Q. How is a tenant billed for electricity charges?

A. Electricity charges can be billed to the tenant in one of three ways:

1) Direct meter – whereby the tenant has a direct meter and account with the local utility.  The electricity charges are based on the tenant’s actual monthly demand for electricity.  Typically, electricity charges via direct meter approximate $2.25-2.50/sf, or $187.50-208.33/month for each 1,000 square feet of space;

2) Submeter – whereby the electricity is delivered to the building by the local utility, but a third-party installs meters for each tenant and handles the billing on behalf of the landlord.  Again, the electricity charges under a submeter are based on the tenant’s actual demand, plus an administrative charge of 5-10% assessed by the third party via the landlord.  Typically, electricity charges under a submeter will approximate $2.36-2.75/sf, or $196.88-229.17/month for each 1,000 sf;

3) Rent inclusion – electricity under rent inclusion is added as an annual per square foot charge and paid to the landlord.  Electricity charges under rent inclusion are inclusive (picture all of the lit office buildings in the nighttime skyline), but the landlord reserves the right to audit the actual usage and adjust upwards , if necessary.  Typically, electricity under rent inclusion approximates $3.00-3.50/sf or $250.00-291.67/month per 1,000 sf. 

In a typical Midtown South, Class B loft building, electricity will be provided by direct meter or submeter, while in a Midtown, Class A building, rent inclusion electricity will be more common.