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8. Suite Meters

(a) Overview

As part of a general energy conservation effort initiated under the Energy Consumer Protection Act (ECPA), the province has mandated that 'suite meters' be installed in any new residential construction. 'Suite meters' are electrical meters which record the consumption of each specific residential unit, facilitating clarity as to the resident's degree and cost of electricity consumption.

Generally, residental tenancy agreements can either provide for electricity costs to be born by the landlord ("included in rent") or that they be billed to the tenant separately under direct contract with the energy provider (and thus not included within rent) ("direct tenant payment"). In either case of course it is the landlord's duty to maintain the electrical system in the unit in accordance with the province's Electrical Safety Code.

Complementary to the suite meter requirement for new construction, existing tenants governed under the Residential Tenancies Act (RTA) are being given the option of 'opting-in' to any suite meter installation program that is initiated by their landlords [RTA ss.137-8]. Opting into such a program by a tenant who presently has their electricity expenses 'included in rent' means shifting to a 'direct tenant payment' arrangement between the tenant and the electricity provider.

The suite meter provisions of the Residential Tenancies Act (RTA), in force 01 January 2011, are explained in this section. These rules are binding on landlords despite any attempts in a tenancy agreement to avoid them [RTA 137(18)].

(b) Suite Meter Conversion Requirements

. Overview

If a tenant's electricity costs are presently 'included within rent', if the landlord installs a suite metering system - and if the tenant consents in writing - then the landlord can, on notice to the tenant, change the arrangement to a 'tenant direct payment' one. Commensurate with this change is the tenant's entitlement to a rent reduction reflecting the value of the electricity costs that they are now undertaking directly [RTA s.137(3)].

. Information that Must Be Given to Existing Tenants Before Consent

Before an existing tenant grants their consent, the landlord must inform them of the below-listed information [RTA s.137(4)], which must be given to the tenant in writing [Reg 394/10, s.5]:

• an advisory that the tenant may refuse to consent to the change;
  
  
• the amount of rent reduction if the change is made, and how it is calculated;
  
  
• the contact information of the electricity distributor or suite meter provider;
  
  
• that the distributor or suite meter provider may require a security deposit from the tenant, and - if so - information about their security deposit policy;
  
  
• the types of fees that would be imposed on the tenant by the distributor or suite meter provider, their amount if known or otherwise a description of how such fees are calculated;
  
  
• the circumstances in which the fees charged by the distributor or suite meter provider may increase, and of any presently planned increases;
  
  
• that the distributor or suite meter provider may shut the electricity off if the tenant falls in arrears of their bill;
  
  
• contact information for the Ontario Energy Board (OEB) along with a written statement that the OEB can be contacted by the tenant in the event of a dispute with the distributor or the suite meter provider;
  
  
• if a refrigerator is provided under the tenancy agreement, then the landlord must also give the tenant the 'best information available' about the date of manufacture of the unit and any available information about it's energy efficiency; and
  
  
• if requested by the tenant, the landlord must give them a copy of any agreement between the landlord and the suite meter provider.

In practice, the Board form linked here has either included all this information, or provided spaces for the landlord to insert it:

Tenant Agreement to Pay Directly for Energy Costs
. Consent

In order that the tenant's consent to this change be freely given, the RTA provides that any provisions in a tenancy agreement (typically a written lease) which purport to obtain tenant consent to a change to 'direct tenant payment', or that in any other way conflict with the suite metering rules set out in this section, are void. Consent must be freely negotiated outside of the tenancy agreement [RTA 137(18)].

It is important to note that this consent is not for the landlord to physically install suite meters, but rather to shift to the 'tenant direct payment' arrangement which suite meters are intended to facilitate (as a means to achieving the electricity conservation goals of the ECPA). A tenant may experience the landlord install suite meters, in preparation for future tenants down the road, but still insist on maintaining an 'included in rent' arrangement if that is how the present tenancy agreement is structured.

The Landlord and Tenant Board ("Board") has produced a form which can be used by the tenant to consent to such a change. It is contained within the form that is linked immediately above: "Tenant Agreement to Pay Directly for Electricity Costs".

