Local Law 84 and Verified Square Footage
As a building owner or manager, one of the keys to improving your reported energy efficiency may be hiding in plain sight. Did it ever cross your mind that your property’s square footage – once professionally verified - could save you from fines? Over the past decade, energy regulation has transitioned from a relatively opaque process to one that reveals New York’s most inefficient buildings for all to see. The City’s insatiable appetite for accurate, repeatable data has driven that change. Building size and specification carry a real impact – from the efficiency letter grade positioned by your entrance, to the dollars out of your pocket to pay for impending carbon penalties.
New York’s energy data story began in 2011, when the passage of Local Law 84 required buildings over 50,000 (now over 25,000) square feet to report their energy and water usage. The annual “benchmarking” exercise produced a binary outcome: properties either submitted the information on time and in complete form, or failed to do so and were hit with recurring fees. Eventually, the City recognized three significant gaps: 1) there were no drawbacks to poor energy efficiency, 2) the public lacked visibility into the results, and 3) there was little incentive to verify data or correct mistakes. So in 2019, Local Law 95 required buildings to publicize energy efficiency letter grades that were computed from benchmarking data. Starting in 2024, the same data will power Local Law 97, penalizing buildings that exceed carbon emission thresholds.
Many of the errors within the Local Law 84 process are entirely preventable. For instance, consider a condominium that accurately reports its energy data, but accidentally under-counts its total units and leaves off a ground floor commercial space. This makes it seem as if less space is consuming more energy, which would lead to a poorer benchmarking result, a lower letter grade, and higher potential carbon fines. By no means is this data review a one-and-done process; on the contrary, buildings will need to hold annual reviews of how their energy usage affects their environmental footprint and overall expenses. but the focal point of this process is even more fundamental than space attributes. Before submitting their first emissions report to comply with Local Law 97, buildings must have their square footage verified by a Registered Architect or Professional Engineer. These individuals will also be responsible for documenting energy conservation measures taken to improve onsite efficiency. Buildings can no longer afford to submit annual data during the benchmarking process just because it is the same data they have always had on file. Many properties have not commissioned a square footage certification in years, and because the benchmarking process and letter grade issuance are already in practice, there is no reason to tarry.
The most immediate step any building can take to improve its energy efficiency is to professionally certify its square footage. New York City building owners and managers have a hard enough job as it is; why would they delay taking action to avoid unwanted scrutiny and exorbitant costs? With Local Law 97 and carbon emission penalties looming in 2024, now is the time to prioritize a deep-dive into the data. Buildings that choose not to validate square footage, space types, and other core metrics may jeopardize their energy reputation and their finances.
Market Analysis
Electricity
New York City enjoyed tame wholesale power prices through the first week of December. Mild weather and falling natural gas prices led NYISO electricity to unseasonably low daily prices around $0.043/ kWh. The grid operator had reported sufficient reserves to meet system-wide demand in winter 2022, but they were not ready for the record cold that descended on Christmas Eve. Over the holiday weekend, Con Edison and National Grid asked customers to conserve energy as electricity prices reached an unprecedented $0.30/ kWh.
Natural Gas
To close out a tumultuous year, natural gas spent December in a dizzying pattern that concluded in a surprising slide. NYMEX-traded futures took an early dive on account of warmer-than-expected temperatures, which reduced national heating demand. When forecasts rapidly changed a few days later, natural gas roared back to where it began trading at the start of the month. Europe has been able to stave off price volatility by diligently managing and deploying its natural gas inventory. Even after the arrival of biting winter cold across the nation, the commodity remained settled near $5.00.
Crude Oil
Crude oil clashed with bearish headwinds in December, but refused to give up without a fight. Only a few days into the month, the commodity tanked in response to the triple threat of recession fears and rising COVID cases in China. Opposing these macroeconomic conditions is the $60 price cap instituted by the G7 nations, which aims to drain Russian’s profits but may incur a slowdown in production. Oil courses regained momentum just before Christmas, anticipating a short-term spike in demand due from Winter Storm Elliot.
💡 Mitchell’s Tip: “Happy and healthy New Year”
