Legal Blogs and Updates

This summer, the New Jersey Board of Public Utilities (“BPU” or the “Board”) has been issuing notices to owners/operators of commercial buildings over 25,000 square feet in floor space.  The notices announce a new obligation for the owners/operators to report their buildings’ annual energy and water consumption data.  As of today, the relevant utilities are required to make this “benchmarking” data available to owners/operators, who must, in turn, submit the benchmarking data for calendar year 2022 by October 1, 2023.

Understandably, the novel requirement has caused confusion in the regulated community.  The below therefore explains the background of the benchmarking requirement, its applicability, the exemptions available, and the procedure for submission of benchmarking data.

BACKGROUND

In 2018, Governor Phil Murphy signed into law the Clean Energy Act, P.L. 2018, c.17 (the “CEA”).  It states:

No later than five years after the date of enactment of P.L. 2018, c. 17 (C. 48:3-87.8 et al.) [i.e., the CEA], the board [i.e., BPU] shall require the owner or operator of each commercial building over 25,000 square feet in the State to benchmark energy and water use for the prior calendar year using the United States Environmental Protection Agency’s [Energy Star] Portfolio Manager tool.

[N.J.S.A. 48:3-87.10b.]

A BPU Order dated September 7, 2022 (Docket No. QO21071023) (the “Order”) provides that the benchmarking requirement applies to electric, natural gas, and water utility consumption.

APPLICABILITY

Pursuant to the Order, a building is required to comply with the benchmarking requirements if it comprises over 25,000 square feet in floor space and qualifies for one of the following classifications in the State’s tax assessment database: Class 4A, Class 4C, or Class 15C. 

However, exemptions are available in some cases.

EXEMPTIONS

The Order lists the following exemptions, which the building’s owner/operator must actively apply for:

• New Buildings: According to the Order, a new building does not need to benchmark energy and water use for the prior year until it has been “operated for a full calendar year.”
• Demolitions: “Upon application, demolished buildings may be removed from the Covered Buildings List, provided that the building owner provides a certificate of approval for demolition.”
• Unoccupied Buildings: “If a building is unoccupied for a full year (365 days), the building owner may apply for an exemption, provided that the building owner provides an affidavit or certification of non-occupancy.”
• Foreclosure or Bankruptcy: “If an action for foreclosure or bankruptcy has been filed during a particular reporting year, the building owner may provide proof of the filed action and receive an exemption for the given reporting year.”
• Other: Finally, there is a catch-all exemption:  “Building owners may have their buildings removed from the Covered Buildings list in certain other situations for good cause, [] g., the building’s size falls below the threshold . . . .”  Naturally, the building owner/operator must not only demonstrate good cause but also provide “appropriate and sufficient evidence justifying such removal.”

Building owners and operators can demonstrate that they qualify for an exemption using the appropriate BPU forms.

PROCEDURE FOR SUBMITTING BENCHMARKING DATA

Assuming no exemption applies, building owners and operators must begin to comply with the benchmarking-data submission requirement by obtaining 2022 utility data from the electric, natural gas, and water utility companies serving the building in question.  Utilities are required to provide a webpage or other means of obtaining such data by August 1, 2023.

The building owner/operator will also need to keep track of how many tenants, if any, occupy the building and whether any one tenant consumes more than fifty percent of the water or energy in the building.  For privacy reasons, BPU has implemented the so-called 4/50 rule with regard to tenants. That rule is explained in the Order as follows:

Under the 4/50 rule, if there are four or more tenants in a particular building or no one tenant exceeds 50% of the energy consumption or water usage in a particular building, data collected from all meters in a particular building will be aggregated, and this anonymized data will be provided to building owners [by the relevant utility] for benchmarking. If, on the other hand, there are fewer than four tenants in a particular building or if one tenant exceeds 50% of the energy consumption or water usage in a particular building, then the building owner must request each tenant’s written consent to allow the applicable utility to provide energy and water data to the building owner.

A utility should provide a form Consent Letter for obtaining individual tenants’ utility data when tenants’ consent is required.  All completed Consent Letters must be returned to the utility. The utility will then send the aggregated data for the consenting tenants to Energy Star’s Portfolio Manager program or will email it to the building owner/operator in a spreadsheet so the data can be uploaded to Portfolio Manager.  (Note also that there are special rules for “campuses” containing multiple buildings.)

Once the utility data is obtained from the utility in question, it can be submitted online.  To make the online submission, the building owner/operator must first register with Energy Star.  Then the building owner/operator can use Energy Star’s Portfolio Manager program to submit the utility data.

Again, the data submission deadline is October 1, 2023, for calendar year 2022 (and July 1 for subsequent years).  Connell Foley LLP can help building owners/operators determine whether the benchmarking requirements apply to their buildings, seek exemptions on their behalf, and assist with the collection and submission of benchmarking data. Please contact Ryan Benson at (973) 840-2483 or rbenson@connellfoley.com.