Surprise! Tenants Save Energy When They Pay Utility Bill

July 30, 2014 By Linda Hardesty

WegoWise applied advanced regression modeling on monthly utility data from over 3,000 multifamily and affordable housing buildings across Massachusetts and found that multifamily buildings where owners pay the utility bills use about 30 percent more energy (BTUs) per square foot than buildings where tenants pay the utility bills. Additionally, WegoWise found that annual utility costs for buildings with owner-paid bills are 20 percent higher than tenant-paid bills.

The results spotlight the ‘split incentive’ issue, where tenants are not motivated to save energy if they aren’t the ones footing the utility bill.

“This study reveals that behavior changes driven by financial incentives result in far more impressive energy reductions than traditional behavioral efficiency approaches. In some cases, these savings might even be on par with building upgrades and retrofits,” said Barun Singh, founder and chief technology officer at WegoWise.

The company also found that in tenant-paid buildings, on average, heaters are set at temperatures six degrees lower than in owner-paid buildings. In Massachusetts, owners are required to keep interior temperatures at 68 degrees or higher during the day and 64 degrees or higher at night to account for tenant comfort. The study found that owners do in fact heat buildings, on average, to 66 degrees.

To determine the disparity between building temperature settings, WegoWise created a mathematical model of each building’s response to the changing outdoor temperature, based on monthly utility usage. The model provides estimates of the temperature set point, the weather-independent baseload energy usage, and the efficiency of the building envelope. WegoWise’s analysis accounts for correlated and confounding variables, including tenant type, building type, heating system, and building age. While this observational study cannot attribute all six degrees of difference to a behavioral difference, it does demonstrate that utility bill payer affects this difference the most.

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