A Method for Arriving at Assessment Adjustments

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This is based upon a letter sent March 4, 2009 to our Management with a request that this be distributed to the board members. It should have been received prior to the March board meeting, and our board members have had ample time to read and to absorb this.

I have observed some of the planning process used by our association in determining assessments. There are a range of emotions displayed by the board and by unit owners when the subject of assessments is discussed. I have previously written to the board about analysis I have made and of my assertions on how we got to where we are. In October, 2008, I began a study to assess using different techniques to determine our monthly assessments. I determined that there was an alternative method that would have yielded lower assessments had the boards consistently adhered to a simple schedule of adjustments using data published by the U.S. government.

My study of past assessments provided some insight into how we arrived at our current assessments and the consequences of the path chosen by the board in 1982 and the following years, until 2000. I have included those insights here. What also follows is a comparison to the alternative method of raising assessments, which seems to be a simple, reliable tool for use in determining assessment adjustments.

Of course, board members and unit owners may choose to ignore the data presented here.

I have several purposes in writing this. I am interested in the “how” of our arrival at this particular financial point in time. I want to provide our board with useful information so as to avoid repeating how we got to this point. I am also very interested in tools that can aid in the decision making process. For example, without knowing the details of the future (inflation, etc.) how can we prepare, that is, how much should our association save each and every year, for the repairs that will undoubtedly be required?

Upon reading what follows, one can conclude that there was a time when our assessments were simply too low. The association appears to have been operating with a "technical" deficit for at least a decade, beginning in the 1980s and nearly to the year 2000. We had sufficient funds to operate, but insufficient for reserves. The current management and recent boards addressed the problem and our assessments have risen. However, we continue to make up for the shortcomings of the past. Finally, on reading this, you will get some idea of just how large a financial hole we had dug for ourselves.

I have listened to unit owners (and that includes members of the board) who seem to have difficulty comprehending how things became the way they are. The following should prove useful in determining how this occurred. The why, I cannot say, because I was not a unit owner in the 1980s and 1990s and so I did not attend meetings. If you did, perhaps you can shed some light on the "why". I am very interested in that!

This chart shows the actual assessments voted by the board each year, commencing with 1983 and continuing to the most recent vote in 2008. The assessment increase is shown as a percentage. There are several things about these increases. 1) They were very erratic prior to 1996. 2) They were zero or a negative value (a decrease from the assessment of the prior year) for several years prior to 1996. 3) They increased dramatically in 1999 but the pace of increases has since tapered off.

The following charts are derived from spread sheets I have made, which included the actual assessment amounts, the percentage of adjustment voted by the board each year, and the COLA or cost of living adjustment determined by the U.S. government. The U.S. government has different legal and economic bodies that generate this information. Most COLA data is backward looking, i.e. published after the fact. My spreadsheets and the resulting charts use data which is forward looking. I use the Social Security Administration annual benefit adjustment. This is a percentage, issued in the fall of each year by the SSA, which determines the increase in SS benefits for the following year. It is an attempt to anticipate cost adjustments on a year to year basis. For example, in 2008 this was published as a 5.8% increase, applied in 2009.

Each chart has two trends. One is derived from the actual decisions made by the board. The other is an alternate, derived from the COLA adjustment, and indicates the result if the boards had based the annual assessment adjustment solely using the government COLA adjustment. The difference between these two trends indicates a gap which in our association’s case, was a shortfall in saving. That gap continued each and every year and as a consequence, our savings rate fell further and further behind.

The first chart is a comparison of the monthly assessments using the two methods. It has two trends; one is the actual, average monthly unit assessment and the second is an alternative COLA based assessment. The alternative assessment replaces the percentage increase voted in 1982 by the board, with the percentage calculated by the U.S. government for SS benefits in 1982. This is repeated each year from 1982 to 2008. This is chart No. 1 “The High Price of Avoiding Assessment Increases” so named because prior to 1995 the board chose zero or negative adjustments for several years. You will note that the trends cross in collection year 2001. Prior to that time, our assessment increases consistently lagged those deemed necessary by the government COLA method. If left unchecked, this would result in operating deficits, i.e., the inability to meet basic financial needs. Later boards and our current management, apparently in recognition of this, have since 2001 raised our assessments annually by a rate above that of the COLA percentage. This has resulted in today’s higher monthly assessments as compared to using the alternative, COLA method. It has also built up our reserves. I chose 1982 to begin because this is the first year the board chose a negative or zero assessment adjustment. Assessments began in 1979 and the interval until 1982 provides too unstable a starting point, as boards attempted to find their footing and establish assessments that would fund ongoing "operational" needs.

Chart No. 2 “Annual Assessed Amounts Collected” depicts the total assessments collected annually from the period 1983 to projected for 2009. The amounts collected annually are trended using the two methods, and the trends cross in 2001. The amounts collected using the percentages chosen by the boards were lower during the years prior to 2001 than the amounts that would have been collected using the U.S. government percentages. As the assessments have increased each month, so too have the amounts collected. The amounts collected annually are now much greater than they would have been had the U.S government percentages been used. However, the space, or area between the trends to the left of the point of crossing is nearly equal to the area to the right of that point, which means that we have finally collected an amount sufficient to make up for the difference since 1983!Chart No. 3 “Accrued Amounts Using Actual Assessments and Alternative COLA Method” shows the long term effects, the sum of all assessments collected from 1983. It compares the sums collected using the board selected percentage adjustment to the sums collected using the U.S government SSA COLA method. The U.S. government COLA percentages consistently grew the savings at a higher rate. By December 31, 2009, the actual, total assessments collected at the association, for the period 1983 through 2009 is projected to be $16,028,211. During that same period, using the COLA method $15,910,181 would have been collected. These are nearly identical with a difference of 0.74%. The trends do not include interest accrued on saved funds.
Chart No. 4 “Monthly Assessments Using Actual Method and Alternative COLA Method“ compares the average monthly amounts collected per unit using the board selected adjustment method and alternative COLA adjustments from 1982 to the present. If it looks familiar, it is! Chart No. 4 is identical to Chart No. 1 and I repeat it here with this additional information: In 1999 the assessments at our association began to rise at a faster rate. Prior to 1999 the assessments consistently lagged those which would have been collected, had the U.S. government COLA SSA adjustment percentages been used. In 1999 the average assessment was about $135 and had increased to about $291 by 2009. Today, my actual assessment is $308.57, but had the U.S. government alternative percentages been consistently used, my actual assessment today would be a much lower $216.90. The reason is simply this: our current assessments are an attempt to collect in the period 1999 to the present, the sums of money that were not collected in the prior period 1983 to 1998. This difference is the space or area between the two trends on the graph below. The "gap" prior to 1999 seems deceptively small, but it wasn't, and the difference is now saved as our "reserves": The final chart trends the assessment adjustments as percent change voted by the board, compared to the percent change which the U.S government COLA method used for the same period of 1982 to 2009. You will observe that the percentages voted by the board were quite erratic prior to 1995. You will also observe that the U.S. government method was nearly always below 5%, and was as low as 1.3% in 1986 and 1998. There is one caution. In the period 1978 to 1982, prior to the trends and during a period of pronounced inflation, the U.S. government COLA percentages were above 8.0% for four years.
All of this is for exploring possibility using “what may have been”. However, several observations and conclusions can be drawn from the data shown in the charts.