. Notice of Change

Once a tenant's consent to a change to 'direct tenant payment' has been properly obtained, further written notice of the change must be given by the landlord to the tenant at least 30 days before the change is to take place. This notice must must also state when the change is to occur [Reg 394/10, s.3].

Landlord's Notice to Terminate Obligation to Supply
Electricity
(c) Physical Installation of Suite Meters

The RTA has been amended to excuse landlords, on notice, from the service interruption incurred by the installation of suite meters [RTA 137(2)]. Without this exception such a service interruption would be prohibited by the landlord's duty to provide continuing vital services where required by a tenancy agreement [RTA s.21(1)]. The notice required for this purpose is separate and distinct from the "Landlord's Notice to Terminate Obligation to Supply Electricity", discussed above.

While there is no Board-issued form made for this purpose, such a notice must [Reg 394/10, s.2]:

• be in writing;
  
  
• be given at least 24 hours before the interruption;
  
  
• specify a date, and a time between 8am and 6pm, when the interruption will occur; and
  
  
• describe the anticipated duration of the interruption.

(d) Suite Meter Conversion Where Electricity is the Primary Form of Unit Heating

Where electricity is the primary source of unit heating then a change to direct tenant payment pursuant to a suite meter conversion can only be done with respect to non-heat electricity, and then only if heat and non-heat electricity are metered separately [RTA s.137(5); Reg 394/10, s.6].

(e) Rent Reduction on Suite Meter Conversion

. Overview

As noted, conversion to suite metering involves moving from an 'included within rent' arrangement to a 'direct tenant payment' model, thus requiring a commensurate rent reduction for the tenant. This sub-section sets out how that rent reduction is calculated. There are several ways of doing this, some varying with the circumstances of the situation.

The following definitions apply for all the calculation methods discussed below [SMAUC Reg 4(1,2)]:

• "electricity consumption costs" means the amount set out in an electricity bill under the heading "Your Electricity Costs", sub-heading "Electricity". In the case of a single unit where the bill is not available, this amount shall be as directly advised by the electricity or suite meter provider;
  
  
• "additional charges and taxes", with respect to a single unit, means the estimated non-consumption charges to be made after the change to 'direct tenant payment', including electricity delivery charges, "regulatory charges, debt retirement charges, billing fees and other administrative charges and all applicable taxes" - but excluding "any one-time set-up fees and any penalties or charges related to late payment".

Note:
While RTA s.137(6) makes allowance, the terms of which can be articulated in the Regulations, for circumstances and procedures where a tenant may apply for 'adjustment' of a rent reduction and any corresponding rebate due, SMAUC Reg s.7 expressly states that - for the time being at least - no such circumstances exist. It seems that RTA 137(6) was just put in place to make provisions for adjustment of rent reductions legislatively 'easier' should they be required in future. At that time SMAUC Reg 7 can be amended to set out those circumstances and procedures.

. When Rent Reduction to be Effective

The first rule is that the rent reduction must take place on or before the commencement of the rental period in which the change to 'direct tenant payment' is to take place (in the vast majority of cases this will be the beginning of the month of the changeover). So for example if the changeover is scheduled to take place on the 10th of April, the rent reduction must take effect 01 April or earlier [SMAUC Reg s.4(3)1].

The wording of this provision is ambiguous as to what happens in the case of delay in the actual changeover with the electricity supplier. However, the phrasing: "the day on which ... is to be terminated" suggests to me that inadvertent delay will not justify a delay in the rent reduction. Landlords however will no doubt have a differing view and there is injustice in the result, so the matter may have to be ruled upon by the Board. Fault of the parties for the delay would no doubt be a issue of contention in such a proceeding.

. Calculation Options Where Electricity is Not Primary Form of Unit Heating

In this case where electricity is not the primary form of heating the unit, then the RTA sets out two methods or calculating the rent reduction: what I call the 'bill averaging' and the 'square footage' methods. The choice of which option to use will ultimately be up to the landlord (subject to tenant consent), as follows [RTA 137(3); SMAUC Reg s.4(3)2], but 'bill averaging' seems best suited when a LL has only a small number of unrelated units, while the 'square footage' is best suited for large buildings with numerous units of within them.

