Counting every kWh your property uses is important for your NABERS Energy Rating assessment. The more detailed your records, the more accurate your rating will be. Getting a true picture of your energy consumption means including and documenting your after-hours air conditioning (AHAC) service.
The NABERS Preparing for Office Rating Guide is a helpful resource for identifying what basic information to gather. But the guide doesn’t get into the specifics around documentation for AHAC. Documenting AHAC hours can be tricky given they’re usually tracked separately from normal operating hours. For a deeper dive, we recommend the NABERS Energy and Water for Offices Rules v.5.1. Although this resource is as a guide for assessors, it also provides valuable insights for FMs and property managers.
The Rules around AHAC are complex and hard to drudge through, so we’ve done the work for you. Below is a breakdown of the NABERS Rules for documenting AHAC, which will better prepare you for your assessment.
Rated Hours
NABERS assessors calculate the total number of hours per week your building is occupied—your rated hours. Assessors use your rated hours along with your annual kWh usage and other factors to determine your efficiency rating.
To calculate your rated hours, assessors will look at your core hours. These are your normal operating hours per week (e.g., 8 am to 6 pm). Core hours are usually listed within the owner/tenant agreement (OTA), and the assessor will likely use your OTA to help determine these.
To increase accuracy, assessors also include any AHAC hours. Your HVAC system uses energy to produce the AHAC service, so you should count these hours too. Any missing AHAC hours skew your total rated hour count, lowering your NABERS rating. And the impact will be proportionate to the total hours demanded. That is, the more AHAC hours omitted from your rated hours, the more inefficient your property will appear.
AHAC Documentation
The negative impact of omitting AHAC hours is why it’s critical to keep accurate logs of tenant requests. For NABERS, not just any records will do either. Assessors must deem data “acceptable” or else include it in the calculation. The NABERS Rules lists the following types of “acceptable data.”
Tenant Requests
Section 5.3.3.1 of the NABERS Rules addresses AHAC requests and states that “acceptable data” includes:
Logs of AHAC requests by tenants, showing the date and time of each request and the functional space to which it applied; and
Evidence of other AHAC requests, such as correspondence between the tenant and the owner or building manager or information written into the OTA which has been verified to be correct and up-to-date. This evidence must include the date, time and space to which AHAC has been agreed to be applied.
Therefore, an example of acceptable documentation might be an automated entry from an after-hours HVAC app that records date, time, floor and tenant. Unacceptable documentation might be a tenant email listing only the requested date and time. The most important part of accurate documentation is the tenant’s request, so keep this in mind when setting up your request process.
Overlapping Hours
To be considered rated hours, AHAC hours also can’t overlap with your core hours. So you’ll need acceptable documentation showing their separation. Section 8.3.2 of the Rules explains that to include AHAC hours, you must provide:
Evidence that no AHAC has been counted during the Core Hours and during the plant start-up period or the hour before the start of Core Hours if the plant start-up period is unknown;
One thing to note here: NABERS focuses heavily on counting only “comfort condition” hours— times when internal temps are appropriate for occupancy. Assessors assume that comfort conditions are not met during the start-up time for your plant. For that reason, you can’t count any AHAC hours that occur during start-up times for your system. If you can’t provide evidence of the actual run up times for temps, assessors will assume one hour.
Example: Your OTA lists your core hours from “8 a.m. to 6 p.m.” Your normal plant start-up time begins at 7 a.m. to reach comfort conditions. Tenant A requests AHAC from 7 a.m. to 8 a.m. on Wednesday, but your start-up time for Wednesday stays at 7 a.m. (i.e., AHAC and start-up begin at the same time). Since your building isn’t at “comfort conditions” by 7 a.m. on Wednesday, you can’t count that AHAC hour towards your rated hours.
Zones and Functional Spaces
To calculate AHAC hours, NABERS assessors also need to divide your net lettable area (NLA) into functional spaces— specific areas of your building. Functional spaces can be based on tenancy distinctions (i.e., leases) or physical ones (e.g. HVAC zones), but variations often happen. For example, multiple tenants could occupy the same functional space by leasing the same floor. In contrast, a single tenant might occupy separate functional spaces.
Regardless, the goal of defining functional spaces is to group areas with the same periods of occupancy so assessors can calculate the effects of vacancies and different operational hours on your building’s efficiency.
For facilities managers, the important thing to note is that AHAC requests need to reference their correct functional spaces. This is especially important when multiple tenants share the same functional spaces. Accurate records and detailed building schematics are essential, and assessors will use them to calculate your rated hours. To this end, Section 8.3.2 of the Rules requires documentation in the form of:
Drawings and measurements showing AHAC zones for requests serving different zones within a single functional space.
If the NABERS assessor can’t locate detailed areas for different AHAC zones, they will use the smallest area available or else average hours together. Either way, any guesswork will lower the accuracy of your rated hours.
The rules around multiple tenants sharing functional spaces and zones can get quite complex. So, read section 5.3.3 of the NABERS Rules to see what situation fits your properties the most.
Conclusion
The way your NABERS assessor handles your AHAC consumption will depend on several factors. One of those is how they arrive at your core hours. There are several methods for doing this, which depends on what data you make available. The assessor may determine your core hours from your lease. If data is missing, they may need to calculate an average, and when estimates are involved, you can bet they won’t likely benefit your rating. In the end, the key is proper and thorough documentation of your AHAC requests, HVAC zones, and NLA.
If you’re new to after-hours air conditioning (AHAC), you may find it hard getting started drafting a lease or tenancy notice. AHAC is a complex topic, and each property requires a bespoke solution. However, there are a few basic terms and ideas that appear in most agreements regardless of your circumstance or location. While you should always consult a legal professional when drafting leases, the following tips and topics will help get the ball rolling.