1. Had the association boards used a simple method of calculating assessment adjustments based on U.S. government SSA COLA and collected assessments consistent with inflation increases, we would have today achieved the same balance sheet and reserves. However, in the process we would have had smoother, consistently smaller assessment increases and would today have lower monthly assessments.


2. Using assessment increases below the COLA percentages is an inferior method, as experienced by our Association.


3. The pace of assessment adjustments should moderate to the COLA rates, and has.


4. The COLA method may not assure sufficient funding for large capital projects, such as the planned roofing and paving projects. This is because specific, actual costs are unknown. Further analysis is required.


5. The COLA method, it has been pointed out, includes factors not of direct concern by our Association. For example, changes in the cost of food. However, the point of the analysis is to review a forward looking, annual method that would avoid the issues we have experienced and smooth the adjustments, from year to year. The analysis speaks for itself.


6. The association is now collecting funds at a rate greater than the COLA method would, because our monthly assessments are higher. The impact on future balance sheets cannot be determined with certainty until the true costs and timelines of capital projects is known.


7. To avoid large “spikes” using the COLA method (e.g. 14.3% as in 1980) and consequential disruption to the budgets of unit owners, it is advisable to adjust very low COLA percentages upwards to provide some short term smoothing and avoid large increases. This requires analysis of future, anticipated balance sheets.


8. This data can empower condominium boards to consider using the U.S. government COLA percentage increases as basis for the minimum for assessment adjustments, if that method is not now used.

I provided this data to our board on March 4, 2009 and I hope that this is useful and will have some influence on the predilection of the board when the time comes to vote for assessment adjustments. I will be doing additional analysis and I welcome comments.

The following is the SSA website which includes the COLA data I used. http://www.ssa.gov/OACT/COLA/colaseries.html

Update to Nicor Gas on the "Budget Plan"

I have received my latest Nicor Gas bill, for the period February 17 to March 19. I now have a credit of $0.01!

So Nicor has re-calculated my "budget" and it has increased to $35.00 per month, from $32.00 per month. Using the new information I have updated my post:
nicor-gas-on-budget-plan

Possible Assessment Savings Outlined at the March 12 Meeting

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Here is a list of possible savings to the association that were mentioned by board members during the March meeting. I made this list by adding up the different projects and issues and their cost, as described by the board during the meeting. On the other hand, I have not made a list of spending INCREASES. There have been a few of those mentioned at board meetings; for example, a "reserve study". I'll post those later, once the numbers are known.

Total possible annual savings of the items listed below= $37,950. This, over a 20 year period, which is about the life of the roofs, would yield a total savings of $759,000 in today's dollars (no adjustment for inflation). That's a lot of money, enough to do the roofs on at least 15 buildings in the year 2029! Imagine, with NO assessment increases, we could save sufficient funds to do 15 buildings. Amazing! Of course, this money could "burn a hole" in the pocket of future boards, and they could spend it.

To actually accomplish these savings, the board would have to vote on specific actions, and unit owners would also have to agree and possibly alter some of their behaviour. So let your board know what you think!

1. A possible $13,300 savings each year, if architectural shingles are used during the forthcoming roofing project, and roof life is extended by 5 years.


2. A possible $84,000 savings by having Unit "B" owners pay for replacement of roof windows, at a cost of $1,000 each. This would reduce the cost to the association for this project by about 8%. "B" unit owners would see a temporary assessment increase. Savings each year, over 20 years ($84,000 / 20) = $4,200.


3. Changing the painting schedule from once each 5 years, to once each 6 years. Possible annual savings = $14,450.


4. Voluntary elimination of feeding of critters, birds and other wildlife at BLMH. Possible savings each year, by eliminating the need to trap of animals = $6,000.

Total possible savings, EACH YEAR, from the above = $37,950. The cost of the windows would be a savings to about 75% of the unit owners; the "B" unit owners would assume the cost of the windows and they would not see a savings for this item. Perhaps there are some other trade-offs possible?

If you have any other ideas, let your board know! Or, let me know and I'll publish them here and pass them along.

Update - Board Meeting of March 12, 2009

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Other recent posts (Click On to Go To):
Comparison of Natural Gas Plans, posted March 10
The Three Domains of Knowledge posted March 13
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Meeting Highlights:
Reserved "Guest" Parking is Eliminated, Driveways, Rules and Regulation Infractions, Contracts, Specifications, Bid versus No-Bid Issues, Roofing Project and Continued Discussion of Assessment for Unit B Owners for Roof Window Replacement

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Comments to this Post


All of our board members, with the exception of the Landscape Director were present for the meeting. There were about 10 units represented by unit owners. The open portion of the meeting ran from about 7:00pm to 9:30pm and then the unit owners were excused and the board went into executive (closed) session.

Here are my observations from my attendance at this board meeting. The Guest Parking was, I understand, voted upon after the unit owners were excused for executive session, and has been eliminated [i.e., it is no longer a violation for residents to park in the spaces labelled "reserved for guest", which effectively eliminates this as guest parking.]. I am not aware of an announcement to the unit owners prior to their dismissal by the President and I left the room at executive session as requested by management and the board President. The doors were not opened nor were unit owners invited back into the room at the end of executive session.

Please note that if you require clarification, the source is the board. I can render comments and so on, but the board is making the decisions in open session, executive (closed) session and with management. They need your input. Attend the meetings! It is my goal that these notes will provide you with a summary of the discussion between the various members of the board, the management and the unit owners in attendance. If you have questions or comments, please email me. However, if possible, do attend the meetings!

If you have an issue with the board, my suggestion is this: write a letter to the Management Office and include your name and address. Request that the letter be copied and given to the board members, and then sign, date and mail it. Keep a copy of the letter and file it somewhere were you can find it for board meetings and so on. Writing a letter serves several purposes, including: 1) it gets the information or issue into the hands of everyone who is in a position of authority and responsibility; 2) it documents your communication; 3) sending it to the Management Office and the board makes it a part of the record; 4) written letters allow the writer to fully express themselves in a way that can be brief and is reproducible, so everyone gets the identical communications.

If someone arrives at your door with a petition, think long and hard before you sign it. My recommendation is DON’T! If you think a petition has merit, think about the issue, take the time and a 42 cent stamp and then write a letter, in your own words, about the issues or concerns that you have and send it to the Management Office. Don’t become a copying machine with a signature, mouthing someone else’s words, concerns, issues and agenda. That includes what I write here. We have politicians at BLMH and don’t be used by them. Authenticity is what is required. We all language things differently and your concerns, expressed in your own words are what the board needs to hear.

