Ontario Condo Law Blog : Toronto Condominium Lawyer & Attorney : Gardiner Miller Arnold Law Firm : Ontario, Ottawa, Hamilton, Kitchener

For one thing, owners are acquiring electric vehicles without first verifying that their condominium can actually accommodate their electricity needs. If the required service turns out to be unavailable, the vehicle owner is faced with a difficult situation and few options. Informing the board just prior to taking delivery of an EV is not sufficient because receiving board approval is not assured. The owner must, prior to acquiring an electric vehicle, determine whether the necessary service is available and whether it can be used for the specific purpose of charging a vehicle.

Next, condo boards must carefully consider an owner’s request, perform a delicate balancing act of several relevant factors and then provide a reasoned answer. Boards have a duty to ensure that owners have reasonable use of the condominium premises and services while promoting safety and preventing unreasonable interference with other owners’ use of the common elements and services. Rules governing the use of common elements bad and services must be reasonable.

Boards must also prudently manage the finances and monitor expenses being shared by all the owners. As we have said before, owners who wish to take advantage of additional services should be prepared to pay the freight. After all, the cost of the utility is a significant issue, with rates on the rise and the fact that electric vehicle ownership will likely increase over time. What might be a dollar a day right now can exponentially grow, driving up common expenses fees.

Cost, however, is not the only issue. Owners must keep in mind that condo boards must also consider technical and engineering aspects, safety, aesthetics, impact on other occupants and fairness to the unit owners as a whole. The board must analyze, weigh and balance various issues, competing interests and future implications. Unit owners often do not appreciate the numerous factors that boards consider when making decisions and are consequently surprised and frustrated when they do not receive a positive answer.

Complicating this scenario is the fact that many condominiums are not properly equipped to provide sufficient electrical service to all parking spaces. Indeed, the Ottawa unit owner in question must park in the visitor space in order to use the single plug that has sufficient voltage to run his charger. Where do visitors park? What happens if someone else wishes to charge an electric vehicle? The issues in this story therefore run deeper than just cost.

The situation at each condominium will be different, owing to their layouts, technical capabilities and the wishes of the unit owners as a collective. Each condominium must have a frank discussion as a community, consider emerging technologies and practices and then devise its own solution. Not everyone will be happy with the outcome, but compromise is a hallmark of condo living.

Join the debate. Watch the television piece here, then listen to the radio interview here and then share your thoughts below.

The most obvious inaccuracies deal with how electricity is billed and, second, how such costs are allocated and shared. Gorrie says:

As with all older condos, the electricity bill covers the entire building, including private and common areas. The expense is apportioned among the units according to their floor area.

So, meeting participants argued, even if the owner of a battery-powered car could plug into a maintenance outlet — which would be difficult to arrange — it would be unfair.

First: While most older buildings in the GTA do not submeter electricity at present and simply treat that utility as a common expense to be shared by all owners, an increasing number of condominiums are seriously looking at submetering and some have already taken the plunge. Condominium boards currently have the legal ability to implement electrical submetering without owner approval, thanks to government legislation intended to help boards download the costs to unit owners, which more accurately allocates the costs and encourages conservation. Those boards that put the submetering issue to a vote often encounter stiff resistance, mainly because anecdotal evidence suggests that unit owners pay more for submetered electricity than not, even though their common expenses tend to stabilize as a result of utility costs being downloaded from the condo corporation’s books. We wrote about submetering previously here and here, but the debate on the financial impact of submetering is left to another day.

Second: Common expenses are not necessarily allocated in proportion to their floor area as Gorrie suggests, but they frequently are. Legally, common expenses are allocated in the proportions set out in the condominium declaration, which document is drafted by the developer, and can reflect any formula the developer chooses.

The next thing in Gorrie’s article worth addressing is the strength of the condo’s argument against providing free electricity and charging facilities, described as follows:

As the president’s letter puts it: “Anyone who uses one of the electrical outlets in our garage to power or recharge a vehicle is using power paid for by all unit owners. This is comparable to having the gasoline used in one’s car paid for by all unit owners as part of their monthly condominium assessment.

“Condominiums currently do not supply gas for residents’ vehicles and do not provide a location for their vehicles to get gas.”

