The Very Real Issues With A Ratio Utility Billing System

Most tenants moving into apartments or other types of multi-family residences will be told the amount they will pay for water, and perhaps other utilities, when they move in.

This is typically calculated through a formula known as a ratio utility billing system or RUBS. In the not too distant past, this is a common practice for landlords of both residential and commercial properties to use. Now, with the option to use individual smart meters on every unit, fewer buildings are still using RUBS, and for very good reasons.

The Calculation

Most types of commercial properties will use a percentage of the monthly bill based on the amount of square footage the commercial tenant rents. For example, if there were two tenants with the same square footage in a commercial property, the monthly bill would be split into two. If one had 2/3rds of the square footage and the other 1/3rd, the utilities bill or bills would be divided by 2/3 and 1/3 respectively.

In residential properties, the same square footage factor is used, but usually, there is an additional calculation based on the number of occupants. This only makes sense as a 1000 square foot apartment with one tenant would reasonably be expected to use about ½ as much water as a 1000 square foot apartment with two tenants.

The Problem

The concern with the ratio utility billing system is the inequality if one tenant is practicing water conservation and the other tenants are not. For example, even with a similar sized apartment with the same number of occupants, one unit may use significantly more or less water than the other, but both would pay the same amount.

While smart meters will eliminate the ratio utility billing system, RUBS may still be required in some older buildings. This is often the case when the old plumbing and utility systems are not designed in a way to allow for smart meter technology in the building.

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