Best Practices for Fair Tenant Billing: A Brief Guide
- DrizzleX
- Aug 5
- 8 min read
If you want to bill tenants for their utility usage, also known as utility sub-billing, you’ll need to measure how much each tenant uses and determine the costs. It’s all about tracking usage and making sure everyone pays for what they use.
The process includes measuring how much each tenant uses electricity, water, and gas, and then invoicing them based on their actual usage. This way, everyone pays their fair share, and it keeps things transparent and fair for everyone in the building.
In this article, we’ll go over some tips and other tenant billing solutions to help you set up fair and accurate utility sub-billing for your tenants.
The information provided in this article is for general informational purposes only and should not be considered legal advice. Water billing practices, including the implementation of submetering systems, must always comply with the terms outlined in the lease agreement between landlords and tenants. Property owners and managers are advised to consult with legal professionals to ensure their billing methods align with local laws, regulations, and contractual obligations.
Why Billing Tenants Can Feel Unfair?
Most property managers still bill tenants for their water and energy consumption using the Ratio Utility Billing System (RUBS) in buildings without individual utility tenant meters for each unit. With RUBS, bills are split based on factors like the size of the apartment, not what a tenant actually uses.
However, many tenants feel this system is unfair because it's quite vague whether they're actually getting billed for their actual water and energy usage.
Although it's understandable to think that a tenant's apartment space and the number of people within it could result in higher water and energy costs, this conclusion isn't all that accurate.
Recommended reading:
Why RUBS Rubs Tenants the Wrong Way
For example, a family of three that uses water and energy responsibly will consume less than a single tenant who is careless with their utilities.
With RUBS, the property manager would have to bill the family of three higher than the single tenant, which is unfair. As such, using RUBS doesn’t sit well with a lot of tenants.
Another problem is that RUBS doesn’t give tenants any reason to save on utilities. Since they’re not paying for their own usage, some of your tenants might use more than they need. That pushes bills higher for everyone.
In the end, RUBS can cause a lot of frustration. Tenants feel like they’re paying for someone else’s usage, which can lead to dissatisfaction.
Some cities have recognized the problems with RUBS and decided to ban them. For instance, Santa Monica, CA, no longer allows RUBS as a billing method.
Why Is Fair Billing Important?
Fair tenant billing is important for several reasons:
Better Tenant Satisfaction and Relationship
Just like how businesses aim to encourage customers by offering clear pricing and excellent service, property managers can build trust with tenants by implementing fair utility billing.
It feels a lot fairer and clearer for tenants when they are billed based on their actual utility usage. They have more control over their costs, which helps them manage their expenses.
A fair tenant billing process improves the living experience and strengthens the relationship between property owners and tenants.
Accurate Tenant Billing Helps Your Profits
When you bill tenants accurately, you recover all your utility costs without missing anything. It also gives you useful data to see how resources are used and spot ways to save money. In the long run, this helps keep your property profitable and running smoothly.
More Environmentally-Friendly
When tenants are billed for what they actually use, they have a reason to cut back on their utility consumption.
This saves money and helps with sustainability efforts by lowering the property's environmental impact. In fact, fair tenant billing can reduce a building’s utility usage by 5–10% or even more.
Stay Compliant With Local Laws and Regulations
Fair tenant billing keeps you in line with regulations and reduces the risk of legal issues. It also shows that you manage your property responsibly, which helps build trust and credibility with your tenants.
Best Practices for Tenant Billing
If you want to start adopting tenant billing solutions that would make charging your tenants fairer, here are some of the best practices you can try out:
Accurate metering: Compared to RUBS, submeters track each tenant’s actual usage. This helps you bill fairly based on real water or electricity use.
Clear billing statements: Show unit prices (like per kWh or gallon), meter readings, and total cost. You can use property management software or spreadsheets like Google Sheets or Excel.
Stay accurate with audits: Regular audits help keep bills correct and make sure you're following local rules.
Use smart technology: Submetering systems with dashboards and usage history make billing easier and help tenants see and improve their consumption.
Submetering for Tenant Billing
If you’re looking to improve your billing method, tenant submetering can help. It makes it easier to manage utilities, lowers monthly bills for tenants, and simplifies invoicing.
What Is Submetering?
A submetering system measures how much water, electricity, or gas each unit in your building uses. This way, you can bill tenants for precisely what they use instead of splitting costs evenly or using estimates.
Now, for water, here’s the tricky part: most apartment buildings don’t have separate water mains for each unit, so traditional water meters won’t work.
Instead, you can install micrometers on fixtures like sinks and showers. With IoT technology, these micrometers track usage for each unit and make monthly billing much easier and more accurate.
Applications of Submetering
Here are some common uses of submetering:
Toilet use: A micrometer measures water usage for each flush, making it precise. It’s great for spotting leaks or inefficiencies and lets you bill tenants accurately for exactly what they use. This keeps things fair and helps avoid surprises on bills.