1. At several times during the meeting, the Director – Secretary and Welcoming addressed the unit owners who were present and provided an explanation of previous events that had a bearing on the discussion currently in place. [Comment: This type of information injection is most helpful to unit owners, such as myself. It places the conversation into a context, which is frequently broader than the one that is currently in progress. ]

2. As part of the “Treasurer’s Report” our Architectural Director/Treasurer presented information regarding the movement of some funds from money market accounts to short term (6 month) CDs as well as information on the earnings (interest) on these investments.

3. The “Management Report” included a brief discussion about work order histories, a reference to a work order for a roof leak repair (cost $1,250 and approved by the board) and acknowledged the updated sales report and insurance reports, both of which were not revealed or discussed.

4. Work orders discussed included reported concrete patio failure(s), driveway issues with photos presented by our Communications Director. At one unit, portions of the asphalt driveway have lifted to the extent that the owner has stated that they cannot enter their garage without “bottoming” of their automobile. The Architectural Director/Treasurer recommended prioritizing the work on the driveway of a unit with the lifted asphalt, and placing it first on the replacement list. Later in the evening the board discussed the need to quickly prepare an evaluation of all driveways, to which management agreed. Management will group driveways by their condition, for the purpose of determining the order of replacement and repairs. During the session open to the unit owners, several present including myself described the failure of repairs, the buckling or lifting of asphalt and in my case, the separation of the garage concrete slab and widening of a crack therein as water flows back against the garage and into the earth at the seam where asphalt meets the concrete garage floor, and also into the garage. Freeze – thaw is now damaging the concrete floor of the garage, as the destruction of the asphalt driveway has now expanded to include the concrete garage slab. In my case, the seal of the garage door has reduced effectiveness because of the shifting of the concrete slab.

5. The roofing project was discussed during this portion of the meeting and during the committee reports. A breakdown of costs for the most recent (2005?) roof replacement is underway and will be presented to the board by the next meeting. The Architectural Director/Treasurer provided a summary of the preparation of specifications, of the type and quality of materials anticipated, of the desire to open up the bid process by restating parts of the specifications to allow more installers who use differing suppliers and nail guns to bid. The Architectural Director/Treasurer prefers the use of “architectural grade” shingles. These have a life of up to 30 years, but require stripping at the end of that life; only one layer of this type of shingle is permitted on the roof. The longer life of these shingles and their ability to hide roof imperfections was stated as advantages of use. However, the Architectural Director/Treasurer also stated that it is prudent to plan on a life span less than the maximum. He stated that 20 years as a realistic minimum life span. This then moved into a discussion of methods to extend the life of the roof. The Architectural Director/Treasurer stated that installation of insulation baffles to assure free air flow, increased soffit vent area, the increase of attic airflow and the use of insulation in the attic space would all contribute to longer life of the roofing components. He used a figure of 5 years as an achievable extension of life [Comment: if an improvement from 20 to 25 years is achieved, then in the span of 75 year building life, the number of times a project of this type must occur is reduced from five to four. A figure of $1 million has been used by the board as a possible total budget number for the current roofing project. If that is true, then reducing the number of roofing projects from four to three will save $1 million over that 75 year life. That is a $13,300 savings each year, which is, of course, assessments that do not have to be collected, or monies that can be spent on other projects. Note: This is a simplified financial perspective and does not include the costs of alternative shingles, inflation or interest. ]

The Architectural Director/Treasurer stated that specifications will be complete for the April board meeting, and that his target is the completion of two roofing projects in 2009. This work must be completed prior to hurricane season, at which time, plywood becomes extremely difficult to obtain.

The Architectural Director described how installation of insulation in the attic would benefit all unit owners. Longer roof life is a savings to all unit owners. Heat rises in the units via convection and he stated the case for some savings accruing for the first floor unit owners. He also pointed out that there are other projects which directly benefit first floor owners only, such as improvements to concrete patios, and lintels.

The Architectural Director again restated the case for diverting water from the center of the driveway [for example, between A and B unit garages] to a discharge point off of the gabled entrances or off of a new “shed” roof as the case might be for buildings that do not currently have a gabled entrance. This must be agreed upon by the board to finalize the specifications for the roof. He said the principal advantage of the shed roof over a gabled entrance was cost. He acknowledged that the earlier attempts were not an immediate success.

A brief discussion of warranty for roofing was included in the overall roofing discussion. Warranties are of various types and qualities. Warranties by roofers must be backed by the manufacturers. [Comment: I expressed to the board during this meeting and the February meeting, that I had direct experience with the superiority of a manufacturer’s warranty over that of the roofer. A commercial building I am involved in had a roofing project completed about 15 years ago. The roofer has since gone out of business. The manufacturer has assumed the responsibility for the warranty and that includes workmanship and materials for the entire 20 year period of the warranty. This has saved the building owner a considerable amount of money.]

The Architectural Director/ Treasurer opened up the discussion to include the replacement of B unit windows and framing in the roof gable. [Comment: this, too is an ongoing discussion from earlier board meetings]. This is expected to be done as part of the roofing project. The reasons cited include: 1) the age of the existing windows, approximately 30 years; 2) the problems experienced with roof leaks, which in some cases are actually the result of window, sill and framing leaks, and specific examples were cited; 3) the desire to avoid doing this roofing project and then over the span of the next 20 to 25 years and before another roofing project, investing assessment dollars into roof repairs which are the result of window and sill failures (typical cost today +$1,200 each).

The discussion included types of windows, manufacturers and the materials available. Samples of finishes were demonstrated. The Architectural Director/ Treasurer stated that difficulties had been encountered in finding windows matching our design (non-casement) with suitable finish and described some of the options and their advantages and disadvantages to unit owners. One window which is a very good design uses a painted finish. (Paint over vinyl?). This is of concern as the finish must last the life of the window. The Architectural Director/Treasurer went on to describe some of the issues of applying paint over vinyl or similar products, and that includes building trim, the effect of heating and expansion on materials that have been painted, and the issue with seams that open and close or material buckling, all due to expansion and contraction of the underlying materials. [Comment: Window warranties were not discussed, but it would be prudent to have a warranty that meets or exceeds the life span of the roofing material used. In this case, 25 or 30 years. Window finishes must also be warranted by the manufacturer. Of course, it is very difficult to anticipate who will or will not be in business in 30 years; especially in the current economic climate. I have been told by architects that it is preferable to use the best materials possible for the application as opposed to a warranty of inferior materials. ]

