District cooling is touted to be a cost-effective alternative to conventional air-conditioning. But ask homeowners and landlords at Jumeirah Lakes Towers (JLT) and they couldn't disagree more. Asked to shell out an arbitrary "capacity charge" every month, the residents have been seeking clarifications from Palm District Cooling (PDC), the district cooling service provider at JLT, but have elicited few answers.
As per the PDC website, capacity charge is the developer's share in the infrastructure cost of the district cooling plant and network. Upon handover of the units, the onus of paying capacity charges is passed onto the homeowner. However, unit owners contend that while developers had accrued cost savings by not accounting for cooling equipment in the building, this did not translate into lower sales price for the apartments, which continue to be on par or more than buildings with conventional air-conditioning units.
Paying off capital investment?
Typically, it is a building's design consultant who advises the developer on the tonnage required per unit to provide sufficient cooling. "Instead of using its own money to build the infrastructure and charge us only for consumption, the PDC is, instead, using our capacity charges to maintain the equipment at its central cooling plant. We are aware of this and it has been a topic of discussion on many forums," says Eddie Tossounian, the owner of a two-bedroom apartment in Dubai Arch Tower, JLT. He adds, "Someone calculated that it could take about seven years for all unit owners to pay off the PDC capital investment with our capacity charges. To make matters worse, it looks like the PDC will continue charging us this ridiculous levy."
"I expect the capacity charges are not just to maintain the infrastructure but also to maintain its general operating costs," an owner occupier says, on condition of anonymity.
Palm District Cooling response
When contacted, the district cooling provider offered us this response: "Palm District Cooling builds and operates district cooling systems under contract in accordance with the specifications provided and committed by the building developer and their consultants. These specifications include the cooling capacity for each unit and common areas, for each building. Palm District Cooling does not influence the required cooling capacity for the building nor the sizing of the district cooling equipment.
As per the chilled water supply contract with PDC, the annual capacity charge is equal to the product of Dh750 per ton multiplied by the TR (tonnage of refrigeration) allocated to your property. This fee is usually levied in monthly invoices sent to homeowners.
"I have two apartments in Indigo Tower that are almost identical in size, but there is a variance of 50 per cent between the capacity charges levied on them," rues a homeowner who did not wish to be named. "Also, the capacity charge for my one-bedroom apartment in Indigo Tower is less than that of my two-bedroom apartment in Lake Terrace."
Demands to recalculate tonnage capacity
With owners' associations taking charge of maintenance in most JLT blocks, one would expect them to negotiate chilled water supply contracts with PDC. "This is critical — we are already requesting that our tonnage capacity be recalculated — no luck yet. I have asked PDC many times to justify my tonnage and they refuse to do so," says the first homeowner.
Meanwhile, Hans Altmann, regional manager, Techem Middle East (an energy services provider), suggests that if owners of an individual building wish to reduce the capacity, they should redesign the chilled water system and load calculation, and then renegotiate the reduction with the district cooling provider.
Apart from the fixed capacity charges, homeowners must also pay a one-time meter set-up fee of Dh1,000, consumption charges, a refundable deposit (Dh1,000 for studio/one-bedroom, Dh2,000 for two-bedroom, Dh3,000 for three-bedroom) and a monthly service charge of Dh30 for the meter reading.
If chilled energy has been suspended in instances of non-payment, the homeowner must pay the PDC a reconnection fee of Dh1,000. As per the PDC portal, the Dh30 service charge is the fee charged each month for the meter reading and billing services provided.
Most landlords in JLT expect their tenants to foot the consumption charges. However, owners of vacant units in JLT claim that they are charged consumption fees even when the apartment remains empty for several months. "In the case of my apartment in Lakeshore Tower, consumption meters were only installed a year after the building was handed over. So consumption charges have been billed only from November 2010. We are dreading a big fat bill that the developer will spring on us for 2010-11," says a landlord who prefers not to be named.
The PDC meter to gauge consumption charges is usually installed above the false ceiling outside an apartment. According to Hans, "If there are no meters installed, the budgeted yearly cooling charges are estimated and paid in advance. These charges are then allocated as a fixed lump sum based on the area occupied and deemed in either the rent or service charge. If meters have been put up, individual bills are issued to tenants."
Landlords blamed for tenant default
However, in some instances, the landlords are expected to pay the consumption charges if the tenant defaults on his payment. "While I have been constantly telling PDC that I am a landlord and should only be paying the fixed capacity charge, they always seem to add more to my bill," explains Imran Chaudhry, who owns a studio apartment in Indigo Tower.
"The PDC reasons that if the tenant delays paying the consumption charge, they will charge the landlord. It doesn't make sense to me. They even deducted payments when I was in credit of several thousand dirhams. I realised that the PDC was not just levying capacity charges but consumption charges as well. The tenant didn't bother paying them, so they took it all from me," Imran adds.
As a disclaimer, the PDC claims on its website that it has the right to send invoices based on estimated consumptions. This could explain why a homeowner continues to receive cooler bills despite a faulty meter. "In November 2009, the meter for my unit in Indigo Tower was broken. Instead of fixing it, PDC has been charging me ‘estimated' consumption charges since then. Today, this meter is still broken — and they still charge Dh30 a month to ‘read' my broken meter," claims the homeowner.
Several buildings in JLT had attained notoriety for having their chilled services disconnected by PDC for non-payment of cooling fees. "Disconnection happens when owners have not paid their bills, and not just the capacity charge. The bill includes three elements, and capacity charge is only one of them," observes Iona Stanley, homeowner at The Palladium.
Area-based allocation of tonnage
Meanwhile, homeowners are also up in arms against the area-based allocation of tonnage in JLT apartments. "I have never really measured my apartment because that's the method the PDC uses to see how much tonnage an apartment needs. It only matters how much carpet space your apartment has. I wouldn't be surprised if some people are charged with balcony included, who knows?" says Eddie.
Echoing his angst, the landlord in Lakeshore Tower says, "I have no issues being charged for the actual consumption. However, the arbitrary ‘tonnage' fee is charged over and above the actual consumption every month." He adds, "I thought that the objective of district cooling was to bring down costs. In this case, the costs have gone up substantially."
While the consumption charges for common areas is generally measured using a separate meter in most JLT blocks, they were initially levied after consultations among the developer, facilities management firm and PDC.
"Now, we have an elected OA. So they will determine with PDC what the charges will be. I wouldn't be surprised if our OA has all the common areas of our building remeasured to make sure everything is accurate," suggests Eddie.
With owners having no recourse, they are unable to cancel their PDC contracts until they sell their unit in JLT. Disillusioned with the developer and allied service providers, an irate owner makes an emotional outburst, "I have lost all faith in anything that the developer or facilities managers prescribe or ask for. There is no transparency and no clarification given when requested for." dnair@alnisrmedia.com
District cooling service providers cover the costs of constructing plants and piping through the capacity charge, by which the capital investment is recovered by charging end-users a fixed amount every year.
Gulf News
Image Credit: Illustration: Dana A Shams/ANP
