When rental properties have bulk utility meters that service an entire property – instead of individual meters for each tenant – problems can occur when it comes to equitable dividing up of the total bill each month.
Tenants who stay at home will naturally use more electricity, water and gas than working couples who are out all day, yet both sets of tenants will be asked to pay the same utility cost. The total bill is simply divided by the number of tenants.
This is where utility submetering becomes even more beneficial.
What is Submetering?
Submetering is the process where a landlord pays the entire utilities bill to the service provider, but then recovers these costs from each tenant individually. The amount is calculated on individual meters that show exactly what a tenant’s energy consumption has been.
Landlords simply need to calculate the cost per gallon for water, per kilowatt hour (KWH) for electricity, and per cubic foot for gas. These costs are then multiplied by the number of gallons, KWH and cubic feet each tenant has used which is shown on their meter readings. Landlords are not allowed to make a profit on these charges. They may only charge for what the tenant has used.
Some utility submetering service providers will do all these calculations on behalf of the landlord: send out bills to tenants, receive the payments and pay the amounts across to the respective utilities companies.
The practice of utility submetering delivers favorable results for all concerned.
First, submetering helps conserve energy, as once tenants become aware of how much they are using, and how much it costs them, they will find ways to use less in order to save. You can see the immediate financial benefits of reducing your consumption.
Second, it benefits residents as they get to take direct control of their individual electricity and water consumption. Utility submetering helps tenants understand, monitor and conserve their usage, and you only pay for what you use.
Third, building owners get to improve their energy consumption, thus saving on overall energy costs. It also gives them a much more accurate and efficient way to manage their utility expenditure.