Why Do Landlords Submeter Utilities?

With energy costs on the rise, an increasingly large fiscal strain has been placed on landlords and operators of multifamily properties. The cost of providing utility services can easily add up to tens of hundreds of thousands of dollars per year, and if utility cost recovery rates are low, net operating income suffers. It is critical to turn utilities from an expense into an opportunity.

Submetering allows property owners and managers to fairly distribute utility costs among residents, increasing recovery rates by empowering them to take charge of their usage and mentally separate rent from utilities. Additionally, submetering is proven to reduce overall consumption. Studies have shown that residents who receive individually calculated utility bills feel more responsibility, with water, gas and electric usage dropping as much as 35%.

Types of Utility Submetering

There are two main practices used to individually calculate water, gas and electric bills.

True submetering refers to the practice of installing individual meters in each unit, allowing property management to measure and record each resident’s actual utility usage.

In cases when installing meters is too expensive or logistically challenging, ratio utility billing, or RUBS, is used. RUBS calculates utility bills based on industry-accepted formulas, taking into account unit size, occupancy, layout, amenities and more.

How Utility Bills Are Calculated

With a true submetering setup, each unit’s actual usage of gas, water and electric is measured and billed back precisely based on the utility company’s rates.

With RUBS billing, the landlord’s master utility bill is allocated among residents using a number of variables, including the number of residents per unit, the number of occupancy days per billing period, the square footage of each unit, the number of rooms and fixtures per unit, as well as other factors. RUBS formulas can be customized for each property or portfolio.

What Utilities Can be Submetered?

Submetering and RUBS billing are commonly used for natural gas, water and electricity. It is relatively common for a single property or portfolio to use multiple types of utility billing, e.g., submetering for electricity and RUBS for gas.

Non-utility expenses such as trash, cable, parking and storage can also be calculated and billed back individually to residents.

Is Submetering Only for Apartments?

No. Any type of multi-unit property can take advantage of utility submetering. The team at Synergy has helped student housing, HOAs, military housing units, water districts, mobile home parks and other types of multi-unit or multi-home dwellings start submetering programs. Commercial properties can also be submetered.

Why Should I Outsource Submetering & Billing?

While it is possible to implement DIY utility submetering and billing, it is a better use of time and resources to outsource to a full-service firm like Synergy. We offer a “one-stop shop” for utility cost recovery, from infrastructure consulting and system design through installation, maintenance, billing, collection, remittance, reporting and resident services.

Many of our clients had previously attempted to handle utility billing in-house. Inevitably, they didn’t realize how much time, effort and hassle it involves – and quality is sub-par. At no cost to the landlord, we’re able to make multifamily properties’ utility challenges go away, allowing owners and managers to focus on their core competencies. Rather than a set expense, utilities become an amenity.