers, though some have suggested that it could be forced to make data public under freedom-of-information laws.

Transaction-triggered disclosureIn California, Washington State, and Austin, Texas, the law only requires that energy data be made available to counter-parties in real-estate transactions. “If you don’t want to sell a building, if you’re not leasing the whole thing to a single tenant, and if you’re not refinancing, you have no obligation,” explains Justin Regnier, P.E., mechanical engineer at the California Energy Commission’s High Performance Buildings and Standards Development Office.

The California disclosure requirement takes effect in stages, beginning on January 1, 2013, with transactions involving commercial buildings over 50,000 ft

². Outputs from Energy Star Portfolio Manager, which are shared with a potential buyer or lease-holder, must also be made available to the California Energy Commission, but there is no provision for making that information public—a factor that has made the law more palatable to real estate interests.

While public disclosure is not part of the plan for these transaction-based information exchanges, the data may still become publicly available over time, because it can be collected and aggregated by CoStar and other real estate data services, which currently track sale and lease prices and occupancy data.

Although Seattle requires disclosure only around a transaction, all building owners must report their numbers to the City, and the City will release aggregate figures for the building stock. Rebecca Baker, energy benchmarking program manager there, told

EBN, “We’re not into public shaming. We want the building owner to be having that conversation with people who are engaged in the transaction” at a time when they can converse about the particulars of the building and why the energy use intensity (EUI) is what it is.

The weak real-estate market means that relatively few transactions are taking place right now, giving the transaction-based approach less of an impact. Even allowing for that effect, however, it’s apparent from the differences between New York and Seattle that a plan for highly visible public disclosure of the information is far more effective at getting the attention of building owners and managers than is a transaction-triggered disclosure.

Carrot or stick

When owners don’t comply, cities and states have to choose whether to use a “carrot” or a “stick” approach to bring the market along. In Seattle, Baker told

EBN, “In the first few years of the program, we have taken the approach that we want to educate building owners as to the benefits” of energy benchmarking, “as opposed to coming out with a full-fledged enforcement program.” So far, Seattle’s compliance rate with the new law has been around 30%–40%, according to Baker. The law stipulates a structure of fines, but she says that they’re unreasonably high. Some vendors there offer compliance services for free; others charge anywhere from $100 to $2,000, depending on the building scale, so using a vendor to comply is likely to be cheaper than paying a fine.

Silliker+Partners is one of those vendors, and principal Jared Silliker feels that clearer penalties and strict enforcement deadlines would increase compliance. “The very first question I get all the time is ‘what happens if I don’t do this?’” he reports, noting that some recalcitrant owners have concluded that they can safely ignore the requirement.

Reporting: The Government Is Here to Help

All mandates in the U.S. that require reporting of data to local government entities rely on Portfolio Manager as their data repository and collection tool. In New York City, for example, building owners or their hired consultants log into Portfolio Manager, enter defining characteristics for a building, and provide data from a calendar year’s worth of energy bills.

New York and other cities have also been working with the U.S. Department of Energy (DOE) and Lawrence Berkeley National Laboratory on a new interface that automates some steps. Called the Standard Energy Efficiency Data (SEED) Platform, the software will offer local governments a low-cost way to create their own access points for users to enter data into Portfolio Manager as well as their own reporting tools for getting their data out. SEED is also tied into DOE’s Building Performance Database, which contains data for thousands of buildings in a way that allows users to learn from trends in the data while protecting the anonymity of individual buildings.

SEED should also make things easier for third-party, private-sector tools that hope to benefit from the newly emerging streams of data on building energy use. Websites including HonestBuildings.com and the U.S. Green Building Council’s Green Building Information Gateway (GBIG) are expected to absorb and distribute the data on New York’s buildings as soon as it becomes available.

Consultants heavily involved

New York City offered training and education programs on its new energy reporting requirements, expecting that building owners would want their staff to take on this new task. Some did, but a surprising number of owners chose to rely on third-party consultants to do their reporting instead. “Over half the buildings were benchmarked by consultants,” Beber reports, adding, “In New York, we shop everything out.”

Owners in Seattle have the advantage of automated data reporting services available from all three energy utilities. That means that owners or consultants just have to enter building information and authorize the data transfer. That service has made support from consultants less needed than it is in New York, although some expertise is still helpful to navigate the different protocols that each utility uses for data transfer.

In both cities, consultants offered to do the reporting for very reasonable fees because they saw this service as a foot in the door that they could leverage to win additional work from the owner, including energy audits, retrocommissioning, and energy upgrades. In New York, each consulting group handled a lot of properties: 20 firms were responsible for 80% of the third-party reporting.

City staff met with one consultant whose portfolio had an unusually high percentage of low-scoring buildings, assuming that the consultant was making a reporting error. It turned out the consultant had intentionally targeted buildings that performed poorly in the hope of generating more retrofit work.

The multi-tenant quagmire

The simple concept of providing energy and water data for “a building” can turn out to be quite complicated. Utility companies track their customers based on meters and accounts, not buildings, and municipal property lists are based on tax lots. Multi-tenant buildings often have multiple meters, while campus buildings may share a meter with others.

California has strict data privacy laws. One of the reasons that implementation of California’s law has been delayed twice is the question of how to get owners access to their tenants’ energy data so they can disclose it without violating the ratepayers’ right to privacy.

