No doubt, our nation’s energy is in a state of flux. Never before have we seen such an onslaught of federal, state and local regulation, sometimes in direct contradiction. It’s further confounded by differing charters of thought, political environments, and even Acts of God.

Last month, super storm Sandy knocked out power to over 8.5 million customers in 21 states; many apartment dwellers. As many remain without utilities even today, Governor Andrew Cuomo of New York, convened a commission to investigate what he called a “labyrinth” of regulatory agencies and utilities to investigate their failure to prepare. As Cuomo looks to overhaul the system, it won’t be hard to garner support as most agree that the country’s infrastructure is in serious need of updating; the complexity of delivering services is only confounded by a growing maze of federal, state and local processes.

Such complexity continues to expand on the federal front; the number of government regulators has increased by 13 percent, while widening its operations budget to over $54 billion.

In recent months, the EPA devised scores of new rules ranging from tougher water guidelines, to restrictions on greenhouse gas emissions, delaying the effective dates of said rules until after the election. Just recently, a U.S. Senate Committee projected that the majority of looming EPA rules would significantly impact gas prices, home energy costs, and the overall cost of doing business, leaving property owners perplexed at how to best prepare for the impending changes.

Rising energy prices tend to have a lagging economic impact, says James D. Hamilton, professor of economics at the U.C., San Diego. “Unless income also rises—which isn’t happening for many people now—higher fuel costs will eventually displace other expenditures.”

Property owners may be best advised to shore up to avoid exposure and mitigate risks in times such as these, versus the natural inclination to cut dollars and processes.

Still, there remain some certainties on the road ahead. We will face renters who share the same concerns as their landlords with regard to the impact of energy costs on their income. How we, as owners and managers, derive new and innovative processes and methods to combat these rising costs will be that which shapes our outcome.

 

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