Wednesday, November 10, 2010

Suite Metering Finally Arrives for Ontario Landlords

Suite Metering Rules Finally Arrive for Ontario Landlords

After years of controversy and delay, suite metering regulations in Ontario will come into force on January 1st, 2011.  When the Residential Tenancies Act was proclaimed in January of 2007, section 137 and 138 were exempt from proclamation as neither the landlord nor tenant groups was interested in a change that could adversely affect them, and the government wasn’t prepared at the time to enforce new regulations and fight additional battles at the same time as the Tenant Protection Act was being repealed and replaced.

What are suite meters?

A suite meter allows tenants to pay their own electricity based on their actual consumption. Suite meters help tenants manage their energy consumption and better participate in Ontario’s conservation efforts.  Landlords can install suite meters in all residential rental units. However, landlords require existing tenants to consent before responsibility can be tranferred, requiring that the tenant to pay for their own electricity use.

The History

The issue became muddier when certain landlords tested suite metering of existing tenants without regulation or sanctioning, pushing the envelope, and required tenants to sign up with distributors of electricity and pay directly to these distributors, while the landlords reduced the rents proportionately.  Some tenants objected and there were complaints and applications to the LTB, but more harmful and effective were complaints to the Ontario Energy Board.  The OEB issued a stop-gap order in August of 2009, EB-2009-0111, providing for interim measures for obtaining consent from among tenants already affected, and rendering void any consents obtained prior to the order.

But in May of 2010, the government received Royal Assent for the new Energy Consumer Protection Act, 2010.  The Residential Tenancies Act has also been amended (such amendments to be proclaimed on January 1st, 2011) and the government created a new Regulation, ONTARIO REGULATION 394/10, filed in October 2010, allowing landlords to provide suite sub-metering to existing tenants, provided they have informed consent, and requiring landlords to meet prescribed energy efficiency standards, but for refrigerators only.

The Energy Consumer Protection Act, 2010  ( the “ECPA”) deals with gas marketing and retailing of electricity to consumers, contracts, meters, door to door sales etc.  Of interest to landlords  are sections 31 through 34 which deal specifically with suite metering, installation, billing, the types of premises covered etc.  But the bread and butter of the new rules are found in the Part II of the Regulation to the ECPA, the new ONTARIO REGULATION 389/10.  It contains information about entering into new contracts, tenant disclosure statements, contract renewals, extensions and cancellations etc.   Also a suite meter may not be installed in a rental unit in a residential complex unless it is done in accordance with s.137 (2) (b) of the Residential Tenancies Act.  That section reads:

Interruption in supply
137 (2)  A landlord who has the obligation under a tenancy agreement to supply electricity may interrupt the supply of electricity to a rental unit when a suite meter is installed if,
(a) the suite meter is installed by a suite meter provider;
(b) the supply of electricity is interrupted only for the minimum length of time necessary to install the suite meter; and
(c) the landlord provides adequate notice to the tenant in accordance with the prescribed rules. 2010, c. 8, s. 39 (1).

The changes to the Residential Tenancies Act, and the new Regulation, ONTARIO REGULATION 394/10 included a lot of goodies.  These new provisions include a clear affirmation that utilities supplied by the landlord are not rent and that the landlord cannot bring a rent arrears application to evict as if it was rent.  It also sets out that a landlord that currently has the responsibility for providing utilities can only terminate the obligation and require the tenant to pay if there is written consent on a Board approved form (currently being developed), provide the proper notice of termination of the service (30 days) and reduce the rent according to the methodology set out in the new Regulation.

For Existing Tenants Where You Want to Switch Over

Landlords that are currently required to provide a tenant electricity cannot unilaterally terminate responsibility for electricity unless the tenant consents.  Section 137(3) reads:
Termination of obligation to supply electricity
137(3)  Subject to subsections (4) and (5), if a meter or a suite meter is installed in respect of a rental unit, a landlord who has the obligation under a tenancy agreement to supply electricity to the rental unit may terminate that obligation by,
(a) obtaining the written consent of the tenant in the form approved by the Board;
(b) providing adequate notice of the termination of the obligation to the tenant in accordance with the prescribed rules; and
(c) reducing the rent, in the prescribed circumstances and in accordance with the prescribed rules, by an amount that accounts for the cost of electricity consumption and related costs. 2010, c. 8, s. 39 (1).

