Submetering Primer: What Is Submetering?

The usual set-up: most developments either have a single master meter for the entire site, or a meter for each building. Either way, the development is charged for the site’s water and electricity bill. This charge is then divided by the number of units within a site and passed on to the tenants via their monthly rental fee, association dues or other forms.

Submetering involves the installation of individual meters to each unit within a development, such as multi-family homes, commercial buildings, mobile home communities, etc. Once that development is submetered, the charges will then be divided based on a unit’s individual consumption, providing a much fairer way to share the expense. Tenants who use less utilities also pay less and no longer have to pay for neighbors who use more.

Submetering has been around for more than 2 decades, starting with the electric industry. Before that, every property only had one master meter and the owners would have to pay for the entire bill. This led to a lot of irresponsible utilities use because tenants were not directly responsible for their own bill. Once submeters were installed for each unit, the utilities consumption greatly decreased. From then on, submetering has become the standard and the water industry followed suit.

One aspect of utility billing that hasn’t changed is that property managers or owners still need to pay their monthly utilities bill to their local municipality. Each month, a utility billing company will read the tenants meters, bill them for their use, collect from the tenants and remit payments minus the billing fee, along with detailed reports to the property owners.