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The Basics of Utility Metering

When you mention utility metering most people automatically think of a bill they receive each month. A closer look at this will show that some of these people will think of the bill they receive from their municipality, while others will think of the bill they receive from their body corporate management company.

Answering the question of why there is a distinction between municipal and body corporate bills is a good place for us to start laying the fundamentals you need in order to understand utility metering. We start our explanation with the basics of town planning. Historically, a new town or suburb grew in an organic, informal nature without much thought or planning. New structures were generally erected on an as seen fit basis with little thought as to boundaries, roads, utility services, sewage or zoning. The result of such development would often get out of control.

Gradually, people started organizing development and the profession of town planning became the means to build better living spaces. To plan for a growing city or suburb, town planners would have to take into consideration many factors. Current requirements would be a large contributing factor to the plan, but consideration for expansion and for future demands would heavily influence decision making. Various inputs, calculations and projections would eventually result in a town plan which would serve as the basis for all development projects within the region. Everyone who wanted to buy land and build in the region would be subject to the town planning requirements. No plan would be passed for development without approval.

As a consequence of the town plan and to promote and facilitate co-ordinated development and management, local authorities would be formed. These authorities would also supply civil infrastructure such as roads, drainage, electricity, water and gas. This infrastructure would generally be supplied at great capital expense and would generally be limited to the common areas that joined what would be privately owned pieces of land that would have been mapped by the surveyor general. The resulting civil infrastructure would be paid for through a system of local rates and taxes that would be billed to the land owners, businesses and residents of the local authority. It would allow for the effective travel and delivery of services such as electricity, water or gas throughout the area and would often link with adjoining areas.

Large production national facilities would already be in place to supply resources such as electricity, water and gas to the homes and businesses in the local authorities. Effectively connecting the homes and businesses in the region to what would often be called “The National Grid”. The concept for metering the services supplied via these vast infrastructures was based on the premise that the civil infrastructure would run up to the boundary of each property. At this point the local authority would install metering equipment which would be read by meter readers on a monthly basis. This information would be used to bill customers for their consumption.

This entire infrastructure was planned with a current and future capacity for service delivery in mind. However, no amount of future planning is able to take into consideration social, economic and political change. Some areas would grow as expected, others would grow less than expected and some would totally out strip expectations. Eventually the course of time would see even those areas which grew as per planning, having an ageing infrastructure that was not designed with the new present day capacity in mind.

Factors such as urban sprawl were often not a priority consideration when there was so much space to use. The need for increased density in urban areas was not something many civil infrastructures had been planned for. As demand for land grew, property prices increased and new high density methods of building residential and commercial space evolved. New concepts of land ownership and use emerged, changing from owning a single title deed to an ERF, to concepts such as share blocks, sectional title schemes and home owners associations. These new ways to property ownership made owning property cheaper, but they also increased the demand for supply on a civil infrastructure that was not made to support such density.

Where the need for metering had once been to provide a single meter on the boundary of an ERF, these new property ownership schemes required metering at a much higher density and greater scale. While it would be possible to supply additional infrastructure for electricity, water and gas to every new dwelling, this would come at a huge capital cost to the local authority. The cost of such extension to the national grids and the pace at which new development was taking place made it near impossible for local authorities to embark on such an investment.

The solution would be for local authorities to focus on increasing existing civil infrastructure capacity while making it the responsibility of property owners and developers to supply what would eventually become known as sub-metered infrastructures. This would alleviate the local authority from the pressures of financial costs and lead time to infrastructure delivery, while enabling developers simply to submit requirements for grid connections and press forward with their project development plans.

Initially, sub-metering was not something any of these high density projects did anything about. Instead they would choose a method of billing by “participation quota” to determine how a single utility bill would be covered by all the residents within a scheme. This method of billing remained the de-facto standard for utility metering in sectional title schemes for many years. However, it was not very popular as consumers bill would be calculated by the “participation quota” of the section within the scheme.

This could be based on the size of the section within the scheme as a percentage or by the number of persons the section was intended to be used by. Obviously “participation quota” billing did not take into consideration variable factors such as the actual number of inhabitants within a section, as a result there where many inequalities in the “participation quota” method of billing. To rectify the “participation quota” system, new developments started to install post-paid sub-meters within the structures they were building and many existing structures were retro-fitted to follow suit.

The local authority would bill the scheme based on the main meter located on the boundary of the property. The check meters within the property would be used to monitor and calculate the consumption of each dwelling within the scheme. The sum of all readings from the check meters would equal that of the municipal meter reading. The residents would then each pay their bill and the body corporate would then use the money collected to pay the main bill from the local authority.

This two tier system resulted in a new class of utility metering known as sub-metering. To distinguish between the local authority meter and the sub-meters new terminology was developed. The meter located on the boundary of the property which was supplied by the local authority would be referred to as the “primary meter” or the “bulk supply”. The meters located after the primary meter would be called “secondary meters” or “sub-meters”. This method of billing was an improvement on the “participation quota” system. It was more accurate and therefore more just and equitable to residents. While the sub-meter system was an improvement it was not without its' short comings.

Sub- metering did not take into consideration factors such as common property within the scheme. Areas such as stairs, elevators, parking lights and other common facilities would need to be independently metered.

This problem was overcome by taking the sum of all sub-meters on the property and subtracting the result from the meter reading supplied by the municipality on the bulk meter. The difference that remained was attributed to the common property. While this was a logical and effective method of calculation it still meant that the body corporate had a financial shortfall which would generally be absorbed by what is called a sectional title levy paid by each section holder. The levy would also be used for general maintenance and up keep of the structures and common property.

It was soon apparent that this system would only work effectively under the assumption that every section holder paid their utility bills and levies on time. It also worked under the assumption that there would not be any tampering or by-passing of metering equipment and that all metering equipment was reliable and accurate. Obviously, such assumptions could rarely be replicated in reality. Over time expenses would grow, levies would need to be increased, residents would resist and not everyone would play the game. Many body corporates, under increasing costs and inability to effectively bill and collect revenues succumbed to financial disrepair and would often be taken into administration. In such cases, the value of sections within the scheme often fall to prices far below what people had originally paid for their sections. Many sections holders fell into large arrears with their body corporates. Some of the sections would be repossessed by the body corporate and the proceeds of sale used to cover losses.

However, the process of repossession was not a quick one. It also carried a significant legal cost. Many cash strapped body corporates simply could not repossess the sections with the result that the people living in these sections continued to draw on resources and continue not paying, drawing the body corporate into further disrepair. Many such schemes eventually degraded to such an extent that the buildings became unsafe for human inhabitancy. Local authority would have to condemn the building and absorb the total losses. Some of the buildings could be salvaged with significant capital cost by private investors, many had to be demolished. As a result, the origin of our monthly utility bills is dependent on whether we receive our services direct from a local authority or from a body corporate management company that is mandated with managing a residential or commercial scheme.

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