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Sub-metering in District Cooling – well worth the effort

Individual metering to rationalise billing has been a prickly issue that has plagued the District Cooling sector ever since it has made inroads into the Middle East. Mohannad Khader discusses the challenges and opportunities that come with it.

| | Jul 12, 2016 | 10:00 am
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Mohannad Khader

Mohannad Khader

In any utility business, the consumption bill is the document that facilitates continuous interaction between the utility provider and the end-user. In the District Cooling sector, the provider tends to keep it simple and bill the building owner based on a bulk meter installed in the energy transfer station. The owner of the building usually takes the responsibility to distribute the charges to the end-users of the tower, be it residents or offices.

In freehold developments, the developers of towers are primarily motivated to complete the project, so that they can sell the units – apartments, townhouses or villas – to individuals. After selling all the units, and the contracted cooling capacity is assigned to the individual owners, the District Cooling provider assigns the rights and obligations of the building to the co-owners’ association.

Planning ahead

It is always important to start planning for individual billing from the design stage of a project. This is because, at a later stage, it becomes an extremely complicated process to start individual billing for buildings that were not planned either technically or commercially to generate them.

The developers will have to comply with certain technical requirements, such as installing sub-meters to each unit, and providing physical accessibility to the installed meter. Furthermore, these meters have to be remotely accessible for regular meter reading and monitoring. Commercially, the sales and purchase agreement (SPA) between the developer and the individual unit owner should clearly state the District Cooling obligations. Attaching the cooling service agreement along with the SPA is highly recommended. Besides that, the developer should be prepared to explain the technical and commercial requirements to the buyers.

Ideally, the process starts at the handover stage, where the individual unit owners take over their unit from the developer. The District Cooling agreement should always be part of the handover process – that is, the individual unit owner should sign the cooling-service agreement during the handover stage. This process requires intensive coordination between the District Cooling provider and the developer.

Dispelling misconceptions

Since there are no chillers in the buildings, the plethora of charges are paid by the individual unit owners, which leads to the misconception that District Cooling is expensive

One of the challenges that the District Cooling industry faces is the misconception of the capacity fees (the fixed fees). Unlike other subsidised utilities, District Cooling providers charge the customers a fixed amount, based on the cooling capacity required to cool the unit. In developments using conventional cooling, the capacity fees is the counterpart of the fees related to operation, maintenance of the cooling equipment, facility management fees, the overheads and replacement and upgrade costs, not to mention the huge electricity bill to cover the common areas, including the chillers. These expenses are usually recovered by the developer or the co-owners’ association for the conventionally cooled buildings. In the case of District Cooling, since there are no chillers in the buildings, the plethora of charges are paid by the individual unit owners, which leads to the misconception that District Cooling is expensive, while in reality, it is not. It is all about how the expenses of the buildings are structured and who is paying for it.

In any challenging task, such as sub-metering, where the risk seems to be obvious, there are always opportunities. For one, sub-metering provides an opportunity for a utility provider to deal directly with end-users. In fact, it is beneficial to do so, as this helps avoid any miscommunication and misunderstanding conveyed to them by middlemen.

Another benefit of sub-metering is data gathering. Individual billing generates a huge amount of data that could be analysed in many aspects. For example, it was found that during summer, the common area energy consumption, including the fresh air-handling units, represented more than 50% of the energy consumption of a tower.

Sub-metering – the way forward

Forward-thinking District Cooling providers typically offer residents and building owners a fully integrated billing platform and web portal, which allows automation of data in an easy-to-use and simplified format. This cannot be achieved without having a proper customer service platform that captures the customers’ payments, bills, enquiries and complaints. Individual billing or sub-metering is not an easy task to achieve. However, once the necessary setup is in place, the process takes care of itself, and is worth the effort that has gone into the process.

Mohannad Khader is Director, Business Development Department, Qatar Cool. He can be contacted at mkhader@qatarcool.com.

CPI Industry accepts no liability for the views or opinions expressed in this column, or for the consequences of any actions taken on the basis of the information provided here.

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