Important Note:
While the LL has the initial option as to which method to use, they are generally stuck with the first method that they opt for - with one exception. The exception is that - with respect to the units in one residential complex - the LL may switch once only from the 'square footage method' to the 'bill averaging' method. Once they do this however they may not switch back again to the 'square footage' method [SMAUC Reg 4(3)4,5]. If the LL tries to disregard this limitation, they can be 'punished' by having the method which produces the greatest rent reduction applied against them [SMAUC Reg 4(3)6].

Now to explain the first of these methods: 'bill-averaging'. As noted, the 'bill averaging' method [SMAUC Reg s.4(4)], may be best suited for single rental units such as detached residential homes. Basically (subject to the below specifics), it takes the known electrical consumption cost for the most recent preceding 12 months, adds to this an estimate of the cost for 'additional charges and taxes' for the following 12 months, and then uses the monthly average of those costs as the amount of the rent reduction.

That general rule is elaborated by the following specifics:

• the date at which the 12-months 'before' and 'after' are counted is the date that the LL provides the tenant with the information as to the amount of the rent reduction - ie. the date of delivery of the form "Tenant Agreement to Pay Directly for Electricity Costs" (call this the "determination date");
  
  
• if the unit was vacant in any of the 12-months preceding the determination date, then the electrical consumption cost for the preceding 12-months is determined by extrapolating the monthly cost for the months in which the unit was occupied to the months of vacancy. For example, if the unit was vacant for three months, take the monthly consumption average for the nine months of occupancy, and extent that to the three months of vacancy.;
  
  
• the "additional charges and taxes" ('charges') costs figure is to be estimated in light of the electrical consumption for the prior 12 months, except only that in the case that the unit was vacant during some of those months such costs shall be extrapolated from the monthly consumption for the months in which the unit was occupied to the months of vacancy (this Reg calls the 'notional consumption').
  
  Because there is no prior charge history from the time when electricity was 'included in rent', the estimate of the amount of these future 'additional charge and taxes' must necessarily be based on past electricity consumption. That consumption, when plugged into current rules and policies for these charges, is what determines these charge amount estimates.
  
  This particular provision will no doubt be the most challenging for landlords engaged in this process, and it is one of the more extreme examples of micro-managing in Ontario regulatory law for small scale economic ventures. However, the amounts here are so relatively small and the provisions so confusing that I think it safe to say that mistakes in the calculation will rarely never be challenged in litigation before the L&T Board. The overall scheme is a glaring example of how out of touch modern regulatory law is with the limited capacities of small enterprises, who cannot afford the professional accounting and legal assistance required to properly administer these rules.

Now to explain the 'square footage' method, which may be best suited for larger residential complexes (usually, one or more buildings) [SMAUC s.4(6)]. This method first requires a professional engineer to isolate out the electricity consumption cost (in dollars) and the electricity consumption (ie. volume) of the complex that is attributable to the residential units only for the most recent 12 month period. These two figures (cost and volume) are then apportioned to each unit on a square footage basis (by determining the fraction of the residential rental space that any particular unit is of the whole residential area) and then multiplied by the totals for the whole complex. The electricity consumption (ie. volume) figure for the unit is then used to estimate the 'charges and taxes' (in dollars) that are likely to be charged over the next 12 months. That 'charges and taxes' estimate (now a cost figure) is then added to the electricity consumption costs calculated for the prior 12 months for the unit. That sum, when divided by 12 (months) is the rent reduction figure for the particular unit beign considered.

This rule is elaborated by the following specifics:

• the date at which the 12-months 'before' and 'after' are counted is the date that the LL provides the tenant with the information as to the amount of the rent reduction - ie. the date of delivery of the form "Tenant Agreement to Pay Directly for Electricity Costs" (the "determination date");
  
  
• unlike the 'bill averaging' method (described above), this method disregards any periods of vacancy amongst the units.

. Calculation Where Electricity is the Primary Form of Unit Heating

The method used in this case is very similar to the 'bill averaging' method described above (where electricity is not the primary form of heat), but it excludes from consideration the electricity used for heat completely [SMAUC Reg 4(7,8)].

Basically (subject to the below specifics), this method it takes the known non-heat electrical consumption cost for the most recent preceding 12 months, adds to this an estimate of the cost for 'additional charges and taxes' for non-heat consumption for the future 12 months, and then uses the monthly average of those costs as the amount of the rent reduction.