Kitchen sinks: Putting micrometers on kitchen sinks lets you track water used for cooking and cleaning. It also helps tenants see how much water they’re using, allowing them to manage their consumption better.
Faucet use: Tracking faucet usage in bathrooms, kitchens, or utility areas gives you detailed information about water use. This data helps spot leaks or notice if someone uses more water than expected.
Showers: Installing micrometers in showers is a smart move for accurate tenant billing. It also helps you catch illegal high-flow showerheads that might be wasting water.
Any water fixture: Using submetering on all water fixtures, including those in each unit and shared areas, helps property owners track water usage across the entire property. This makes it easier to divide water costs fairly among all tenants.
Submetering Case Study From DrizzleX
DrizzleX installed a submetering system at this property, and it made a big difference.
The image below shows that the property's water usage dropped, costs went down, and tenant billing became more accurate. Everyone benefited from the changes.
Here’s a breakdown:
Big drop in daily use: Water use went from 2,363 to 1,268 gallons per unit per day after installing DrizzleX.
Annual savings: The property saved $10,860 and cut water use by 55%. That’s 592,960 gallons saved in one year.
From a Tenant Billing Perspective
When it comes to tenant billing, here’s what happened:
Lower Usage, Lower Bills
Thanks to the DrizzleX system, water use per unit has dropped a lot. Tenants are now using less water, which means their water bills are lower, too. It’s a win-win for everyone!
Meter Readings Show Actual Usage
Owners save through submetering by billing tenants for their actual water use instead of relying on flat rates or estimates based on the building’s total usage. This keeps things fair and accurate for everyone.
How DrizzleX Can Help You With Tenant Billing
DrizzleX helps you find hidden leaks, like running toilets or dripping faucets, so you don’t waste water without knowing it. It also tells you when a tenant is using too much water.
Most buildings that use DrizzleX cut their water bills by 25 to 45 percent, sometimes even more.
You’ll likely get your money back fast. On average, buildings save enough on water to cover the full cost of DrizzleX in about nine months.
Usage reports: DrizzleX gives you a “Water Consumption Insights Report” that shows how much water each tenant uses. You can use this to talk to tenants about their habits and help cut waste.
Leak detection: Some leaks are hidden and only show up on your bill. DrizzleX tracks water flow and tells you where and how much water is being lost.
Email notifications: When a leak is found, you’ll get an email with details like the apartment, fixture, how many gallons were lost, the possible cause, and how to fix it.
Billing: You can bill tenants based on their actual water use. When tenants pay for what they use, they tend to use less.
How to Get a Gallon Report and Calculate Tenant Water Bills With DrizzleX
Billing your tenants is made easy with DrizzleX. For an accurate bill, the system takes in two components:
Your sewer/water local rate
Gallons report per building
Here’s a simple step-by-step instruction on how you can use DrizzleX’s system to bill your tenants:
Once logged in, find the “Gallon Report” section on the homepage.
Choose the property or building you need the report for.
Specify the date range to define the billing period.
Click “Generate CSV” to download the water usage report for the selected property.
Locate the downloaded file on your computer and open it.
Find the “HCF per period” column in the file.
Multiply the HCF value for each unit by your water and sewer rate.
Prepare the bill details for tenants
You can also include the following in the bill for a clearer bill breakdown with your tenants:
Start and end read values: Show the meter readings at the start and end of the billing period.
Total gallons per period: Display the total water usage.
Total HCF: Include the total HCF value.
Rate per HCF: Provide the water and sewer rate used in the calculation.
Total amount in USD: List the total charges for water and sewer usage.
Want to know more about DrizzleX? Get a free quote now.
FAQs About Tenant Billing
What is tenant billing?
Tenant billing is the process of charging building tenants for the utilities they use, like electricity, water, or gas. Property managers use billing data, such as meter readings or energy usage, to create tenant invoices.
A good billing system helps owners manage energy costs and provides tenants with accurate information so they can better control their usage.
What is rental billing?
Rental billing covers all charges related to a tenant’s rental unit, including rent and sometimes utilities.
If there are multiple tenants in one building, rental billing may include split utility costs based on consumption data or space.
This process makes it easier for landlords and property managers to keep billing activities simple and reliable for each unit.
How do I start billing water and energy consumption for my client?
To start billing tenants for your client, you’ll need access to energy consumption or water meter readings from the building’s systems. Then, set up a process to collect data, generate invoices, and send them to tenants.
Property managers often use energy management solutions to help track billing information and improve data quality for future billing activities.
What utilities will the tenant be responsible for?
Tenants are usually responsible for their own energy usage, including electricity, gas, and sometimes water. What they pay depends on what the building setup allows and what’s stated in the lease.
In many commercial buildings with multiple tenants, landlords use meters or submeters to measure individual consumption, so each user pays only for what they use.
How can energy management help reduce energy costs?
Energy management helps track and control energy consumption through accurate measurement and better use of data.
By using tools that improve reliability and give a clear view of usage, building owners and property managers can optimize systems to lower energy costs. This process supports smarter decisions and more efficient energy use over time.
