Have you ever heard the old adage, “Sell in May and go away”? It’s a popular one among stock traders since prices often dip during the summer months, but it’s not a rule to live by, especially when it comes to energy purchasing. We prefer the saying, “Prep in October, before winter gets closer”. Now, yes, we did make that up, but for good reason!
Winter weather can impact multifamily real estate owners on so many levels. From site-level crises like freezing pipes (and residents) to portfolio-level energy costs, the only way to manage the changing seasons is to plan ahead, early and often. For tips on how to prepare your actual buildings for winter weather, check out our checklist. For energy purchasing, getting ahead of the weather is key, however, that means your strategy heavily depends on forecasting, historical data, and taking action.
In the last few years, volatile winter weather has rocked New York City and national energy markets on a number of, often cleverly-branded, occasions. In 2014, Con Edison electric supply prices climbed to $.22/kWh after a string of single digit degree days – popularly known as the northeast’s Polar Vortex. In this past, extremely mild winter, Con Edison prices dipped to $.05/kWh. Owners who allow the price they pay to float with the market are susceptible to unexpected swings like this, which is why a pre-season contract often makes the most sense.
Heading into the upcoming winter, energy market prices are looking unstable. Due to an extremely hot summer in 2016, prices are no longer trending downward. Natural gas production has begun to level off and is expected to fall short of consumption in 2017, leading to a deficit in the storage system.. As always, prices are heavily influenced by fluctuations in weather, available supply, and expected demand. In the winter, extremely cold temperatures will cause the use of heaters to rise, drain natural gas supply and, inevitably, prices will go up. In turn, warm weather during the winter months will preserve natural gas and keep prices low. If only we really knew what to expect from Mother Nature!
Accuweather and the Farmers Almanac predict relative warmth in the South and Southwest but a colder-than-usual stretch in the Plains and Northeast.
The NOAA predicts warmer than usual weather across the map.
Ultimately, how you decide to budget and strategize for winter energy spending depends on how much risk you’re willing to take and able to handle. If you are more conservative and want to make sure that your budgets are set and secure each year, locking in a fixed rate for your energy supply before the winter would be your best option. This strategy is very typical in supportive or affordable housing and Co-ops or condos. If you have more ability to take on risk, and have enjoyed the recent low rates in 2015 and 2016, there are a variety of flexible and aggressive strategies to implement that can help you get the lowest rates possible.
No matter which approach you take to energy procurement for your buildings, one thing is certain: now is the time to act.
As leaves change and summer temperatures begin to wane, you can get away with putting off unpacking your winter coat, but for building owners and operators, now is the time to start transitioning buildings from cooling to heating season. With new September leases settling in, it’s more important than ever to make this transition smooth and successful. But what exactly should your site staff be doing to prepare? To ease the transition, our engineers are here to help. Below is a checklist outlining the most important measures to take as we head into the next season.
Cooling System Shut Down
- If laying up equipment for the winter (summer boilers, chillers, etc.) decide on a dry or wet lay-up. For a wet lay-up, make sure the water is treated properly to prevent corrosion during the off-season.
- Drain cooling towers and check for water in low spots. If they run year-round, check operation of the basin heaters and tower bypass valve.
- If shutting down circulating pumps (such as chilled water) that have variable speed drives, consider running pumps at minimum speed. In some systems – particularly ones with old pipes, many terminal units, and clog-prone terminal unit control valves – this can prevent the strainer plugging and valve clogging that would have occurred when the pumps were restarted.
- Seasonal changeover – many systems require manual valve position changes as part of a seasonal switchover. Failing to make these changes properly can result in poor operation or even equipment damage. Does your staff have an up-to-date accurate valve chart? Is there a written procedure and checklist for switchover?
- For any equipment that operates with glycol, check the glycol concentration. Check that glycol feeder supplies are full and feeder equipment is functional.
Heating System Prep
- If boilers have been shut down, have your service contractor fill and start them. If they were running over the summer, they should be cleaned and re-tuned for winter operation at higher firing rates.
- If your boiler is dual-fuel, make sure the oil tank is full at the beginning of the season, so that you have enough oil for a few days of operation during a cold streak.
- Are controls operating in automatic mode at the beginning of the season? Are the setpoints correct? (Do you have documentation of what the correct setpoints are?)
- Check the operation of all heat-trace systems. These are often neglected and abandoned.
- After starting up systems, check that all indicating devices are working. Replace dirty sight-glasses, blown out pressure gauges, and the like.
- If hot water or steam pipes have not had flow during the summer, blow down suction strainers and boiler/s more frequently for the first week or two of operation.
- Check functionality of all outdoor air dampers and freezestats on air handler. Freezestats can be checked with cheap freeze spray. If the stat can’t shut the fan down and outdoor air dampers can’t close, you risk coil freezing and expensive coil damage, not to mention water damage when the iced-up coil thaws.
- Check all piping exposed to freezing temperatures for “dead legs” – sections of piping that have been isolated or bypassed and have no flow in them. These are a freezing risk.
- Check drain lines from any condensing combustion equipment, especially if it drains outside. Combustion condensate lines will stay open in moderately cold weather and then freeze and shut boilers down when temperatures are at their coldest. In freezing weather, building staff should be checking this every day.
These are just a few of the most crucial steps to take before it gets cold to ensure heating systems perform optimally when they’re needed most. We encourage building owners to talk with their site staff to ensure these steps are being taken and incorporate them into standard procedures and written documentation for seasonal changeover. Consistent and reliable operations and maintenance is the backbone of healthy buildings, happy staff and residents and minimal headaches.