But it’s not so easy.  There is a lot of info the landlord is required to provide to in-situ tenants prior to the tenant agreeing to make the change.  I assume the suite-meter provider will be anxious to provide this information readily in a format that’s easy to use.  In fact the ECPA sets out that the provider must forward the required info to a residential landlord within 10 days after receiving a request from the landlord related to sub-metering of a rental unit.  The Regulation sets out that:

The tenant must be given a statement in writing that the tenant is not required to consent to the termination of the landlord’s obligation to supply electricity to the rental unit.   The tenant must be given information in writing about the amount of the rent reduction for the rental unit and how the reduction is calculated.

 The tenant must be given the following information in writing concerning the distributor or suite meter provider supplying the electricity to the rental unit:

·         Contact information for the distributor or suite meter provider.
·         A statement that the distributor or suite meter provider may require a security deposit from the tenant.
·         Information about the distributor’s or suite meter provider’s security deposit policy, if a security deposit may be required.
·         A statement describing the types of any fees to be imposed on the tenant by the distributor or suite meter provider, and setting out the amount of the fees or, if the amount is not known, a description of how the fees are calculated.
·         A statement indicating the circumstances in which the fees charged by the distributor or suite meter provider may increase.
·         Information about the amount of any planned increases in the fees charged by the distributor or suite meter provider.
·         A statement that the distributor or suite meter provider may shut off the electricity supply to the rental unit if an amount payable by the tenant is overdue.
·         Upon request, the tenant must be given a copy of the agreement, if any, between the landlord and the distributor or suite meter provider.
·         The tenant must be given contact information in writing for the Ontario Energy Board and a written statement indicating that the tenant can contact the Ontario Energy Board about any dispute with the distributor or suite meter provider.
·         If the landlord provides a refrigerator for the rental unit, the tenant must be given, in writing, the best information that is available to the landlord about the date of manufacture of the refrigerator and any available information about the energy efficiency of the refrigerator.

If a landlord is successful in obtaining consent from an in-situ tenant to terminate the provision of electricity and reduce the rent accordingly, the Regulation sets out the formulas for the reduction, either based on past consumption for the unit, or on estimated past consumption for a unit during the prescribed 12 month period.  Hopefully there will be online tools to do the calculations.  Existing tenants cannot insist on being converted to suite metering.  It is up to the landlord to decide whether to install suite meters in existing buildings and whether to start the discussion about transfer of responsibility.  There is nothing to prevent landlords from approaching sitting tenants to obtain their consent to be billed for their electricity use.  Of course in new construction, buildings will have to include suite metering in all units.
For existing tenancies, electric heat is a contentious issue, as the government’s wisdom is that tenants really have no ability to control consumption as the landlord is responsible for insulation and windows. To protect the tenant, the new Regulation sets out that:

6.  Where the primary source of heat in a rental unit is generated by means of electricity, the following are the circumstances and conditions referred to in subsection 137 (5) of the Act under which a landlord is permitted to terminate an obligation to supply electricity to the unit, but the landlord is permitted to do so only if both of the circumstances and conditions exist:
1. The electricity supply for the provision of heat in the rental unit is not connected to the meter or suite meter that measures the electricity supplied to the unit for other uses.
2. The landlord does not terminate the obligation to supply electric heat.

For Prospective Tenants

For prospective tenants, if suite meters are installed in a building, (or if any rental, a house, triplex etc. has separately metered units) the landlord must, before entering into a tenancy agreement with a prospective tenant for the unit, provide the prospective tenant with information in a form approved by the Landlord and Tenant Board.  This would include the most recent information that is available to the landlord for the prescribed period from the suite meter provider concerning electricity consumption in the rental unit.  If the rental unit was vacant during any part of the prescribed period, the landlord must provide a statement of the period that the rental unit was vacant, and any such other information as is prescribed.  The landlord will also be required to provide information about the date of manufacture and other energy efficiency information about the refrigerator.   Of course none of this applies if if, under the proposed tenancy agreement, the landlord agrees to assume the obligation to supply electricity to the rental unit and to pay any associated costs
The rules about electric heat appear not to apply for prospective tenants.  There is nothing to prevent a landlord, for instance a small landlord renting out a house or triplex, from having a regular meter from “Toronto Hydro” and entering into a new tenancy agreement with the tenant having the tenant responsible for electricity even if there is electric heat as the primary source.  However, it appears that there is a provision of the ECPA O.Reg. 389/10 that prohibits a suite meter provider from billing a rental unit for consumption of electricity by the occupant if the meter was installed after the day the section comes into force and heat is by electricity and the meter measures the electricity for the heat.  How would they even know if the house is heated electrically?
And finally, if a landlord fails to comply with the various requirements of the Regulation, the tenant can claim an abatement of rent and other remedies at the Landlord and Tenant Board, including in some cases, terminating the tenancy.  However landlords are adequately protected from frivolous tenant applications in circumstances where the distributor cuts off power in situations where the tenant is responsible for payment for the supply of electricity.  It is also made clear that if the tenant is required to pay a security deposit to a utility distributor, this will not be considered an illegal charge, nor will it be considered rent or consideration in exchange for the right to occupy.