The discussion moved into the issue of who is to assume the financial burden for the window replacement, and if it is the “B” unit owner, then how to deal with the situation where a “B” unit owner has recently replaced a roof window, which will again be replaced as the surrounding framing is replaced. Management pointed out that unit owners must be immediately notified (the newsletter was mentioned as the method), as there should be no further rooftop window replacements by unit owners, if it is anticipated that these will be replaced as the roofing project proceeds to their building. The discussion then gravitated to the issue of compensation of “B” unit owners who have recently replaced their rooftop windows and would now be expected to again replace the roof window. A discussion of what the definition of “recent replacement” might be (5 years was cited) and the need for proof of replacement (a receipt) which would date the replacement. The discussion also included the issue of “B” unit owner payment methods and plans. During that portion of the meeting open to unit owners’ comments, the concern of a potential 33% assessment increase for “B” unit owners was mentioned by the Architectural Director/ Treasurer. During the period that comments were welcomed from the floor, I suggested that the benefits of attic insulation to the “B” unit owners HVAC energy related expenses would, over time, offset the cost of the installation of the roof window. An energy audit could confirm this. [Comment: the addition of ceiling insulation should lower the energy usage of second floor units. This could influence a unit owner’s decision of which energy plan to use, assuming natural gas is used. See my post “Nicor Gas on the "Budget Plan"” dated March 10. The subject of ceiling insulation, drainage and so on is an ongoing discussion and I do not believe
it is resolved nor a final decision has been reached. Progress is, however being made.

6. The discussion of winter and ice damage, driveways and so on also included the item of a “warped” garage door which was described as “water damage”. This is a metal door, and the board discussed and agreed for the association to assume the financial responsibility for repair. [Comment: How does water warp a metal door?].

7. Reserve study proposals were discussed. The board desires proposals from those who could perform the reserve study. Some have been received, but certain members of the board directed the management company to obtain “glossies” and sales materials from the bidders and distribute same to the board. There was a discussion of the possibility of the preparation of a reserve study proposal by the management company, and this was approved. Review of the proposals was deferred until next month. During the open portion of recent board meetings, there have been discussions about the need or lack of need for a reserve study, the benefits to be derived there from, and the potential pitfalls. No such discussion occurred during this meeting.

8. The janitorial contract and the bids received were discussed. During previous meetings there have been discussions about increasing the frequency of cleaning from once every other week to weekly. The bidders provided two quotes, one for each frequency. The Communications Director asked the Manager if the value of any of the bids had been revealed to other bidders. He emphatically said "No" and elaborated. A discussion ensued among the board members pertaining to the condition of the halls, the advantages of more frequent cleaning and the costs of the proposals for once weekly cleaning. Those proposals exceeded the budget and the Architectural Director/Treasurer pointed out that approval of bids which exceed the budgeted amounts require the board to determine where this excess is to come from and further, if this is to occur, then what is the point of the budget? Is the purpose of the budget a guide to aid the board in its decision making? The board then discussed the possibility of a “hybrid” schedule, which has more frequent cleanings at certain times of the year. Management pointed out that no such bids existed, as the board had not directed management to acquire them. Conversation then moved to the floor, and unit owners described how they clean the halls, and that is certainly an option. The board voted and selected a vendor with a cleaning schedule of once every other week. [Comment: I have attended meetings, and some unit owners have expressed outrage at the need to intervene to maintain the building common areas. This is, I think, a non-issue. I and some of my fellow unit owners do, from time to time , intervene and vacuum the halls, sweep, and clean windows. We also shovel the snow, sweep snow from the rooftop before it freezes in the gutters, and spread salt. I also think this issue is one of several that has been seized upon by elements at BLMH for political advantage, and consequently has been blown out of proportion. During meetings it has been used as an example of poor or mis-management. "Change" was the election mantra and specific "change" is the goal. ]

9. Landscaping and mulching contracts were briefly discussed by the board. Harrow Court is on the schedule for this year.

10. Painting was discussed. Management advised that we are on a 5-year schedule. The Architectural Director/Treasurer asked if a 6 year schedule was workable [Comment: this would reduce annual costs by about 17%. The possibility of a six year schedule is interesting. No one on the board appeared to pick up the idea and champion it. But this idea could save us $14,450 each year, using 2009's budget as a guide]. Our Director – Secretary and Welcoming, addressed the unit owners with a discussion of the boards experience that the various buildings wear unevenly. This is attributable to the presence of pets, children, teenagers, the number of occupants in a building, and so on.

11. Pothole repairs to streets were discussed. These are currently underway but are considered to be “temporary fixes” and not permanent solutions. Management and the board discussed the fact that proper and long lasting repairs cannot be made until hot patches are installed during warm weather. One hole has been overlooked, was added to the “to do” list, and is near the northerly entrance.

12. The board discussed a unit owner’s installation of a “vent less” fireplace. The chimney is shared by two units and there are specific guidelines to be adhered to. The Architectural Director/Treasurer related his experience with this type of fireplace and his concerns. It was his recommendation the unit owner consider the use of a “fireplace insert”.

13. The board discussed some of the decision making process. Our Director – Secretary and Welcoming pointed out to the unit owners who were present that it is the board, and the board alone that will make the decisions. Unit owners’ comments and input are welcome, but unit owners cannot vote on the matters at hand. [Comment: To expand on this, the board can discuss, vote and alter any issue, including any and all Rules and Regulations at any time, and can do whatever they wish, as long as they adhere to the “Condominium Act”. This act is, however, not all inclusive. Following the Condominium Act does not assure a well run, financially viable association. Many of the provisions of the act are what are referred to as “minimum standards”. Most people are unhappy with minimums; if that were untrue, then we would be pleased to have our units barely heated, streets barely paved, paint peeling, and coffers and reserves empty. There would be no trees, no grass and only sufficient lighting to meet city codes. Roofs can be patched for 30 or more years, if necessary. It is possible for boards to operate associations this way, and some do. IT IS LEGAL to do so; there are no laws to protect us and to assure that our association is well run, efficient and has sufficient operating funds and reserves, or that misguided boards, no matter how well meaning, will operate with good judgement or prudence. The term “sufficient” as applied to finances can be misconstrued and misrepresented, and even reserve studies can and are manipulated. All that management needs to do is hire a firm that will say what a board wants to hear, and management will defer to the wishes of the board, because management was and is hired by the board. If a board wants to run an agenda that management opposes, all the board has to do is replace the management firm with one that is amenable to the wishes of the board. Is that one of the unstated goals under the banner of "change"? Is that one of the back door promises that was made? All will, in time be revealed, and true intentions will be unconcealed.]

14. For that portion of the meeting devoted to “Committee Reports” the Communications Director made requests of the other board members to have their written materials for inclusion in the newsletter in her hands no later than March 26, to facilitate issuance of the newsletter during the first week in April. A discussion ensued among the board members and counter-offers and promises were made.