This argument isn’t iron-clad: Residents with low electricity consumption already subsidize energy-hog neighbours who keep lights blazing, crank up the air conditioning with the balcony door open, and spend hours watching a 50-inch plasma TV. Still, it’s potent.

The gasoline analogy seems suitable enough. As for the argument that electricity for car charging should be treated as a common expense because owners are already subsidizing their less-efficient neighbours, the reality is that no condominium board in its right mind can or should permit unrestricted use of electricity for charging electric cars or anything else outside the boundaries of a dwelling unit. The Ontario government estimates that the cost of electricity will increase by 46% over the next five years but has imposed a 10% artificial reduction in rates over that same period, suggesting that taxpayers and ratepayers will face a massive increase eventually. In these circumstances, it’s quite likely that many condo boards will implement submetering, either with or without owner approval. To offer free electricity for vehicle charging when electricity rates are rapidly increasing is more than unfair, it’s political and financial suicide.

A third problem in the article is the fact that people who want the extra service or facility aren’t receptive to the concept of paying for it. Gorrie writes:

A suggestion that those with charging stations pay a surcharge to cover the approximate cost didn’t generate enthusiasm.

Neither did the idea that individual residents could pay to have charging stations installed in their parking spaces, even though, since the devices can bill users individually, metering needn’t be a problem.

In most situations, the debate would end here. Few condominiums can or would offer increased or enhanced services or facilities without a plan to fund the expense and unit owners typically have no business expecting any such increase or enhancement without paying the cost in one way or another. To give electric car owners a free ride in this respect would create a slippery slope but, unfortunately, there are no easy answers.

Other than the issues raised above, here are some additional considerations that must be factored in to the discussion.

First: Modifications to common elements must be made in order to wire the garage for electricity. If it is sufficiently expensive, or if the board chooses to treat the project as substantial and put the issue to the owners, a positive vote of 2/3 of the unit owners would be required, as per Condo Act, section 97(3).

Second: Some solution for submetering would need to be found. As stated above, condominiums providing free electricity makes no sense. That said, there is no legal impediment to a condominium full of like-minded residents to vote in favour of treating both the project and the cost of electricity as a common expense. It’s their money!

Third: Parking spaces are not all the same. In some buildings, the spaces are exclusive use common elements and their allocation is prescribed in the condo declaration. In others, the spaces are individual units that are privately owned. The possibility of reallocating spaces so that owners of electric cars can park near common charging stations will depend on the legal status of the space. The allocation of spaces may be changed with consent or a large majority vote, but there is no legal means to compel the legal owner of parking unit to switch spaces with anybody else [unless, of course, you’re the Quebec Human Rights Commission].

Fourth: In those cases where the parking spaces are legal units and not common elements, owners wishing to install wiring or a charging station in their parking unit would likely be required to enter into alteration agreements under section 98 of the Condo Act [to the extent that the modification requires alteration to surrounding common elements.] These agreements address who is responsible for maintaining, repairing, and insuring any improvements made to units.

There will doubtlessly be other issues that arise and will be dealt with by trial and error.

From Gorrie’s article, it is clear that condo boards are already faced with requests by unit owners to devise a solution for charging electric cars. The frequency and volume of these requests will probably increase. Additionally, older condominiums that are moving to smart metering might seriously consider wiring their parking garages and installing facilities for electric car recharging, which might one day be a valuable feature that enhances property value. In these circumstances, a wise condo board might start considering the issue now. Here are some steps that boards and unit owners can take in their own buildings today to get the ball rolling:

• Take an informal poll of owners to determine the owners’ level of interest, but recognize that the interest will surely grow over time.

• Strike a committee to start looking at the legal, engineering and other applicable issues and provide a report or discussion paper that can form the basis of a plan. Ask interested unit owners to get involved to share their ideas and the workload.

• Focus on whether the project can be implemented in stages, such that the garage is wired in one or more phases, and that individual parking spaces be hooked up floor-by-floor or on some other basis. This allows costs to be spread out over time.

• Talk to the service providers and check out emerging technologies for both recharging stations and submetering.

• Get quotes on required materials and services.

• Consider whether a revenue-generating opportunity exists for the condo corporation.