So, as a brief summary:

LTB Forms Available December 24, 2010

The Landlord and Tenant Board (LTB) has provided these forms on their website on December 24th, 2010.  I have attached the first item.

 The expected forms include:

 1)      Information for prospective tenants form

2)      Tenant consent form for suite-metering (for when you want to convert a sitting tenant from bulk metering to suite metering

3)      Rent reduction schedules (for each of the different rent reduction options)

4)      Notice to terminate the obligation to supply electricity

So What Do You Need To Know?

The new legislation will require informed and written consent from existing tenants before landlords can terminate their responsibility to provide electricity and have the utility provider bill them for their electricity use.  In private rental units (non-profits are exempted), landlords must reduce the rent by an amount that reflects electricity costs the tenant will have to pay.

Landlords are required to provide the following information to existing tenants only if and when seeking their consent to bill them for their own electricity use:
·         the amount of rent reduction and how it is calculated;
·         the contact information for the suite meter provider and the Ontario Energy Board;
·         the suite meter provider’s fees and charges including any planned increases;
·         the suite meter provider’s security deposit policy if tenants are required to pay a security deposit;
·         the disconnection policy if electricity costs payable by the tenants are overdue;
·         the energy efficiency of the refrigerator, if supplied by the landlords, to help tenants estimate their future energy costs.
·         In residential rental properties with six or fewer rental suites, landlords may apportion utility costs and pass these on to their tenants separate from the rent subject to certain conditions.

Landlords will have to meet prescribed energy efficiency standards for refrigerators.

If a unit is separately metered and the tenant will pay for electricity, landlords will have to provide prospective tenants with information about utility costs and energy efficiency of the refrigerator.

Tenants will be able to apply to the Landlord and Tenant Board for remedies if the landlord has breached their obligations around consent, rent reductions, energy standards, or disclosure of information.


Karen Arfa said...

i like this idea as a tenant. i would like to know if this would help me who pays 67% utility fees in a shared house. there is a bigger family living in the basement part of the house and i rent the upper half of the house. i feel like i am being taken advantage of and paying something i am not using. it would be nice to know if getting my landlord to do that in a house that is being rented as two units....can someone help me out and let me know ...this is a good idea though for us to pay what we consume only, not for what someone else is consumming.

Andrew said...

I believe you are wrong that the Act only requires landlords to ensure fridges are energy efficient.
The Act states:
Electricity conservation and efficiency obligations

(9) If a suite meter is installed in respect of a rental unit and the obligation of the landlord to supply electricity has been terminated, the landlord shall, in accordance with the prescribed rules,

(a) ensure that any appliances provided for the rental unit by the landlord satisfy the prescribed requirements relating to electricity conservation and efficiency;

It clearly states "any appliance" so this would include stoves.

Harry Fine said...

Don't think so Andrew. I read the Regulation, and it's just fridge. When an Act uses the words "prescribed rules", or "as prescribed", it means you need to look at the Regulation. The Regulation just says fridge.

Christopher Seepe said...

I have also spent a lot of time researching this bit of suite metering legislation and I also believe it is just Fridge.

I have been speaking with members of the Landlord & Tenant Board, the Compliance and Enforcement Unit of the Ministry of Housing, and two separate suite metering suppliers to determine a simple YES or NO answer to the following question:

Can a landlord require a NEW tenant (not an existing one), as part of a NEW tenancy agreement, to pay for ALL electrical use, including electrical heating?

I have an 11-plex in which all electricity is currently included in the rent. However, several of the tenants are not energy conservation-minded (windows open in the dead of winter with the heat up to 80 degrees). I understand that I need existing tenant permission to bill them for electricity and that the landlord can't transfer the cost of electrical heating to the existing tenant (... by the way, I'd like to know what the rationale is behind this and why it doesn't also apply to natural gas heating?).

I would like to make the investment to install suite metering but the building is such that the electrical heating and other electrical usage cannot be separately metered and measured.

Harry, your answer regarding prospective tenants was the best I've seen (and heard) so far but it is still inconclusive.

To add to the confusion, I believe that only a person/entity licensed with a utility (or OEB?) can invoice for electricity.

Can you shed any additional light on this, Harry?