15. The renewal of the contract with the company which provides the maintenance and engineered solutions for the association was discussed by the board. There are no other bidders and the state of specifications has been unacceptable to several board members. This was again an issue for the President and the Communications Director. The Landscaping Director who has also taken issue with this was not present at the meeting. The dollar amounts of the bid and the increase over previous contracts (1.52% per year) were discussed. The general nature of the work to be performed and which had been performed, with specific examples of the work, which included project management and custom engineered and designed solutions to problems which lowered operating and maintenance costs, and reduced the need for future expenditure or manhours, were all cited by the Architectural Director/Treasurer. He cited specific cases where direct involvement of this firm saved thousands of dollars; in one case he mentioned the figure of $12,000. He cited the special knowledge and resources of that firm, including the in-house training programs. He asked the Communications Director if she had ever visited that firm’s facility and the response was “No”. These pros and cons were discussed by the board. However, the lack of formal, complete and thorough specifications continued to be a problem for two board members. What ensued was a discussion of who and how to prepare a sufficiently thorough and technically complete specification so that viable alternative bids could be acquired. The discussion included the difficulty of this task and who was qualified to make such a specification. It was stated that there is no doubt a specification can be written, but this isn’t a painting or cleaning contract; it is a very complex task that the successful “contractor” is asked to do. Such a contract would require an equally complex specification. The Architectural Director/ Treasurer stated that he was not qualified to make this specification. The discussion included a description of various aspects of the work, but it was also acknowledged that these descriptions were incomplete and inadequate [Comment: somewhat similar to viewing the tip of an iceberg; there is a lot that is unseen and unknown]. Also discussed was the timing and concerns about delay of issuance of a contract, its impact on the roofing project and possible loss of the services of the firm in question. Also discussed with management’s input were expectations for cost increases; the first year for a new firm is a “learning experience” with inefficiencies; these are usually recaptured by the third year, but not always and are certainly not guaranteed. The risks inherent in choosing a new firm to do the work, which is very broad in scope and includes the need for a licensed and bonded single source firm with certified electrician, plumbers, carpenters, masons, laborers, stream and pump maintenance, etc.; literally a broad brush stroke of skills and the difficulties in finding firms capable of providing these skill on an ongoing basis. Unlike construction, this requires a small, multi faceted and very skillful team with good engineering management, readily available to be on site when called upon. The Communications Director cited the “many complaints” against the firm in question and the President asked how to deal with this. The conversation was opened to the floor, and of the unit owners who were present, not one had a negative word against the firm, and three gave excellent opinion and described their specific experiences. I was given an opportunity to address the board from the floor and I pointed out the use of imprecise terms such as “many” was inappropriate. The Communications Director cited the ROC survey. I suggested that the same rigor must be applied to unit owner complaints as is applied to unit owner rule violations. They must be very well documented, and data acquired. Various aspects of the debate among the board members continued. In response to a unit owner’s question, management pointed out that the three-year contract in question had a cancellation clause. After further discussion, a vote was taken to retain the firm and it passed, with one “Nay” vote.

[Comment: I have written, reviewed and awarded contracts for very complex systems and projects which involved many millions of dollars, multiple vendors and contractors and the coordination thereof. These projects required years to design and engineer and also required years to build. These were not “boiler plate” specs for “off the shelf” standardized systems and components, downloaded and printed. That today, is what many people in our PC infested world have come to view as “specifications”. Because of my involvement in these very complex, unique and costly projects, I can appreciate the difficulty of the specification writing task and the possible pitfalls.

The BLMH complex lies somewhere between the most simple and the most complex specifications. It would be possible to write an adequate specification, but to do so would require thorough and intimate knowledge of the tasks to be done. The resulting specification would include, but not be limited to, descriptions of all of the work including a thorough and complete list of all maintenance items and projects included in the contract. It would include current and anticipated projects for the entire life of the contract, the schedule of these projects so that bidders can evaluate manpower requirements and possibly include detailed drawings and Gannt style diagrams. It would require detailed and accurate descriptions of the quality of all aspects of that work, the materials to be used, the methods to be used and so on. The specification would establish minimum standards for the performance of the contract. It in fact, would be multiple specifications under an umbrella document. I said “pitfalls” can occur when writing this specification because poorly written specifications result in large loopholes and permit performance shortfalls, or can be so rigid as to restrict creativity and require constant intervention by management to discuss interpretation and to approve deviations. The specification is blueprint which establishes conditions of satisfaction and controls costs.

The use of imprecise terms or broad language such as “all”, “some”, “a few” or “many” will cause bid imperfections and permit the bidders to use their best judgment. When a relationship exists between the parties of a contract, there may be a condition of trust and expectations of performance that are not written. The contractor may have a knowledge of the task that exceeds that of the owner, board or management. In such a situation, the contractor literally “fills in the blanks” and performs the work and uses components and methods that assure meeting or exceeding the unwritten expectation. In a new relationship, no such pre-existing standard exists and must be generated, over time.

So, improper or imprecise language may not jeopardize a task well defined by specification or a long term working relationship. But it will result in performance shortfalls when working with a new contractor. Such impreciseness must be avoided when preparing specifications for complex systems, which is precisely what this association encompasses. It includes a “complex” of buildings and grounds which includes “sub systems” such as electrical distribution, power, lighting, water, sewer, wastewater, streams, ponds, buildings, grounds, streets, sidewalks, curbs, drainage, etc. etc. The purpose of the specification is to establish a standard for performance. Such a standard would be compromised by the use of imprecise terms or language such as “some” or “many” which would result in openings for extras and could yield an unenforceable contract. On the other hand, too rigid a specification can run up the costs and result in higher than necessary contract prices. If the board is truly serious about a specification, a firm should be hired to write one. The board should then take the resulting specification and re-write it using the expert or site specific knowledge of the current management firm and long term board members who have had responsibilities for directing the current contract. An internal analysis of all work orders would be helpful, but in itself would not yield a standard for the work performed in response to the work order. I have more than a few “horror stories” about the consequences of specification failure and some wonderful examples. My work involves analysis of contract and specification failures, performance failures and failures to achieve objectives. Perhaps in another post? Finally, I want to say that there is a world of difference when preparing specification for the maintenance of a complex such as BLMH as compared to simple, well defined tasks or systems comprised of multiples of standardized and commoditized products such as PCs, network components, switches and hubs and even automobile repair. End of Comment.]

16. A unit owner asked management if the existing television antennas were “digital ready” and he was provided with an explanation of the multiple sources that management had obtained expert opinion from and the conclusion was “Yes, they are”. Buildings contain an antenna in the roof space above the “B” unit. This is wired into all the units of the building. Unit owners must have digital TV converter boxes for older “analog” TVs. Otherwise, and for all cable TV users, no converter box is required.

