Sky-High Electric Bills Prompt Empire State Building Tenants to Sue

February 19, 2010
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Angry Empire State Building office tenants are blaming their owner for sky-high electric bills, claiming that it is jacking up charges way above rates charged by Consolidated Edison, the electric service provider for New York City. Tenants have seen jumps in their monthly electric bills by hundreds and even thousands of dollars over the last three years. One tenant has complained that his bill increased by 200 percent when Con Ed’s commercial rates increased just 5 percent in the same period of time.

Tenants in the Empire State Building and the Fisk Building, which are owned by investors led by developer Peter Malkin, are suing over the issue. While residential landlords are barred by law from making a profit on utility bills, commercial building owners are not, and real estate attorneys say that it’s typical for commercial owners to tack on up to 15 percent extra on bills as administrative charges. Utility bills generally are sent to the owner because few offices are individually metered. In most cases, the master bill is then divided among individual tenants based on an office’s square footage and usage.

The owner’s attorney insists in court documents that commercial building owners are allowed to increase charges above the Con Ed rate. But the tenants’ lawyer, Edward Fajardo, called the bills “parasitic and onerous,” saying that they are producing unconscionable profits for the owner.
“We wouldn't object to an ordinary markup,” he said, adding that the owners will not disclose the master bills they receive for the buildings.

Both sides hired electricity consultants, who have produced very different reports on what tenants’ bills should be. And, even though they are making the same argument, the tenants sued separately in two different courts--and got two different rulings.

In the Fisk case, a Manhattan Supreme Court judge tossed out the complaint in favor of the owner. Meanwhile, a civil court judge ruled that the owners of the Empire State Building had to turn over the master bill they receive from Con Ed. Both cases are being appealed.