• Get legal advice as to whether owner approval is required for the project and whether owner alteration agreements must be entered into.

• Once the scope and cost of the project are clear, devise a budget to fund the project over several months or years to gather the funds necessary to avoid the need for sharp increases in common expenses.

• Ask your property management firm or local chapter of Canadian Condominium Institute about whether other local condominiums have undertaken projects of this sort successfully.

• If your corporation has success or finds an ingenious solution, share your findings and results with others.

For now, unit owners eager to buy an electric car should be sure that charging facilities will be readily available at their condominium. If not, owners will need to be patient since developing such facilities are lengthy, complicated and costly projects and, further, most condo boards would likely not proceed until there is a sizeable number of owners who demand the service and approve a plan to pay for its installation and operation.

Owners should also accept the fact that they must pay for the electricity they use in the garage, regardless of whether or not their dwelling units are submetered. No pay, no plug.

We’ll be watching this issue with interest and look forward to reading and writing more about it in the future. Share your thoughts with us anytime by posting a comment below.

The Board found that, in addition to breaching the statutory requirement to provide electrical service to buildings within the local jurisdiction, Toronto Hydro’s refusal to provide the hook-ups effectively precludes condominium corporations or developers from the option of using services of licensed smart sub-meter providers.

This highly anti-competitive behaviour is surprising, especially since nothing in Toronto Hydro’s license grants it the type of monopoly it was attempting to exercise by refusing to hook up new condo projects. Toronto Hydro raised a number of justifications for its conduct, including that the public interest is better served by this policy, but the Board rejected this, finding that these policies are actually contrary to the public interest.

Toronto Hydro also argued that its anti-competitive policies furthered the energy-conservation objectives of the Green Energy Act. The Board did not agree with the concept that the environmental imperative should trump the necessity to maintain competition in the energy market.

The Board will hear arguments and then issue a remedy (or “sentence”) in the coming weeks.  Update:  A Compliance Order was issued on February 22, 2010.  See here (pdf).

The decision serves as a reminder that energy consumers have the ability to complain to the regulator and seek recourse when faced with strong-arm tactics and anti-competitive behaviour by utilities and service providers. In this case, the condo developers were faced with a brick wall at Toronto Hydro and they pushed back, taking this matter to the OEB.

Condominium boards should resist the pressure to hastily enter into unfavourable contracts for the installation of sub-meters, be it with their local public utility or with private sector providers. Boards need to get legal advice, call the OEB if faced with questionable or unethical business practices, and take the necessary time to consider the various options for proceeding with a sub-metering project and the ramifications of each one.

Rather then stand by while landlords carry out all of this illegal work, the OEB’s recent ruling now authorizes landlords to install smart sub-meters in rental apartment buildings and industrial, commercial or office buildings, but landlords must meet strict conditions before they can bill the tenants for the electricity they consume.

The conditions include obtaining and providing tenants with an energy audit and then obtaining the tenant’s express written consent to the billing. Another condition is that landlords must follow the Smart Sub-Metering Code that was drafted specifically for situations where condominium corporations arrange for a smart sub-metering provider to install a smart sub-metering system and operate the billing service and collect the money from unit owners. This Code, enacted in 2008 with precious little input from the condominium industry, is available here. The August 2009 ruling by the OEB adapted this Code for use by landlords by making a few small changes, such as replacing the words “condominium corporation” with “landlord” (or its OEB equivalent, “distributor”).

Little has been said by condominium lawyers or managers about the OEB’s Smart Sub-Metering Code, presumably because it has hardly been used, but it seems clear that it will soon be given a vigorous workout by the residential landlords who are chomping at the bit to start downloading electricity costs to tenants. The result might be that some of the kinks in this Code are worked out before many condominium corporations find themselves having to deal with it. That may be positive news.

