Utility submetering vs. mathematical allocation

Are you ready to start charging your residents for their water and sewer usage, but not sure where to begin?

Once you dig into it, you’ll find that there are many options available. But they can be confusing to sift through in order to determine which is best for your specific property. In this article, we’ll break down the two types and offer insights into each.

Submetering:

• Traditional Metering (single point)
• Inferential Metering

Mathematical Allocation:

• Flat surcharge
• Ratio Utility Billing Service (RUBS)

SUBMETERING:

TRADITIONAL WATER SUBMETERS

Most newly constructed apartments include plans for submetering water. Plumbing could be configured now so that meters may be added later if desired. But, if the property owner is going to spend the money to plumb units with individual water feeds, he or she may as well reap the immediate benefits and charge tenants for their measured consumption.

Submetering offers immediate enhancement to the worth of real estate, in terms of both ROI and property value. Please review the matter with your engineers and architects before the design phase concludes. To implement submetering, it is essential to decide beforehand, so that the designs include a single point of water supply.

Some existing properties were built with the foresight of water submetering. They were constructed so the entire water used by an apartment comes into the unit at one single point, with adequate space (in an appropriate area) for a water submeter. By installing submeters, properties will demonstrate to tenants that increasing costs are the result of the city’s sewer reconstruction program, and residents will not mistakenly hold the property responsible for frequent rent increases that would otherwise be required just to cover rising utility costs.

INFERENTIAL SUBMETERING

Some existing properties were built without foresight of water submetering. However, with individual hot water tanks, these properties are excellent candidates for inferential submetering. Though strikingly similar to traditional water submetering, only the water that feeds the hot water tank is measured. That measured usage is then used to infer the total usage for that apartment, based on the total usage for the building.

MATHEMATICAL ALLOCATION:

Most existing properties were not plumbed in a way that submetering can be done without major expense. When these apartment complexes decide to begin allocating water and sewer charges, they turn to mathematical allocation. The residents are charged based on various factors, allowing for a fair method of billing without causing the property to ‘break the bank’ on setup costs.

FLAT SURCHARGES:

Some properties opt to have a flat rate per tenant, or even per bedroom, for the water and sewer. There are many problems with charging a flat rate. The tenant doesn’t feel like they are paying for water, but are paying additional rent. There is no incentive for the residents to conserve on their utilities. Lastly, the flat amount is an estimate of what the tenant might use in the next year and may not be able to be increased until the current lease agreement expires, leaving the property vulnerable to rising costs.

RUBS: RATIO UTILITY BILLING SERVICE

One effective approach to billing residents for water, if submetering is not a viable option, is to allocate charges using a formula. This approach is a well-established and accepted method when actual utility metering is impractical. The most common type of RUBS billing is charging based on the number of occupants and the square footage of an apartment. However, there are other methods available, such as; solely based on occupancy, even division of the fixed service charges with usage based on occupancy alone, or solely based on square footage. Using RUBS methodology gives the resident incentive to conserve and the feeling that they are paying for their water and sewer usage, rather than just additional rent.

No matter which option is chosen, the best method is to start charging residents now, before the utility rates get so high that the first tenant bills are too hard to swallow. With so many options to choose from, you may want to turn to a professional to help you weigh the pros and cons. Liss Technologies Group is happy to help – simply request a free consultation today!