The problem became more manageable after the California Public Utilities Commission ruled in July 2011 on data privacy issues related to smart meters. That ruling clarified when and how this kind of data can be used, and who can have access to it. A technological solution is now in place that requires utilities to provide whole-building data to owners for benchmarking purposes but only after taking steps to aggregate and anonymize the data so owners can’t use it to determine how much comes from each tenant’s meter.

In the rest of the country, data privacy is less regulated, so it has been a relatively simple matter for Con Edison, the main utility in New York, to offer owners an aggregated report for multi-tenant properties. The utility charges a nominal fee of $102.50 for that report. Commonwealth Edison in Chicago makes it even easier, with an online portal where owners can get that information for free—even though Chicago has yet to require energy reporting.

There is evidence that the simple act of having building owners gather energy data for the whole building, including tenants’ data, is leading to some benefits. According to Cayten of CodeGreen, in many cases those bills “get rolled into operating expenses of the building and are never scrutinized by owners directly.” In some cases, owners “actually make money on re-selling energy to tenants, so they have no incentive to reduce tenant consumption.” Now, he says, “Many owners are saying that’s the way of the past; we will have to find ways to help tenants reduce energy.”

Portfolio Manager improvements

The reliance of cities on Energy Star Portfolio Manager as the tool of choice for buildings to enter and report data is increasing use and putting a new focus on the tool, which now contains more than 250,000 building records covering nearly 27 billion ft²—or 40% of the U.S. commercial buildings market. In response, the U.S. Environmental Protection Agency (EPA) is currently revamping Portfolio Manager and plans to launch a new version in June 2013.

The updates affect everything from underlying data structures to the user interface, which EPA says will be modeled on that of TurboTax. Users will benefit from automated “dashboard” views of data across their portfolios and a much more intuitive data-entry process. The new version also includes a provision for benchmarking the performance of projects before they’re built—a feature that is currently handled via EPA’s separate Target Finder tool.

Limits of scoring

Energy Reporting: City by City

Using actual energy consumption data, Portfolio Manager rates buildings on a scale of 1–100, with higher scores being better. A rating of 75 means that a building performs better than 75% of similar buildings nationwide and that it is eligible for the Energy Star label. Portfolio Manager provides its ratings using data from similar buildings in the Commercial Buildings Energy Consumption Survey (CBECS), employing statistical models to smooth over the gaps in CBECS data. Energy Star scores are based on source energy use intensity (EUI) in kBtu per square foot.

Once energy reporting and benchmarking become routine, cities and states will have enormous databases that could make CBECS obsolete. (Portfolio Manager may eventually take advantage of these databases, but the 2013 revamp does not include changes to the scoring protocols.)

Nagging questions remain about how useful the Portfolio Manager score is, however. “It’s most useful in having buildings compare with themselves over time,” argues Jenny Carney, a principal with YR&G Sustainability. Several of the many inputs to Portfolio Manager, like square footage, the number of occupants, and the number of personal computers, have a significant impact on the Energy Star score. That’s by design: larger buildings, or buildings with more intensive occupancy patterns, are expected to use more energy. But, Carney says, “The extent to which those inputs are known accurately is pretty dubious.” While Portfolio Manager has specific rules for determining those inputs, they are rarely followed to the letter. Carney believes that occupancy and other numbers could easily vary by plus or minus 10% in how they are measured—enough to throw off scores by quite a bit. “If you’re doing cross-building comparisons and half of those variables are inaccurate, you’re creating this impression of a fair comparison that may not be fair.”

Using the site and source EUIs from Portfolio Manager instead of the Energy Star score doesn’t offer as much by way of benchmarking; the user has to compare them to national averages, past performance, or other reference points. But it does remove the uncertainty introduced by most of those variables, leaving only square footage. Even that isn’t always measured consistently, however. Owners and property managers are more familiar with metrics such as rentable square feet than the gross square feet (GSF) that Portfolio Manager requires. Hinge reports that anomalies of 3%–5% in GSF are typical, but Carney has seen this measure vary by 10% or more. The new version of Portfolio Manager coming in 2013 should help to reduce that inconsistency by asking for the building’s gross floor area directly, as opposed to just summing up the gross floor area of the individual spaces as the tool currently does.

Building Momentum

U.S. Building Rating and Disclosure Policies

The nonprofit Institute for Market Transformation has been a leading champion of energy disclosure and benchmarking as a driver for energy efficiency in buildings, tracking government initiatives around the world on its BuildingRating.org website, and partnering with real estate organizations and the U.S. Green Building Council to create the Data Access and Transparency Alliance (DATA), which seeks to promote electronic access to building energy data.

DATA got some wind in its sails when the National Association of Regulatory Utility Commissioners (NARUC) approved a resolution in July 2011 encouraging utilities to give commercial building owners access to whole-building energy consumption data to support energy benchmarking efforts. As the officials who oversee regulation of electric utilities, NARUC’s position is influential in promoting utility company investments in changes that would allow them to draw connections between meters and buildings.

The U.S. has never seen widespread energy reporting on the scale currently being implemented in the cities and states profiled here. It’s an exciting time to be watching the field, and

EBN will continue to report on developments. Stay tuned, and let us know in the comments area below how energy reporting is affecting you.