17. A unit owner addressed the board and asked why we had all these rules and regulations if we don’t enforce them. He then provided a detailed list of observed violations, which included storage on patios, personal belonging on the lawns, trash in the garage, bed sheets in windows, the feeding of the animals and “dogs gone wild” i.e. unleashed and owner ignored droppings. The Rules Director advised that during inclement weather it is not always possible to walk the grounds. She also advised that the rules, indeed, are enforced. The board then described the methods and fines that are levied, how they can accrue and ultimately can result in legal action and a lien against the offending owner. The unit owner was unconvinced and pressed. He also asked how does one avoid owner reprisals for complaints. Other unit owners who were in attendance cited their experiences with violators, including open security doors, unusual numbers of residents in “families” and parking issues. An owner requested that a review be made of some of the “no parking” areas to see if they can be expanded, to alleviate parking problems. Guest parking was cited by owners as “always occupied” and never available. The discussion continued with questions about what are our community's standards for the definition of a “family”, as our rules and regulations state that a unit may only be occupied by “one family”. A unit owner suggested to the President that she contact the code enforcer in our town and provided a name to contact. The discussion of violations included noisy units and exercise equipment in units which have caused physical damage to the unit below; for instance, cracked ceilings and items falling from walls due to excessive vibration. It included speeding problems, and an owner’s experience with two speeding families, who were followed to their doorstep; one said “so what?” when confronted, the other apologized and promised not to do it again. Specific instructions were given by management to unit owners on how to deal with violations. A written description is necessary with as much information as possible. The identity of the unit owner who filed the complaint or noted the violation will not be revealed unless the case goes to court. Recently the newsletter included a form for this purpose, but a letter will work. Include date, time, address, description of the violation, and if a motor vehicle is involved then the description of the vehicle and license plate. Also include your name and address. If a motor vehicle is involved, management will determine if it is owned by a unit owner and a violation will be issued.

18. [Comment: “Guest Parking” was listed on the “Bulletin” posted in each building lobby as being on the agenda during the meeting of March 12. However, there was limited discussion, no motion and no vote during open session prior to the closed executive session. I assumed it had been deferred to the next meeting, but I was obviously incorrect. I have been informed that the board took a vote after the unit owners were dismissed for closed door session. There is no longer any "reserved" guest parking at BLMH. During the meetings I attended, the unit owners who attended and addressed the board on this subject were all in favor of continuing some form of guest parking. However, I expect I will be told that “many” people were not in favor of continuing guest parking. Promises were made and promises are, sometimes, kept is also an explanation. ]

19. The discussion on violations led to a discussion of the consequences of feeding animals. The Architectural Director/Treasurer advised the unit owners that trapping animals costs this association $6,000 a year. This does not include repairs to units and the attics, when animals have chewed their way through walls, entered units and wreaked havoc or have bedded down in attics. The question posed by the Architectural Director/Treasurer was: where do we want our money spent? There are apparently restrictions to the trapping and release of animals by unit owners. Problems with eastern gray squirrels and chipmunks were discussed. [Comment: One of the first things an expert will tell you if there is a discussion about controlling critters, is that their food source must be found and eliminated. If unit owners are feeding birds, some of that gets to squirrels, who have two litters a year. On March 10 I saw a hawk in a low branch near the stream behind Harrow Court. It too was drawn by the food supply; in this case, by the prolific critters we have on our grounds. Coyotes and owls have also been sighted. They also are a part of the food chain. I suppose one could say “Feed a squirrel and attract a coyote”! I wonder how much was collected in fines this past year, for critter and bird feeding violations? I'll bet it wasn't equal to the amount spent by our association. So our fines aren't high enough!]

20. A unit owner asked if there had been any underground water main breakages. This was in response to a discussion about a large pile of detritus in one area of the grounds. Management said it was due to work by the local power utility. The Architectural Director/Treasurer responded "No" and reminded us that this phenomenon was linked to the flushing of water lines by the city. This relationship was first discovered by our past President. Flushing will begin this year in April, and we will, at that time, know if the pattern continues.

21 . A unit owner inquired into the status of the “official” website, and said that it was rumored to be undertaken by someone outside the board. The President responded and said that the website is underway but that launch has been delayed by the inability to find a suitable, available domain name. The website was described as requiring a lot of effort and work was also proceeding on an “official” blog. No specific timetable was given for the official launch of either. The President advised that her husband who was sufficiently proficient was working on the website.

The Three Domains of Knowledge

This posts strays from the topic of this blog.

I was discussing human nature with a fellow unit owner after the board meeting last night, and we had a conversation about backgrounds and this led to a discussion about limitations. I advised that the thing that I have to be aware of at all times are my limitations and that, as with most human beings, I have to beware of arrogance.

I suggested that an area to be particularly watchful of was that which pertained to "the third domain of knowledge", and I then proceeded to define what that was. Once, I took a series of courses which included philosophical discussions and inquiries. One of these discussions included and inquiry into "The Three Domains of Knowledge".

The "First Domain of Knowledge" pertained to the things that we know that we know.

The "Second Domain of Knowledge" pertained to the things that we know that we don't know.

The "Third Domain of Knowledge" pertained to the things that we don't know that we don't know.

The first two domains are well known and some would say "obvious". We delve in and out of them each and every day. For example, I know that I know how to drive a car, and I know certain things; I have certain specialized knowledge that has to do with my business and fields of expertise. I also know that I am not a brain surgeon. The second domain pertains to things that are learnable. However, the third area is tricky and alludes to my being totally oblivious of certain things. It isn't simply an issue of knowing or not knowing how to do something. It is an awareness of unawareness, of my limitations. Of things I am simply oblivious to and totally unawares.

I have been told it is possible to expand my awareness and to reveal what is concealed. I have learned to ask a lot of questions. I have learned to observe and to inquire, and the entire purpose is to reveal that which exists, for me, in the "third domain of knowledge". Sometimes things are revealed, or as been said "unconcealed". But I confess that I am a novice in the practice of unconcealment.

I think there are practical applications. The skills useful for the third domain also work very, very, well in the first two domains. I have a profound appreciation for tools, whether they be hardware or software and even skills, I see the opportunity in delving into my limitations and lack of expertise with the third domain. I also understand that there are things that I will, due to my physiology and personal limitations as a human being, never comprehend. There are things that no human being may ever comprehend or understand. Some of those things may be unlearnable. I don't know what they are. What I do know is that as I gain skills and knowledge, as I learn things, I am operating at moving things from the second domain to the first domain. Is it also possible, through unconcealment, to move things from the third domain to the second domain?

Note: My work in systems and human systems includes analysis of failures and the failure to achieve desired, anticipated or promised objectives. I have found that observing the operation of human beings, including myself, and their interactions, in the three domains to be very informative and useful.

Nicor Gas on the "Budget Plan"

[Note: This post was expanded on March 12, 2009, comment added March 23 and new data added March 25.]

