Commercial Real Estate energy planning: load, costs and contract choices

Start with the actual operating profile

A property portfolio needs a meter-level view of ownership and operating responsibility. The party paying the bill may differ from the landlord signing a supply agreement. Align contract dates with acquisitions, dispositions, vacancies and lease recoveries before grouping locations.

Map electricity and gas separately

The electrical review should identify base-building systems, common areas and separately metered tenant loads. For natural gas, establish whether the site uses central heating and domestic hot water where owner-controlled. Equipment fuel and meter ownership matter: a tenant may pay only part of the building’s utility cost.

For the cost review, keep owner-controlled energy cost per managed square foot separate from a supplier energy rate. The operating metric includes the business’s activity and chosen cost boundary; the supply price measures a different part of the decision.

Translate operating plans into contract questions

Document tenant turnovers, acquisitions and scheduled capital work.

Sale and assignment clauses matter when a property may leave the portfolio before supply expires.

Ask how the forecast and planned changes are handled in volume, assignment or closure terms before approving a contract.

Keep procurement and efficiency evidence separate

Reconcile each meter to its building and lease allocation before aggregating usage.

For internal monitoring, consider owner-controlled energy cost per managed square foot. Use a consistent definition and compare similar periods. This operating metric is a management tool, not a universal benchmark or an ENERGY STAR score.

The verification record should connect the result to ownership entity. Changes in that activity can explain a bill movement even when the supply price is unchanged.

Records for a useful review

Alongside twelve months of bills and the current agreement, prepare the records that explain commercial real estate operations:

• Ownership entity.
• Property schedule.
• Lease recoveries.
• Disposition timetable.

Hypothetical property-disposition contract exposure

Hypothetical: an owner expects to sell a property in eighteen months, while a proposed supply agreement lasts thirty months. The contract extends twelve months beyond the planned disposition. At an assumed 200,000 kWh per year, that period corresponds to 200,000 kWh of forecast use, but it is not automatically an amount the seller must purchase or a termination charge.

The actual assignment, sale and exit clauses determine the obligation. Confirm which ownership entity holds the account and whether a buyer can or must assume the agreement. Model any documented cost only after obtaining the terms; a favorable unit rate does not by itself resolve a supply commitment that outlasts the ownership plan.

Questions & answers