Utilities - Direct Water Billing: Policy Issue
Overview
In the face of rising water costs, housing providers have increasingly moved to directly bill residents for water through either installing submeters or using Ratio Utility Billing Systems (RUBS). Submetering allows property owners to bill each unit for individual utility usage through the installation of additional meters behind a utility meter. RUBS is a formula-based methodology for calculating a resident’s water usage. These methods allow the fair assessment of water usage costs to residents. However, utility regulators in some states and localities have attempted to curb the ability of apartment owners to engage in this practice, alleging it amounts to a resource's sale or resale.
Industry Position
The National Apartment Association (NAA) believes that states and localities should take care to exempt property owners when considering utility-related legislation or regulatory code changes that require or encourage direct water billing practices. NAA also believes lawmakers should allow property owners to decide what type of direct water billing system works best for their business and the residents they serve.
As an Owner or Operator, How Does this Affect My Business?
Direct water billing practices relieve the financial and administrative burdens associated with anticipating residents’ water usage, while also giving residents a stake in the water economy. Charging residents for their water usage creates an incentive to conserve that has been proven to yield significant consumption drops.
RUBS represents a viable option for owners who decide against investing in submeter installation, or who own a property with a configuration that makes submetering impossible.
State and local agencies have attempted to limit the ability of apartment providers to directly bill residents for water, arguing the practice amounts to the resource's sale or resale. Regulators frequently take issue with fees related to such billing programs, implying that property owners and third-party billing companies are unfairly profiting from the billing process. In such cases, regulators typically seek to require apartments owners to cease the practice or register as a public utility.
However, any limitations on the two types of direct water billing would force owners to estimate water costs and include them in the cost of rent, leaving owners on the hook for increased use above that estimate or renters paying more for using less.
Contact Information
To learn more about this issue, please contact NAA's Public Policy team.
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