Comment added March 23, 2009. According to the New York Times article "Natural Gas, Suddenly Abundant, Is Cheaper" dated March 20: "..the first globalized natural gas glut in history is driving an even more drastic collapse in the cost of gas that cooks food, heats homes and runs factories in the United States and many other countries. Six giant plants capable of cooling and liquefying gas for export are due to come on line this year just as the economies of the Asian and European countries that import the most gas to run their industries are slowing.....Gas industry executives expect that liquefied gas imports into the United States will at least triple in the second half of this year.....The global capacity for liquefied natural gas exports of 200 million tons a year will increase by 25 percent with the completion of six new plants in Qatar, Russia, Indonesia and Yemen, totaling $48 billion in investments, and the upgrading of a seventh plant in Malaysia.....Natural gas in the United States costs a little over $4 per thousand cubic feet, down from a peak of more than $13 last year. Oil now costs a bit more than $51 a barrel, down from a peak of more than $145 in July. On average, world spot prices for liquefied natural gas cargoes have come down by more than two-thirds since last summer." Note: You may need an account at the New York Times to access the article, but creating an account is "free".
----------- The Revised Post is Contained Below ------------------
Nicor Solutions recently sent me a letter, which offered me the opportunity to freeze my natural gas costs for a year. I received such a letter last year and declined the offer, after making my own assessment of the costs of natural gas and concluding that gas prices were most likely going to decline. I was of the opinion that accepting the Nicor offer would have resulted in higher natural gas costs, in my view. However, I had no way of knowing if costs would decline, increase or remain unchanged.

I have researched the alternatives available and present that information here. This may assist you in making your own decisions. I am aware that this unusually cold winter resulted in a spike in my energy usage, and that of many of my fellow unit owners. The questions are; what are the alternatives, could I have saved money and what should I do about this, in planning for the winter of 2009/2010?

After having read this, if you have questions, if you would like assistance in determining how your bill is calculated, or if you want to determine if you have viable options, send me an email at letmethinkaboutthisblog@gmail.com and I'll respond and make arrangements to review your gas bills. I do not work for an energy company, I am not a broker or salesman. I am providing this as a means to be of service.

Controlling energy use

The use of energy in my unit is determined by several factors. These include the temperature outside, the setting of my thermostat, the quality of the insulation of my unit, the condition of my gas appliances, and the amount of consumption for cooking, hot water, heat and the gas fireplace. Other factors include the setting and types of forced air registers, the orientation of my unit, which determines the amount of sunlight which enters through windows and therefore assists in heating my unit, and contributes to winter heat loss. The condition of windows and patio doors also determine how much energy is used.

To go into the factors that affect heat transfer would make this far too long a post. But some knowledge is useful for determining how to reduce energy consumption in the cold winter months. This applies, in reverse, during those hot summer months. Heat is transferred three ways: conduction, convection and radiation ("radiation" in this case, has nothing to do with nuclear plants or devices). Heat flows via conduction from warmer areas to cooler areas. Via convection, heat flows up to my ceiling where some is lost by conduction to the attic space above. If you are in a first floor unit, heat is lost through the floor to the earth below. In my unit, heat is conducted through walls, windows, doors, ceiling and floor from the warmer spaces to the cooler spaces. The greater that temperature difference, the greater the heat lost. As the difference in temperature increases, the loss of heat increases even faster; or "at a faster rate". My energy bill is directly related to the amount of heat lost and that temperature difference. Some heat is gained from sunlight entering my patio and kitchen windows. The infrared energy contained in sunlight is converted to heat upon striking the objects and floor of my unit. Cold air entering my unit must be heated and also contributes to my energy consumption.

So what can I do about controlling heat loss? In my unit, I have insulation installed in my ceiling. I open draperies wide in windows facing the sun during the daylight hours, and have some energy retarding shades to reduce heat flow outwards during the hours of darkness. I have registers adjusted to direct more heat to certain living spaces. This includes kitchen, bath and dining and living room, which is our sitting area; the register in the boudoir adjoining our master bath and bedroom is full open, to heat that space and the sleeping space. All interior doors, except closets are left open at all times; the one-time adjustment of registers has controlled the distribution of hot air from the furnace. I also have an automatic set-back thermostat. Using this reduces the temperature difference between my living spaces and the outdoors or attic, and therefore reduces heat loss. Of course, it also reduces energy consumption. This thermostat is located in our central hallway and is set to maintain our living spaces at 70F at times when we are present, and is reduced to 66F at times when we are not, and at night after we are asleep. The thermostat has different time and temperature settings for week days and Saturday and Sunday, which permits us to adjust for our presence. We do from time to time increase the setting using a manual button on the thermostat, if we are uncomfortable. We have increased this to 72F on occasion. We do have a gas fireplace, which we use during the holidays. However, the flue is kept closed when this is not in use, to prevent heat loss via convection up the chimney.
There are other things which we have done, to improve the energy efficiency of our unit, but these are too long for this post.

The "budget plan" and alternative plans

Each year I have chosen the Nicor Gas “Budget Plan” which estimates my usage each year, and charges me a fixed amount each month in a fixed payment. It does not lower my energy costs, but instead spreads those costs over a period of 12 months. This smooths my payments, but I do pay for all energy I use. As a result of the budgeting, during the warm months I use less energy than Nicor is charging me for and so I accrue an account balance for the unused amount. This grows throughout the summer months and the credit, hopefully, is sufficient to cover my increased usage during the cold, winter months. However, it is possible that I will use more gas than I have amassed a credit for, and my monthly payment will increase. Or I will use all the credit I have and exceed that amount, which will cause a large increase in my gas bill, until my usage declines and I again begin accruing a credit.

Nicor re-calculates my monthly budget amount from time to time, and adjusts it for changes in my energy consumption and costs. For example, my monthly bill was $32.00 in 2008. It was also $32.00 per month in 2004. It increased to $41.00 in 2005, then to $62.00 in 2006 and decreased to $38.00 in 2007.

Currently, Nicor Gas and Nicor Solutions offer several alternative approaches. These include:

1. Pay as you go, which simply bills all energy consumed each month at the current rate.
2. Budget Plan, which is similar to the "Pay as you go" plan but averages the payments over 12 months.
3. Fixed bill plan, which offers a guaranteed monthly billing, and does not vary with gas usage or natural gas price fluctuations. It includes, I understand, a furnace inspection and cleaning.
4. Flex plan, which offers gas at a $0.05 per therm discount and bills for all energy used.

I am currently using the "Budget plan" and on March 12 I did call Nicor Solutions to see what my options were. They provided me with information on all of the plans available. Here is a summary of costs for those plans, as compared to my budget plan.

First, I am again of the opinion that there are no significant natural gas price increases on the immediate horizon which would influence my bill in the winter of 2009/2010. I base that in part on data available from the US government EIA website, which projects natural gas prices to increase between 0.09% and 7% in the East and West North Central Regions. However, for the sake of comparison, I'm going to assume that natural gas will increase by 7% next year, and with it, my budget plan monthly bill.