Define “AHAC”
To start, make sure you have a clear and unambiguous definition of after-hours AC. Ensuring accuracy and clarity in your leases not only covers you legally, it helps improve tenant satisfaction. Use a term that’s common for your area. In some markets, after-hours service is referred to as “after-hours HVAC” or “overtime HVAC.” Other times a lease may only refer to it as “after-hours air con” or “AHAC” for short. With a little research, you can locate the preferred name for your situation. But regardless of the moniker used, be consistent to avoid confusing your tenants.
Next, your definition needs to set parameters for when AHAC applies. In most situations, it refers to charges incurred by any tenant who operates the air conditioning system outside of normal operating hours. Therefore, your definition must necessarily include an explanation of “normal” operating hours.
List Normal Hours of Operation
the core operating hours for a property are usually stated within the lease, but it’s a good practice to remind tenants in all your communications. Use a simple table like the following that clearly lists times and days for each floor, tenant and/or zone of the property.
Level 2
Mon-Fri
8:00 am — 6:00 pm
Saturday
8:00 am — 1:00 pm
Level 1
Mon-Fri
8:00 am — 6:00 pm
Saturday
8:00 am — 1:00 pm
Ground
Mon-Fri
9:00 am — 5:00 pm
Saturday
9:00 am — 12:00 pm
Example of table listing core operating hours.
By definition, any HVAC usage outside of normal operating hours is considered AHAC and will be charged as such to the requesting tenant. In contrast, you could list a table showing only times that fall inside the AHAC time slots, if this makes it easier to understand.
Remember to mention any specific days outside the scope of operating hours such as holidays. And if you don’t plan to make AHAC available to all parts of your property, then list those excluded areas in your lease and/or communications with tenants.
Explain Fixed Rate Calculation
Explain how you calculated the energy costs (i.e., fixed energy rate)that factored into your after-hours HVAC fee. If it was based on an average energy cost across the entire property for a specific time, then show how you prorated the amount. Maybe your energy provider calculated the hourly cost for you. If so, briefly explain how this process works. If you estimated the hourly energy based on the equipment involved, then list these HVAC assets for the tenant. Such assets might include chillers, AHUs, VAVs and FCUs.
Yes, your tenants are likely to have little interest in how air handling units work. But they will appreciate that you’ve done your due diligence in calculating the actual energy expenses for which you’re charging them. Such reassurance is beneficial when billing issues surface.
Add Excluded Costs
You may also want to list any excluded HVAC equipment or service costs. These can include anything within your fixed energy rate calculation that you’ve chosen not to include even though it’s an actual operating expense. For example, your chiller uses water for heat rejection, but it may be impractical or impossible to get an accurate measurement. Therefore, you may end up omitting water usage from the fixed rate calculation. Other omitted costs often include electricity for lighting hallways, car parks and powering elevators.
An excluded equipment and services list may seem like overkill, but it does show tenants you’ve chosen to absorb some of the costs. This can help quell future complaints about AHAC increases.
Show Tenants How to Calculate AHAC Charges
Finally, write out the actual formula for calculating the AHAC monthly charge. Examples clear up the process for your tenants. At minimum, your AHAC charge will include the following elements:
Fixed Rate x Number of Operating Hours = AHAC Charges
At this point in the lease, record the amount of the AHAC hourly charge (e.g., “$75 per hour”) Examples here are helpful too: “Tenant A used 10 hours of after-hours HVAC for the month, their total charge would be $75 x 10 = $750.”
Accelerated Depreciation
Including wear-and-tear of your HVAC equipment helps offset replacement costs for their shortened service life. If you include accelerated depreciation in your fixed energy rate or AHAC charges, add it to those sections as a line item or as part of the AHAC formula. There are many ways to recoup depreciation losses. Some property owners make depreciation a separate charge, adding the fees to a general “building fund” that goes to maintain the property as a whole. Whatever method you choose, justify your decision by pointing out that after-hours HVAC operation shortens the life-span of your equipment. You’ll need those funds for PPM and to ensure a comfortable building environment for tenants.
Fixed Rate Adjustments
Electricity costs fluctuate, and so will your fixed energy rates. To stay profitable, many firms add a 12-month fixed rate agreement to their lease. The agreement stipulates that when the year ends, the fixed rate will be reviewed and adjusted according to current market rates. Including a section in your lease that explains your rate review strategy helps tenants avoid sticker shock. Email reminders at the beginning of the year also prepare tenants for rate increases.
AHAC vs Annual Operating Expenses
Keep after-hours HVAC charges separate from your annual operating expenses. There’s the potential that AHAC kWhs are accidentally mixed with your normal end-of-year utilities bill to tenants. If this is the case, you will end up charging tenants twice for the same energy usage.
Savvy tenants will anticipate this possibility of energy “double-dipping” and want reassurance from you. Prepare for these concerns by explaining that you’ve taken measures to ensure accuracy and fairness in your billing. It’s the most effective way to avoid confusion down the road.
Conclusion
It’s clear there are many factors to consider when building an after-hours HVAC lease agreement. In the end, you can make a lease as simple or complex as you like. Your approach will ultimately be guided by how much time you want to spend vs how much energy costs you want to recoup. The more accurate your fixed rate calculation, the more research it will require. For some, the time spent figuring excluded costs may not offset the benefits of avoiding tenant complaints. But most managers will adopt an approach that prioritizes tenant satisfaction. Eating a bit of operating expenses is a small price to pay for full occupancy and happy tenants.
