Philadelphia Building Owners Required to Benchmark Energy and Water Usage

August 1, 2013
MGKF Special Alert

If you own a commercial building of 50,000 square feet or greater in Philadelphia, the time has come to address the City's new benchmarking requirements.  The City of Philadelphia recently released regulations to implement the mandatory energy and water use benchmarking and reporting requirements established last year under Ordinance No. 120428.  The legislation is designed to focus more attention on energy and water use in commercial buildings in order to encourage more informed choices by property owners, tenants and prospective purchasers.  The new regulations and associated forms provide important new details on the program and should be carefully considered as building owners assess next steps.

Coverage and Exemptions:  The buildings subject to the benchmarking requirements include (i) commercial buildings of 50,000 square feet or more, (ii) mixed-use buildings with at least 50,000 square feet devoted to commercial use and (iii) multiple buildings that are served by a common energy meter (without sub-metering or other separate tracking) that collectively have 50,000 square feet or more devoted to commercial use.  The regulations define commercial use to include any activities that involve any form of trade or commerce, whether or not undertaken for profit, or that require consideration in exchange or any good, service or privilege; however, exemptions apply in any of the following circumstances:

  • More than 50 percent of the indoor floor space is unoccupied for more than a total of 180 days during a calendar year;
  • The Mayor’s Office of  Sustainability finds that benchmarking or disclosure would cause exceptional hardship or would not be in the public interest based upon an application and evidence from the owner; or
  • The building is primarily used for manufacturing or other industrial purposes for which benchmarking results  would not meaningfully reflect building energy use characteristics due to the intensive use of process energy (i.e., energy used in the actual manufacturing, production, or processing of a good, commodity, or other material).

Building owners who have concerns with benchmarking or public disclosure of their energy and water usage should evaluate the potential applicability of these regulatory exemptions.  According to the Mayor’s Office of Sustainability, no specific criteria have yet been established to implement last two exemptions, however, an application for coverage must be made to the Mayor’s Office using a form to be released shortly and they will be decided on a case-by-case basis.  Evidence used to claim an exemption from benchmarking must be retained for at least three years from the reporting deadline.  Additional record retention requirements have also been established.   

Single Tenant Delegation:  While the legislation places the benchmarking and reporting obligations squarely on the owners of covered buildings, the new regulations provide an option for delegation of responsibilities to a tenant in a single tenant building.  This option is limited to circumstances where a tenant leases an entire building, is responsible for managing all building energy and water use, and agrees in writing to accept the delegation using the official Single Tenant Delegation Form from the City.  For all other circumstances, the owner has the responsibility to obtain and report information pursuant to the provisions of the Ordinance addressing tenant-occupied spaces.

Data Entry and Deadlines:  The Ordinance and the regulations require owners of covered buildings to enter their energy and water use data into Energy Star Portfolio Manager, the U.S. Environmental Protection Agency’s (“EPA”) web-based benchmarking tool.  While some building owners may already be familiar with Portfolio Manager based on past usage, the Philadelphia program will utilize a Custom Reporting Template and Data Collection Worksheet to be released shortly by the Mayor’s Office of Sustainability.  Owners must enter benchmarking information through the Custom Reporting Template interface to Portfolio Manager.  The new regulations also set forth requirements related to the amendment of reported data.  Further, they require the seller of a covered building to provide a buyer with all information necessary for the buyer to timely report annual benchmarking information for the entire year.

While annual benchmarking information for the prior calendar year is due by June 30 of each year, the first deadline (applicable to 2012 data) was pushed back to October 31, 2013 to allow sufficient time for compliance following issuance of the implementing regulations and a major upgrade to Portfolio Manager.  Pursuant to the Ordinance and regulations, owners may arrange for usage information to be electronically transmitted to Portfolio Manager by the utility. 

Disclosure:  Pursuant to the regulations, the Mayor’s Office of Sustainability will make benchmarking results for all covered buildings (beginning with calendar year 2013 results) publicly available on its website.  Information to be posted will include: (i) building address; (ii) energy use intensity (as reflected in Portfolio Manager); (iii) water use per gross square foot; (iv) greenhouse gas emissions from energy use; (v) Portfolio Manager Energy Star rating (where applicable); and (vi) facility type.  Pursuant to the Ordinance, the seller or lessor of any covered building must, upon request, provide prospective purchasers or prospective lessees with a copy of the building’s most recent statement of energy performance generated by Portfolio Manager. 

The Philadelphia benchmarking program is part of the City’s larger sustainability effort, as outlined in its Greenworks plan, to make Philadelphia the greenest city in the nation.  For prospective purchasers and/or tenants, the new benchmarking program may provide another basis to compare building performance.  For owners, it may provide another basis to prioritize opportunities for improved energy and water efficiency.  There are a number of financial incentives that may be available for qualified energy efficiency-related building improvements, including a federal tax deduction and accelerated depreciation, grants and/or low-interest loans from the Pennsylvania Department of Community and Economic Development’s High Performance Building and/or Alternative and Clean Energy programs, and additional incentives from PECO’s Smart Ideas and the Philadelphia Gas Works’ EnergySense programs. 

For more information on benchmarking, the new Philadelphia program,  energy efficiency or the available financial incentives, contact: Brenda Gotanda, Joseph Manko, Bruce Katcher, Brett Slensky or Michael Nines.