That general rule is elaborated by the following specifics:

• the date at which the 12-months 'before' and 'after' are counted is the date that the LL provides the tenant with the information as to the amount of the rent reduction - ie. the date of delivery of the form "Tenant Agreement to Pay Directly for Electricity Costs" (the "determination date");
  
  
• if the unit was vacant in any of the 12-months preceding the determination date, then the electrical consumption cost for the preceding 12-months is determined by extrapolating the monthly cost for the months in which the unit was occupied to the months of vacancy. For example, if the unit was vacant for three months, take the monthly consumption average for the nine months of occupancy, and extend that to the three months of vacancy.;
  
  
• the "additional charges and taxes" is to be estimated in light of the electrical consumption for the prior 12 months, except that in the case that the unit was vacant during some of those months such costs shall be extrapolated from the monthly consumption for the months in which the unit was occupied to the months of vacancy (this Reg calls the 'notional consumption').
  
  Because there is no prior charge history with respect to these future 'additional charge and tax' amounts, their amount must necessarily be based on past electricity consumption. That consumption, when plugged into current rules and policies for these charges, is what determines these estimates.

. Exemptions from Rent Reduction Requirements

Most rental units that are either government-owned or that were created or converted into public or rent-geared-to-income (RGI) housing under a government program are exempt from the rent reduction duties imposed under the electricity suite meter rules.

These exemptions are complex, as they reflect the complex and intricate history of the development and operation of public housing at all three levels or government and in joint public-private ventures. Tenants to whom these exemptions may apply must trace the past history and present status of their housing provider carefully to see if the exemption applies, but for most tenants in 'public housing' the answer will be that it does.

The following rental units are exempt from these rent reduction rules [SMAUC Reg 19]:

• those owned, operated or administered by on on behalf of the Ontario Mortgage and Housing Corporation (OMHC), Canada or agents of either of them, unless the tenant pays rent to a party other than any of them,
  
  
• those in a designated housing project as defined in the Housing Services Act, 2011 that is owned, operated or managed by a service manager or local housing corporation as defined in that Act;
  
  
• those in a non-profit housing project or any other housing that was developed or acquired under a federal, provincial or municipal program that is prescribed for the purposes of paragraph 3 of subsection 7 (1) of the RTA, and is presently operated under the Housing Services Act, 2011;
  
  
• those that are non-member units in a non-profit housing co-operative;
  
  
• those where the tenant pays RGI rent due to public funding;
  
  
• those developed or acquired, and that continue to operate, under the Rural and Native Rental Housing Program established under the National Housing Act (Canada); and
  
  
• those developed or acquired under any of the following programs
  
  - Canada-Ontario Affordable Housing Program - Rental and Supportive Housing;
  
  - Canada-Ontario Affordable Housing Program - Northern Housing;
  
  - Residential Rehabilitation Assistance Program;
  
  - Supporting Communities Partnership Initiative; and
  
  - Municipal capital facility by-laws for housing or other council-approved municipal housing programs;
  
  if all of the following circumstances apply:
  
  - the unit is subject of a housing services agreement between the LL and either a municipality or its agent, a municipally-run non-profit housing corporation, or a "local housing corporation" or a "service manager" as defined in the Housing Services Act, 2011;
  
  - the unit is a subsidized unit developed or acquired under any of the above-listed programs and subject to a housing services agreement referred to immediately above, which agreement the tenant has received notice of in their tenancy agreement (for post-31 Jan 2007 agreements) or otherwise in writing (for agreements on and before 31 Jan 2007); and
  
  - at the time the tenancy agreement was entered into, the tenant was on or was eligible to be on, a social housing waiting list.

(f) No In-Force Provision for Revision of Rent Reductions

While the RTA has a provision that, if exercised by the passing of an appropriate regulation, would allow for the 'revising' of rent reductions [RTA s.137(6)], the existing regulation (which could in future set out the mechanics of such a revision) has expressly ruled them out, at least for the time being [SMAUC Reg s.7]. If such a procedure is required in future the Regulation would have to be amended.

