Utility Billing Methods

There are a variety of methods used by properties to recover utility expenses from their tenants,  the 2 most common are Submetering and RUBS or Ratio Utility Billing. There is also Hot Water Capture Cold Water Allocation (HWCCWA), Runtime and many others.

Lets start with Submeters

Submeters

Submetering is by far the most accurate method for billing utility usage.  The property will install a utility meter in your home and then are suppose to bill you for your actual usage.  There are a number of problems however in the execution of these programs.

Read more about Submetering

Ratio Utility Billing

Ratio Utility Billing is where the property will take the overall bill and divide that bill based on the attributes of your property or rental unit.  There are several mathematical formulas that can be used, most are based on one or more of the following: Unit Square Footage, Occupancy, Occupancy Factor, or number of bath rooms.

Let see a real world example, lets say you live in a 10 unit apartment building,  each unit is 700 square feet.  You get a water bill that is calculated based the the total square footage of your apartment.

The property gets a bill from the public utility for $500. That is the total usage from all the residents in your building.

The total square footage of the building is 7000 square feet, they divide the total bill by that amount, then multiple by your units square footage.  So your bill would be $50,  as would all your neighbors.   Now if every thing in life was cookie cutter like that RUBS might not be too bad, but lets look at a more complex example

Your single and work from home, so your rent a 2 Bedroom apartment that is 800 square feet. One of your Neighbors is married couple in a 1 bedroom that is 650 square feet, and another neighbor has 2 kids in an slightly smaller 760 square foot apartment.  The building as a total of 7000 square feet.

Now chances are the neighbor with the kids will use 2.5-3x more water than you do, and the Married couple will use 1.6-2x more water than you do.  Lets see how the bills look

Property Bill = $500
Tenant Charge per square foot = $0.0714

Your Bill:  800 x $0.0714 =  $57.12

Married Couple: 650 x $0.0714 = $46.41

Couple with Kids:  $54.26

So your bill, even though you actually consumed less water than the others, is HIGHER under RUBS,  this because the mathematical models used to calculate the bills are geared to “normal” situations.

Another way RUBS causes higher than normal bills, is that since usage has only a indirect unseen tie to the actual bill, there is no incentive to conserve, report leaks, or be conscious of water usage at all,  so people take longer showers, run the water while brushing their teeth, leave lights on, etc.

It is my opinion that RUBS billing should be outlawed,  it highly inaccurate and can punish all tenants for the behavior of a few.

Well what can I do if I am billed based on RUBS

The first step is to ensure your state allows RUBS billing,  do not ask your property or the billing company as they probably do not know if it is or not. There are very few states that have outlawed RUBS so chances are it is legal, but you should consult with your local public utility commission, or a private attorney.

Next You should definitely ask your billing company the following questions

  1. Do you bill my unit using RUBS
  2. If so how do you calculate the usage.
  3. Can I receive a copy of the monthly bills (in some states the property is required by law to allow you to review these).

Once you have this information you should always double check the math, you would be shocked at the amount of math errors I have found in my history in this industry,  it is almost like some of these companies have not heard of the new invention called the calculator.

Some companies have highly advanced billing systems (many of which are error prone as well) other companies generate your bills using an Excel Spreadsheet,  just because you get a fancy looking bill in the mail does not mean the company that made that bill knows what they are doing.

Additionally if your property has a Pool, Sprinklers, Clubhouses, etc make sure you also ask how they calculate and deduct common area usage.  In most areas it is illegal for the property to charge you for their common area utility usage.

Be sure to follow our guide to complaining about Utility Bills as well, but at the end of the day if RUBS is legal in your area my recommendation is to seek out a new apartment as soon as possible,  be sure to express to the management of your community that you will be leaving at the end of your lease because of their decision to us RUBS, if enough people follow you in that and the properties occupancy rate is negatively impacted by it they will change.

Make your you ask about the billing procedures for utilities before signing your next lease.

Hot Water Capture Cold Water Allocation (HWCCWA)

HWCCWA  is where only hot water usage is metered.  HWCCWA is used on a large number of properties because of the way the plumbing was originally run there is no way to isolate the cold water supply from the neighboring units, where many apartments do have an isolated hot water supply (if you have a water heater in your apartment then you have an isolated hot water supply)

While this is not as good as Full Capture Submetering, this is a HUGE step above RUBS.