While nothing else in this recent decision of the OEB directly affects condominium corporations, some of the commentary is educational and interesting, especially the discussion on the differences in the smart metering legislation as between residential tenancy scenarios on the one hand and condominium complexes on the other. In setting out the current context of smart sub-metering, the OEB said the following:

In the residential complex setting the implementation of smart sub-meters is intended to at once make tenants directly responsible for their actual usage, while enabling them to control and constrain their usage to control their costs. This element of direct control and attendant responsibility for electricity usage is key to the government's smart metering strategy. It is the government's stated intention to drive overall conservation and energy efficiency through individual responsibility incented by pricing structures. It is for this reason that the government announced that smart meters will be installed in every home in the province by the end of 2010. The government explicitly authorized licensed distributors to install smart meters through Ontario Regulation 427/06 made under the Electricity Act. That process for single-family residential dwellings is well underway, and in some communities in Ontario has been completed. It is expected that the government's goal of province wide installation of smart meters will be achieved soon, and that time-of-use rates, necessary to exploit the full value of smart meters and smart sub-meters, will be in place in the near term. The Board has noted the government’s announcement on May 14, 2009 which stated that an estimated 3.6 million customers will be on time-of-use rates by June 2011.

The government also explicitly authorized the installation of smart meters or smart sub-metering systems in condominium settings through the adoption of Ontario Regulation 442/07 made under the Electricity Act. The regulatory regime established by the government to achieve this purpose involved empowering the condominium corporation or the developer to enter into smart metering or smart sub-metering implementation arrangements.

In the condominium setting, the condominium corporation has a fiduciary duty to the unit holders and is unequivocally accountable to the occupants of the respective buildings. There is no parallel to the condominium corporation in the residential complex setting. Each tenant in a residential complex has a separate and distinct contractual relationship with the landlord, and there is no corporate entity that has the legal obligation to represent the interests of the respective apartment unit tenants.

Implementation of smart sub-metering in the residential tenancy environment is a very different exercise than in the condominium context. That may explain why the government has not yet put in place parallel legislative instruments to authorize the program for residential complexes.

While interesting, these comments about the fiduciary duty of condominium corporations are somewhat puzzling, given the fact that section 53.17 of the Electricity Act, 1998 and O.Reg 442/07 appear to permit condominium corporations to go ahead and install smart sub-metering systems and commence third party billing of unit owners, all without the need for approval by unit owners. This is, by any stretch, a radical departure from the provisions in the Condominium Act, 1998 that require approval by a large proportion of owners for changes to services and, where required, amending the condominium declaration as to whether expenses are common expenses or shall be paid by the individual owners. While this remarkable power of the board of directors can, in some cases, be the only difference between financial stability and ruin for many condominiums, some might say that a fundamental democratic principle has fallen victim to the environmental imperative. This, however, is a much larger debate for another day.

The OEB went on to say:

As was pointed out by many tenants in their submissions, a very substantial element of conservation and energy efficiency activity lies exclusively within the power and purview of the landlord. The landlord selects, maintains and installs the appliances used in the units, and is solely responsible for the maintenance of the buildings, including installation of windows, doors and insulation. Typically, the tenant has no control over these key elements, yet the installation of smart sub-meters has the effect of transferring responsibility for electricity charges for the apartment unit from the landlord to the tenant. This is a disconnect between control and cost responsibility.

This observation is not entirely inapplicable to condominium unit owners, who typically cannot modify, maintain or repair the common elements, which often include the insulation, exterior walls, window frames, etc. The “disconnect” referred to by the OEB is a question of fairness that also applies in the case of smart sub-metering in condominiums and must be addressed as part of the decision-making process. Boards of older condominium buildings that impose smart sub-metering without considering the relative energy efficiency of the units may be doing their owners a major disservice and can probably expect a major backlash during the winter months of the first year of individual billing. It is trite to say that installing smart sub-metering cannot succeed without significant communication, consultation and involvement with the owners. This, too, is a topic for another day.

Since it is still very early days for smart sub-metering in condominiums and because there is considerable confusion and understandable reluctance by condominium corporations to “take the plunge” and install this equipment, there have been relatively few lessons learned that could be applied to the regulation of smart sub-metering in rental buildings. It therefore comes as no surprise that the OEB has, with this recent ruling, changed the playing field so that landlords are given access to the legislative infrastructure designed for (but hardly used by) condominium corporations.

The net effect of this ruling is to allow the rental sector to take the lead in smart sub-metering, which should give condominiums a comfortable seat from which to watch what happens and to learn from the growing pains.