(g) deleted

(h) Landlord Duties Re Appliances After Conversion

After a conversion has been made to suite metering and a change to 'direct tenant payment' of electricity, the law places a burden on landlords of ensuring that [RTA 137(9), Reg 394/10, s.10,11]:

• any refrigerator supplied by the landlord under the tenancy agreement has been manufactured on or after 01 January, 1994, although where the tenant has been paying electricity directly since 13 October 2010 (either under a suite meter program or otherwise) then the landlord has until 01 January 2013 to comply with this requirement;
  
  
• any replacement refrigerator must have been manufactured on or after 31 December, 2002.

(i) Tenant Application to Board to Determine Suite Meter Rules Compliance

. Overview

General procedures for Board applications are set out in Ch.13 "General Board Procedures". The provisions discussed here are specific ones relating to enforcing the suite meter rules discussed in this section.

. Ancillary Non-Compliance

Where a tenant or former tenant feels that their landlord has breached any of the below-listed suite-meter duties they may make application to the Board - within the indicated time frame - to have the issue determined [RTA 137(11); Reg 394/10, s.12]:

• interruption of services [s.8(c) above; RTA 137(2)] (application must be made within one year after first alleged occurence), and
  
  
• energy standards compliance [s.8(h) above; RTA 137(9,10)] (no time limitation for bringing application).

If the Board, on such an application, determines that such a breach has been made out then it may [RTA 137(12)]:

• authorize the tenant in making past or future repair, replacement or work - with it's cost to be paid by the landlord to the tenant;
  
  
• order the landlord to do specific repair, replacement or work within a specific time;
  
  
• order an abatement of rent;
  
  
• order a rent reduction, with appropriate rebate; and/or
  
  
• "make any other order that it considers appropriate."

The distinction between an 'abatement' of rent and a 'rent reduction' is that an abatement is a specific temporary reduction in rent (for example, $50 for six months) while a reduction is (subject to other normal factors that can increase rent into the future) a permanent reduction of the legal rent. Rent reduction orders, if made retroactive, will also attract a one-time rent rebate order, to 'catch-up' on the back-dated rent reduction order.

. Basic Non-Compliance

Further, where the Board on such an application finds that the landlord has, after a conversion to suite metering, illegally changed the tenancy agreement to a 'direct tenant payment' arrangement, then the Board may additionally order any or all of the following [RTA 137(13)]:

• termination of the tenancy [ancillary to this the Board may also order eviction: RTA 137(14)]; and
  
  
• that the landlord assume the cost of electricity, in which case the Board will declare the new legal rent.

Such non-compliance may take several forms, including [see ss.8(b,d,e) above; RTA 137(3-5)]:

• changing to a 'tenant direct payment' arrangement without proper consent of the tenant;
  
  
• changing to a 'tenant direct payment' arrangement without giving the tenant proper prior notice of such change;
  
  
• failure to provide the proper rent reduction with respect to the electricity cost;
  
  
• failure to provide the tenant with the information required before such change;
  
  
• where electricity is the primary source of heating for the unit, the landlord terminates their obligation to supply heating electricity, or terminates their obligation to supply electricity where heat and other electricity are not separately metered [SMAUC Reg s.6].

Any such application must be made within one year after the occurence of the first alleged breach [Reg 394/10, s.12].

(j) Ancillary Suite Meter Changes to Other RTA Provisions

. Overview

Once suite meter programs are installed, and in the circumstances outlined below, some other RTA rules are modified (as follows). These modifications are integrated in the discussions of those other topics in the relevant chapters of this Isthatlegal.ca Residential Tenancies Law (Ontario) Legal Guide, which are referenced below [RTA 137(15-17]:

. Above-Guideline Rent Increases

The suite meter amendments, brought into law on 01 January 2011, contain changes to the rights of landlords to obtain above-guideline increases (AGI) in rent in applications before the Landlord and Tenant Board (which are required for AGIs). These changes effect the ability of landlords to claim AGIs based on "eligible capital expenditures" (ECEs), the category of expenses used to justify most AGIs (AGIs are generally considered in Ch.11). More specifically, any capital expenditure otherwise eligible under the ECE rules is disallowed (and thus may not be used to ground an AGI increase) if, with respect to the capital expenditure [RTA 137(15)] all of the following conditions are met:

• "a meter or a suite meter was installed in respect of a residential complex before the capital expenditure was made";
  
  
• "the capital expenditure failed to promote the conservation of electricity or the more efficient use of electricity"; and
  
  
• there was an reasonable alternative expenditure that achieved the same purpose of the capital expenditure that was made, but that did promote "the conservation of electricity or the more efficient use of electricity".