Secondly, the winter of 2008/2009 was unusually cold. How cold? According to the National Weather service, this is how monthly low temperatures compared to the normal lows for Chicago-O'hare weather station:

• October Normal Low +43F, this winter (Oct. 2008) +31F
• November Normal Low +31F, this winter (Nov. 2008) +17F
• December Normal Low +20F, this winter (Dec. 2008) -6F
• January Normal Low = +14F, this winter ( Jan. 2009) -18F

These are much lower than the "normal" lows, which were for the period 1971 to 2000. I am going to assume that next winter will be no colder than our most recent. If I am correct, I will use the same quantity of natural gas for heating next year, and my bill should reflect that.

Using my budget plan, here is a chart of the information which I describe below. To compare plans, I need to know costs. For this purpose I am using the bills for the coldest six months ending March 19, 2009. I have not updated the chart below to include the data for February 17-March 19:

The natural gas was consumed for cooking, heating and for hot water, and by a fireplace. Our unit has a 10 year old gas furnace with a set-back thermostat. It also has a natural gas fireplace with pilot. We light the pilot in the fall and do use the gas fireplace during the Christmas holiday season. Once temperatures outside reach 70F I close off the gas valve to the fire place, to shut off the pilot and conserve. Our hot water heater is a 50 gallon natural gas unit which was the “best” that GE had to offer in 2005. It also has a newer (6 year old) G.E. gas stove and oven. We don't use the self cleaning oven feature, which consumes energy; I use the old fashioned "Easy Off" product to clean it periodically. Our unit has ceiling insulation and we are in a second floor, 3-bedroom, 2-bath “B” unit. My spouse and I enjoy cooking and baking and we do a substantial amount.

Here is a summary of our natural gas usage for 6 periods. These include:

1. September 18 - October 17, 2008.
2. October 17 – November 17, 2008.
3. November 17 – December 17, 2008.
4. December 17 – January 19, 2009.
5. January 19 – February 17, 2009.
6. February 17 - March 19, 2009.

My usage, according to my Nicor billing statements were as follows, with usage split on each bill into the months of usage. So my September – October bill includes therms billed in September and October. I took a look at my bill for December 2007 – January 2008 and I used about half the energy (53%) in that period, as compared to the same period this year:

1. September 18 - October 17, 2008 = 2.73 + 3.35 therms = 6.08 therms used.
2. October 17 – November 17, 2008 = 26 +27.24 therms =53.24 therms used.
3. November 17 – December 17, 2008 = 32.18 + 36.77 therms = 68.95 therms used.
4. December 17 – January 19, 2009 = 81.58 + 97.89 therms = 179.47 therms used.
5. January 19 – February 17, 2009 = 33.18 + 40.84 therms = 74.02 therms used.
6. February 17 - March 19, 2009 = 34.88 + 52.32 therms = 87.20 therms used.

Each monthly bill also includes a “Total” which is the sum of cost of energy used each period and includes delivery charges, municipal and state taxes, environmental fees and a utility fund tax. My total for each of the monthly periods was:

1. September 18 - October 17, 2008 = $15.35.
2. October 17 – November 17, 2008 = $59.00.
3. November 17 – December 17, 2008 = $66.76.
4. December 17 – January 19, 2009 = $145.81.
5. January 19 – February 17, 2009 = $63.53.
6. February 17 - March 19, 2009 = $62.35.

Using the number of therms used, and the “total” from the monthly bill, this is my delivered and taxed cost per therm for each month:

1. September 18 - October 17, 2008 = $15.35/6.08 = $2.53.
2. October 17 – November 17, 2008 = $59.00/53.24 = $1.11.
3. November 17 – December 17, 2008 = $66.76/68.95 = $0.97.
4. December 17 – January 19, 2009 = $145.81/179.47 = $0.81.
5. January 19 – February 17, 2009 = $63.53/74.02 = $0.86.
6. February 17 - March 19, 2009 = $62.35/87.20 = $0.72.

Comparison of costs of the Plans available

This comparison looks at these plans:

1. Budget plan.
2. Fixed Bill plan.
3. Flex plan

Using the information presented earlier in the post, here are the comparisons of these plans. I have no crystal ball and so I need to make some assumptions about the future, i.e. the winter of 2009/2010, and energy costs:

Budget plan. If my energy usage next winter is identical to this winter, and if natural gas cost increases by a maximum 7% as predicted by the U.S. government EIA, then my monthly budget amount will also increase by about 7%. Therefore my cost per month under the budget plan will be: $34.24, and my cost for 12 months will be $410.88.

Fixed Bill plan. I called Nicor Solutions and discussed this plan. They reviewed my energy usage, and using their forecasting data, which includes anticipated temperatures and gas costs, they offered me a plan at a cost per month of: $78.80, and my cost for 12 months will be $945.60.

Flex plan. I called Nicor Solutions and they described this plan. It would provide a $0.05 reduction per therm for energy used. I decided to use this information and compare it to my actual consumption for the five months posted earlier in the blog. I used 386.26 therms for which I was billed $257.61. If I had used the Flex Plan, I would have been billed $238.49 for the therms I used. The Flex Plan would have saved me $19.11, and would have reduced my monthly bill to about $28.18, instead of $32.00 per month.

The Winning plan is:

The winner, and plan which offers me anticipated lowest natural gas bill for a year is, in my case, the Flex Plan.

Author's Comments to the Above:

I have several comments to the information presented here:

1. As of October 17, 2008 I had achieved a budget surplus, or credit, of $225.53. This had decreased to $19.25 as of February 17, 2009, and to $0.01 as of March 19, 2009.
2. The comparison of the Flex Plan only uses five months of information. The cost savings is applied to those five months. So the conclusion uses approximate information and my savings over a period of 12 months could be slightly higher or lower.
3. I did not exceed my "Budget Plan" as of March 19, 2009. However, my balance was only $0.01. So Nicor has increased my budget to $35.00 per month, which is their best guess at this time for consumption for the next year. I should again begin to accrue a positive balance until the fall.
4. One of the reasons for the varying cost per therm of natural gas used, is the multi-tiered billing system for delivery charges. I pay a higher amount per therm delivered for energy below 20 therms, a lesser amount for the next 21 to 50 therms delivered, and then an even lower amount for therms above 50. This is added to natural gas costs.
5. Natural gas costs vary per month. For example, according to my Nicor bill, December and January gas was billed at $0.65 per therm used. February this bill decreased to $0.57 per therm, and March decreased to $0.43 per therm.
6. Any comments?
   

Upcoming Posts

I'll be posting the following in the coming days:

[Note: The links for Items that have been posted are included below, as an "aid to navigation":

1. Report and comments on the Board Meeting of March 12, 2009.
2. Information on the Nicor Gas alternatives available, and my energy uses and costs during this recent, cold, winter. This information can be used to compare to your Nicor bills for the same period, and could be the basis for making changes. Posted at: Click Here To Go To Gas Plan and Costs
3. Details of an alternative method of arriving at assessment adjustments. This has been published and provides some interesting and useful insights.

Stay Tuned!