6.9.3 CAUTION: Changed Energy Use Not Proportionate to Resulting Change in Cost

A. A complicating factor when estimating the utility cost results of repairs and alterations, or forecasting utility costs for a new development, is the variability of pricing methods and fixed and variable costs used by utility providers. For example, many providers charge a minimum monthly amount regardless of usage, and other usage-based or flat-fee capital cost surcharges, and usage-based price schedules may include bundled service discounts, volume discounts or surcharges, multiple pricing tiers and peak demand period pricing. It is the responsibility of the energy professional to investigate and determine the appropriate average price per unit of use for each utility used at a property. Therefore, changes in utility consumption often DO NOT result in proportional changes in costs. It is the Lender’s responsibility to assure that appropriate expertise and attention are given to estimating utility prices.

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Chapter 7 Valuation & Market Analysis 7.1 Introduction

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