Basically this rule means that, after a suite meter program has been put in place, the LL has a burden of electing - where reasonable, and where the practical option exists - for a choice of capital expenditures which promotes conservation and the efficient use of electricity over one that doesn't.

This provision offer tenants a 'defence' against ECE-based AGI increases that rely on capital expenditures that unnecessarily increase electricity consumption, at least to the extent of those 'offending' expenses. Tenants may now perform what amounts to an 'electricity conservation' audit with respect to the capital work done to see if the work done had a positive electricity conservation effect wherever possible. If it doesn't, tenants may argue that the expense should be disallowed, and any AGI increase defeated or reduced accordingly. While most capital expenditures that fall to be considered under this rule will be ones that relate directly to electrical work, the rule is broad enough to capture non-electrical work done where it otherwise has an impact on electricity consumption and conservation. This would be in situations where method of doing the work (as distinct from the result of the work) was unnecessarily electricity-intense.

RTA 137(15), which embodies this rule, has an allowance for the creation of exceptions to it within the Regulations, but at the date of writing no such exceptions have been created.

. Illegal Charges

Where a 'tenant direct payment' arrangement is brought about as a result of a suite meter conversion, RTA provisions against illegal charges, and for the making of an application to the Board to recover such illegal charges, do not apply to "charges, fees or security deposits" (including charges for electricity) which the tenant faces respecting the supply of electricity [RTA s.137(16)]. Further, the services provided in consideration for such charges do not fall within the legal definition of "rent".

These variations are simply to 'legalize' charges, fees and security deposits charged by an electricity supplier directly to the tenant, as they are necessarily incidental to the shift to 'tenant direct payment'. The rules which such charges are excepted from are discussed in Ch.10, s.5: "Rent Fundamentals: Non-Rent Charges and Security Desposits" and Ch.12, s.7: "Other Rent Proceedings: General Application to Recover Illegally-Paid Monies".

This provision may be troublesome in future for two reasons:

• firstly, only landlords are subject to the prohibitions against illegal charges in the first place, so there is no need to except electricity providers from making these electricity-related charges in the first place;
  
  
• secondly, the provision lacks any requirement that the electricity-related charge be made to by, and/or paid to, the electricity provider (the conditioning phrasing being only that the charge etc is made "for the supply of electricity"). As such some landlords may attempt to fabricate additional charges for the provision of electrical infrastructure (ie. wiring, etc), which - arguably - exists "for the supply of electricity", and which (they would argue) are excepted by this provision.

. Where Landlord's Vital Services Duty Excepted

As is discussed in Ch.3, s.4: "Tenant Rights: Repair, Vital Services and Maintenance", a landlord has a duty not to deliberately interfere with the reasonable supply of 'vital services' to the rental unit [which includes electricity: RTA s.2(1), 21(1)]. However this duty is excepted where a 'tenant direct payment' arrangement is brought about as a result of a suite meter conversion, and where a landlord, their agent or a suite meter provider is attempting to exercise their rights under these suite meter rules or the right to terminate electrical services when an account is overdue [RTA 137(17); Electricity Act, s.31].

Neither is such an interruption a breach of the landlord's duty not to interfere with the tenant's reasonable enjoyment of the premises [RTA 22], nor a breach of the similar 'reasonable enjoyment' aspect of the related offence provision [RTA 235] (note that the 'harassment' aspect of RTA 235 is not excepted).

Note:
These provisions puzzle me as I don't see how a landlord could run afoul of EA s.31 unless they are also incidentally a "suite meter provider", nor how a suite meter provider could run afoul of the landlord's s.21 non-interference duties unless they were also incidentally a landlord. Perhaps they are meant to 'legalize' either parties in their co-operation with the assertion of the other's rights in these regards, for instance by a landlord allowing a suite meter provider access to the premises for the purposes of terminating electrical service.

I note that at the date of writing EA s.31 is due to be repealed and replaced, with the new definition of "suite meter provider" drawn from Part III of the Energy Consumer Protection Act (ECPA).

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