Friday, April 13, 2018

Getting in to hot water: energy charges for common hot water systems

This post authored by Grant Arbuthnot, Principal Solicitor at the Tenants' Union.There has recently been some developments in the NSW Civil and Administrative Tribunal for renters with common hot water systems. The Tribunal has found, and the TU agrees, that tenants are not liable for paying the energy bill required to heat hot water systems which are shared by multiple homes.

What is a common hot water system?
Some blocks of flats have common hot water systems.  This is where one water heating plant provides hot water to all the flats – individual flats do not have their own hot water systems. This was probably to keep the costs of building the flats lower.
How do they work?
Most common hot water systems are gas fired.  A large central hot water heater is connected to each flat.   Some have a circulation pump to reduce waste by cold water coming from the tap first.  The good systems are well insulated and well maintained. 
In a flat with its own hot water system, the tenant pays the gas or electricity bill used to heat the water. However, this is through an account with their own separate meter.
How were bills being calculated in common hot water systems?
Gas and water entering the plant are metered to allow calculation of the energy per water volume ratio (also known as a common or conversion factor) for the system, over a billing period.  This ratio is then applied to the water volume measured by each flat’s hot water flow meter.  This produces a figure for gas energy for each flat that can be multiplied by the tariff charged by the energy provider on the gas used.
What can go wrong?
We find that with both common and individual hot water systems, some are not well insulated or maintained.  The bad ones leak heat and water and they deliver much cold water, at the tap, before it gets hot.  Gas combustion may also be inefficient by neglect.
In both types of hot water system, because the tenant pays the bill, there is no incentive for the landlord to ensure the efficiency of the system unless the inefficiency can be seen as a repair issue. When tenants complain about common hot water systems, inefficiency is always mentioned. That is, it is very expensive to heat the water and users receive much higher bills than they would expect.
See the end of the article for an explanation of how we might calculate efficiency, and what we should expect in terms of the cost to heat water. It is not unreasonable for tenants to expect an efficiency of 70-80%. Two bills we have obtained from tenants were almost half as efficient and there are common hot water systems that are even more inefficient again.
Good news!
However, there is good news for tenants with common hot water systems. The Residential Tenancies Act 2010 says, at section 38, that the tenant shall pay for gas supplied to the tenant at the premises, if the premises are separately metered.  Further, the Act says, at section 40, that the landlord shall pay for gas supplied to the tenant at the premises if the premises are not separately metered.
With a common hot water system the gas is not supplied to the tenant at the premises or separately metered.  Therefore, the landlord shall pay the gas bills.
This has been backed up by two recent tenancy cases (though neither have been published):
In one, the landlord agreed that the landlord should pay the gas bills before it went to a decision.
In the other, NCAT decided that the landlord should be paying the bills going forward and ordered repayment of some of the tenants’ previous gas payments.

So, if your apartment has a common hot water system, where more than one unit is sharing the hot water tank, then you are not obliged to pay for the gas or other energy used to heat the water. If you think you might have a system like this, get advice from your local Tenants’ Advice and Advocacy Service.
Calculating efficiency
The bills people receive for common hot water systems are confusing because the units of volume are not litres and there are figures called Units, Multiplier, Conversion factor, Heating value, Pressure factor and Base usage.  Bills do state daily use of energy and compare it to prior bills.  This is helpful, but it does not tell you how efficient the plant is.  An efficiency figure would tell us what proportion of the heat of the gas used is actually getting into the water.
It is possible to estimate the efficiency of your common hot water system, by making two assumptions:
  • it takes 4.186 kJ to heat a litre of water one degree Celsius &
  • the water is being heated 500 (from 15 to 650C)
Note that the second assumption may vary between systems and weather conditions.
Based on these assumptions, 209.3 kJ per litre (4.186 x 50) would be 100% efficient.  This can also be expressed as 0.2093 MJ/l.
The two bills we obtained from tenants have effective energy per water volume ratios of 0.494311 and 0.49123.  The bills use MJ as the energy unit.  Assuming the order of magnitude for MJ/l as 0.49… the efficiencies for the bills are:
-        44.33% (0.4433 = 0.2093 /0.494311) &
-        42.61% (0.4261 = 0.2093 /0.49123) respectively.
EWON (Energy & Water Ombudsman NSW) investigated the gas bills of one of the tenants and reported that the common factor [or conversion factor] for an efficient common hot water system ranges from . . . 0.3 to 0.7 . . .
Doing the same calculation (divide into 0.2093) for that range we get:

% efficiency

What could we compare these figures with?
An American National Standards and Technology study from the 1990s demonstrates that the greatest difference to thermal efficiency of electric domestic hot water systems is made by insulation.  The uninsulated units averaged 40.6% (which is similar to the cases we described above) and the insulated units averaged 88.2%.  American advertising claims 80% thermal efficiency for a conventional domestic natural gas hot water system.  Elgas (Australia) correlates 4 to 7 star ratings with 73 to 94% for LPG domestic hot water systems.
Note that all the above figures are for the water heating plant only.  They take no account of loss of heat or water between the plant and the flats.  Calculating efficiency figures at the tap would need temperature measurements at the tap.  That would provide information on the efficiency of the whole system, plant to tap.

The second NCAT decision referred to above was briefly subject to appeal - but the appeal by the landlord has not continued.

1 comment:

  1. A related issue I feel is the same idea applied to properties with common water supply without a meter to each dwelling. Some 30 years ago I was renting a flat in a block of four administered by a Community Housing organisation. The leaseholders were each billed one quarter of the water charges.
    When I queried this I was told gobbldegook by my landlord(who consisted of a small group of friends with minimal training, in a country town) and the TU gave me information that the idea is from an antiquated law applied to "tenants in common" and no longer applied.
    Thanks to TU - it was one of many exploitations that otherwise continued.


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