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The Status of Submetering

As utility costs continue to increase, many property managers are exploring submetering as an option to save money. Historically, multi-tenant properties would often bill each tenant for a fixed percentage of utility costs. The traditional approach actually benefits the least efficient tenants, since their energy usage is cheaper per kilowatt hour the more energy they use. In addition, an equal division of the utility bill doesn’t take into account factors such as:

  1. Number of occupants
  2. Tenant equipment/machinery
  3. Square footage
  4. Heating, cooling, and lighting habits

In response to the shortcomings of a fixed percentage billing system, Ratio Utility Billing Systems (RUBS) have gained in popularity. The RUBS method allows the property manager to allocate a specific percentage of the utility bill to a tenant based on some of the variables listed above.

Unfortunately, fixed percentage and ratio billing methods still rely on assumptions rather than actual measured data. Of course, installing individual meters for each tenant has always been an option. Individual meters are by far the most equitable solution because each tenant’s usage can be accurately measured with no assumptions on the side of the property manager. However, individual meters are typically sourced through and installed by the utility company, which raises the acquisition and installation costs considerably.

Utility companies will likely continue to charge a premium for more granular metering options since it does not benefit them to provide the customer with cost saving technology. Fortunately, the cost of third party metering technology is steadily decreasing, and these meters have several benefits over traditional utility meters.

Accessibility of Data

  • Smart meter data is typically available through a web portal or by directly accessing the device. This data can be made available to the tenants too, offering instant feedback for conservative utility usage. Furthermore, data exports and backups are typically available if needed for safekeeping or additional processing.

Precise Data for Specific Efficiency Measures

  • Internet-connected meters allow for instant access to data, often at extremely high resolution (one second or one minute averages). Traditional utility billing only provides a meter read once a month (and sometimes the values are estimated).

Reduced Installation Cost

  • Unlike many utility meters, smart meters can be installed by any trained electrician or plumber at reasonable rates. Newer meters are typically smaller and less intrusive than their older counterparts, reducing install costs. Many installation locations are available.

Independent Ownership

  • Meters can be tenant and property owned assets, helping reduce electricity usage. Meters with ongoing fees still provide the opportunity for savings, especially if data is made available to the tenants directly. Data can be shared freely with third parties if desired, and there are no forced changes to different hardware by the utility company.

It’s true that granular, inexpensive, reliable, and directly accessible submetering solutions allow tenants and property managers to recognize significant savings. The ability to track usage in real time rather than being at the mercy of the monthly utility bill translates directly to better usage habits.