If you live in a multi-family building in New York City, your electricity bill might be a bit of a mystery. There are lots of ways that landlords can handle utility bills, and it’s not always clear who the bill is coming from and how the charges are generated. So let’s get into it: how does your electricity bill work?
Every building that is connected to a public power grid has at least one electrical meter that the electric company uses to measure total power usage in the building. That said, in a multi-family residential building, lots of people are using electricity off that one meter. To manage costs and energy usage and fairly charge tenants for electricity, utility companies and landlords have a few different ways of setting up electrical service and billing.
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It’s possible that your building is direct metered. This means that each unit has its own electrical meter installed directly by the utility company. This meter reads the amount of electrical service that is used only in your living space. The utility company then monitors this meter to determine your usage and calculates a bill from that. If this is your situation, you will set up an account with the utility company and pay them directly.
If you’re keeping track of your electrical usage, direct metering is convenient because the charges are coming directly from the provider. That said, one thing to look out for is whether your bill is based on estimated charges or the amount of electricity actually delivered. Sometimes, when the utility company isn’t able to come read the meter and you do not yet have a smart meter installed, they will use the last month’s usage to estimate the charge you see on your bill. If your usage is stable, this isn’t a big deal, but if you’re trying to reduce your usage and your bill, this can be frustrating. If you believe you’re being overcharged due to estimated charges, talk to your electric company about submitting meter readings!
Alternatively, your building may be master metered. This means that there is one meter for the whole building, installed by the utility company, and it’s what they use to determine how much electrical service is being used by the entire building. But most likely, the landlord doesn’t want to foot the electric bill for the whole building. If this is the case, your landlord has a few options for dividing this bill up and recouping the costs of electricity for your apartment.
One solution is for the landlord to include electricity in rent. This used to be quite common in older buildings because the cost of updating metering was high, and the cost of electricity used to be consistently low. However, this is becoming less and less common, and especially with volatile energy markets, landlords avoid this because it can be hard to predict energy costs over a whole year. If this is your situation, you’ll have known about it since you signed your lease!
A second option is for your landlord to use a Ratio Utility Billing System (RUBS). This is essentially a formula used to divide up the electrical bill of a multi-family building between the units, usually based on square footage and occupancy. If this is your situation, the terms of how the electrical bill is calculated should be clearly laid out in your lease, and you should be billed by your landlord or a third party based on the terms in your lease.
A RUBS system is useful to landlords because it allows them to recoup the real costs of energy, but it isn’t great for energy efficiency. If the electrical bill is being divided between apartments just based on apartment size, tenants aren’t incentivized to reduce electricity usage because any savings will also be divided between all the units. So basically, if one tenant is conserving energy but another leaves the lights and TV on all day, the frugal tenant won’t really see savings.
Also, this system makes it hard for tenants to take advantage of programs like OhmConnect, which adds a hurdle for tenants looking to save money and reduce their energy consumption.
The last option for a building with a master meter is submetering. Especially in New York City, which requires many buildings to submeter, this is becoming the most common solution to multi-unit utilities. Submetering is when the landlord installs individual submeters below the master meter that show the exact energy usage of each unit. These submeters are monitored by either the landlord or a third party company, and essentially, the landlord will act as the utility company and bill tenants based on usage every month.
If this is your situation, you’ll receive a bill from your landlord or a billing company that is not the electric company, but it should contain the same information. You will be charged on your actual usage in your unit only. Submetering provides the tenant a transparent view of their energy usage, plus clear financial incentives to reduce their energy usage. Additionally, because each unit’s usage is tracked separately, tenants are able to take advantage of time-of-use savings. Submetered buildings can see big drops in total energy usage, especially when combined with other energy conservation measures.
It’s important to note that landlords are only allowed to charge up to the rate that the actual utility company is charging, plus a reasonable service charge. Submetering is strictly regulated by the New York Public Service Commission to prevent landlords from overcharging tenants. The utility company usually has an easy way for tenants to check the submetering rate, and there are penalties in place if landlords are found to be overcharging tenants.
One last thing to know: legally, you can’t be charged for electricity if your unit is on a shared meter. This is when one tenant’s electrical meter is connected to another space in the building, such as a shared laundry room or another apartment, that the tenant doesn’t have exclusive access to. Basically, this is meant to prevent landlords from lumping common area utilities into a tenant’s bills. If you believe your electricity billing includes any shared spaces, reach out to the utility company and request an investigation—your landlord might be required to foot the bill.
Utility bills can be confusing and hard to read, but it’s worth digging into where your energy comes from and who your payments are going to. Especially if you’re trying to save energy and money, get to know your electric bill to make sure that you’re being charged fairly and that your energy-saving efforts are being rewarded!