In a HWCCWA billing scenario the billing company will take the total number of gallons and divide that by the total usage on the property (less a common area usage amount) that will give them a Ratio of Hot Water usage to Cold Water usage,  they will then multiply your actual hot water usage  by this amount to get your total calculated usage for the month.

So as you can see this method is more closely tied to your actual usage and is far more fair to each tenant.This billing method is far more accurate over RUBS.

However with that said please read our entire segment on Submetering because EVERYTHING in that section also applies to HWCCWA billing.

Unfortunately some states have chosen to outlaw HWCCWA but still allow RUBS, which make zero sense to me.

If you billed based on HWCCWA you need basically follow all of the Recommendations of RUBS and Submetering when attempting to verify the accuracy of your bill. You need to know the total consumption of all the meters, the total consumption billed by the utility company, and your metered usage to accurately calculate your bill yourself.

Never trust a 3rd party.

Run-timers

Runtimers are mainly used on Furnaces or other large Gas/Electric systems,  they basically just record the amount of time the unit was operating. Then based on Manufacturer Specs you can calculate the amount of energy that unit should have consumed over that period

For example if your furnace has a Input rating of 100,000 BTU’s/hr and your furnace ran for 54 hours you consumed 5,400,000 BTU’s of energy, there are 1,000 BTU’s of energy per cubic foot of natural gas so you would have consumed 5400 cubic feet of natural gas,  your utility bill would be based on that.

Runtimers are very basic electronics and are not prone to error themselves, the problem is in the math.  Most billing companies will not take the time to ensure they have the correct BTU ratings, and worse properties do not inform the billing companies when they change these major appliances, thus it is possible that when the Runtimer was installed you unit has a 80% efficient 80,000 BTU furnace that has since been replaces with a 95% efficient 65,000 BTU  one, and if the formula is not adjusted with this new input variable you will be paying a MUCH higher bill than you should be.

Further I have personally seen billing companies just use the same input rating for an entire property, when I know for a fact that the furnace rating varies from 65,000 to 100,000 BTU’s

So while run-timers and the math is very accurate when use correctly, the industry as a whole is lazy so it does not want or care to get it right. If you are billed based on Runtimer you need to ensure they have the correct input variables for what every they are metering with the runtime, and get the raw runtime data and do the math yourself. it is not that hard.  Feel free to contact me and I will be happy to provide you with the formulas for your situation.  I am an expert at developing them, and have for many companies (who often choose to ignore me)

What to look for……

If your property is using a runtimer billing make sure they have the proper input rating for your appliance(s) (normally the furnace) and ensure they are not using Runtime Allocation (see below).

If your runtimer has a Readout on it make sure you verify the reading matchs that reported on your bill, If your runtimer does not have a Readout, I Recommend requesting the property install one, or seek permission to have one installed yourself (they are not that expensive) so you can accurally track your usage and compare it with what your billed.

If your property does use Runtime allocation read the next section.

Run-timer Allocation

Another method lazy billing companies will use with Runtimers is the so called “Runtime Allocation” method,  this is just a fancy name for a wholly inaccurate RUBS, and like with RUBS I feel this method should be outlawed.  It is a bastardization of HWCCWA in that they get the total amount of time that all the furnaces or other appliances ran, divide your usage by the total so see what Percentage of the over all time your unit used, then bill you that percentage of the master bill.

So if all the Furnaces in the Complex ran for 540 hours, and your individual unit ran for 54 hours you used “10% of the bill”.  If the properties master bill was $500 you would be charged $50.

There is no logical connection or mathematical model that shows this to be an accurate billing methodology,  this only works if every runtimer is connected to the exact same model appliance,  but never in my life have I serviced or installed a property that is like that, and as the property ages appliances are swapped with newer models,  so even if a property is built with all the same models, over time this billing method will be less and less accurate, and there is zero advantages to using Runtime Allocation over billing with runtimers properly as I outlined above.  Only lazy or incompetent billing companies choose to bill using Runtime Allocation

My property does this, what should I do…..

First off, if your runtimer has a readout, then it is very easy for you to calculate your own usage, if you do not know how feel free to email me and I will be happy to help. Once you know how much you should be paying consult with the property and billing company to see if they will accept this amount.  Some billing companies are reasonable, if they do not file a complaint with the public utility commission in your area as unlike in a traditional RUBS scenario you have provable overbilling, which in most areas is illegal.

 

 

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