Condo Building Energy Costs in Ontario: Who Pays Heat and Hydro?

Energy bills are one of the largest unknowns when you buy a condo. In one building heat and hydro may be bundled into the monthly fee, while in another you receive your own bills for some or all of them.

This article explains how building-level costs reach owners, which documents to read to find out what applies to the unit you are considering, and what happens when energy costs rise.

Two ways energy costs can reach you

In general, there are two routes. The corporation may pay for some energy or utility costs for the whole building and recover them from owners through the fee, or an individual unit may be billed for what it uses. Many buildings use a mix, for example shared heating costs in the fee and in-suite electricity billed to the owner.

We do not state a rule here about which utilities are normally included, because it varies from building to building. The answer for your unit lies in the building's own documents.

How building-level costs become your fee

Condo fees cover maintaining the common elements, reserve fund contributions, and services such as cleaning and building maintenance, and they are shared among all owners. Whatever costs the corporation carries are set out in its budget, which it creates for every fiscal year.

Your share is generally the annual budget multiplied by your unit's percentage in the declaration. For example, a $1,000 monthly budget and a 5% share means $50 a month. If the corporation's energy costs rise and the budget grows, your fee grows by your percentage of that increase.

The percentage is not easy to change. Changing the proportions of common expenses allocated to each unit needs the consent of 90% of owners. So if your unit is billed individually for some costs, that does not change how the rest of the budget is shared.

When energy costs rise faster than the budget

If the building's costs run well above what was budgeted, there can be a large shortfall. In that case the corporation can charge a one-time special assessment on each unit, using the same percentage as common expenses, and the board can do this through common expense fees without owner permission.

There is another route for rising costs: next year's budget. Owners are expected to review the budget and financial statements, which the board must approve before the annual general meeting. A budget that assumes low energy costs may need to be revised upward later, so ask whether the numbers look realistic.

We are not stating a limit on how much a fee can rise in a year. Whether any limit applies depends on your situation and your declaration, so it is worth confirming with a lawyer.

How to find out before you buy

For a resale unit, the status certificate shows the unit's common expenses, any increase with the reason, and special assessments since the current budget, with reasons. The annual budget must be included. The certificate also comes with the declaration, by-laws and rules, the latest audited financial statements and the latest reserve fund study and status.

• In the budget, look for lines covering heating, electricity and water for the common areas and the building.
• In the financial statements, compare what was budgeted with what was actually spent.
• In the declaration and by-laws, look for anything about utilities and how they are charged.
• In the reserve fund study, check whether major equipment such as heating systems is planned for.
• Ask the seller or your realtor for the last year's utility bills for your unit, where they are billed separately.

A corporation may charge no more than $100, including all applicable taxes, for a status certificate and must provide it within 10 days of the request. The Condominium Authority of Ontario advises buyers of a resale condo to have a lawyer review it.

New buildings and energy costs

If you are buying from the builder, the disclosure statement includes a copy of the budget statement for the first year after registration of the condo corporation. A first-year budget can be a useful guide, but costs can look different once the building is occupied and operating.

For new buildings, the Tarion performance audit is a comprehensive inspection of the common elements for deficiencies such as water penetration or fire safety, done between 6 and 10 months after registration. The corporation hires and pays the auditor. Ask a lawyer how those results might affect building costs.

What to do next

• Ask exactly which of heat, hydro and water are in the fee and which are billed to the unit.
• Read the budget and financial statements for utility lines and trends.
• Check the declaration and rules for how utilities are charged.
• Look at the reasons for any past increase or special assessment.
• Have a lawyer review the status certificate before you waive any condition.
• If buying new, read the first-year budget statement carefully.

Frequently asked questions