Exploring Master Metering vs. Submetering: How They Impact Your Utility Billing System

Exploring Master Metering vs. Submetering: How They Impact Your Utility Billing System

For multifamily property owners, understanding the nuances of metering infrastructure can significantly impact utility billing practices. In this post, we delve into the disparities between master meters and submeters and their implications for your utility billing system.

In essence, a master meter and a submeter perform similar functions as utility usage meters, but their focal points differ:

• A master meter measures the utility consumption of an entire building.

• A submeter, situated beyond the master meter, gauges usage within specific areas of the building covered by the master meter.

Though seemingly subtle, this disparity holds significant implications for operating costs and property profitability within your utility billing system. Let's explore the utility billing scenarios associated with each metering option.

Utility Billing Solely with a Master Meter

When relying solely on a master meter for utility billing, property owners face limited options. They can either include utilities in the rent or apply a flat rate for all tenants. However, this approach presents challenges, primarily due to varying utility usage among tenants. Charging a flat rate risks under-recovering utility costs.

Fortunately, a solution exists for billing based on usage with only a master meter: Ratio Utility Billing System (RUBS). RUBS allocates utility costs to residents based on a standardized formula, factoring in unit size, layout, and occupancy. It's a cost-effective method that enhances utility cost recovery, promotes fair cost allocation among tenants, reduces unnecessary consumption, and bolsters a property's net operating income (NOI).

While RUBS is beneficial for properties with master meters, installing individual submeters offers even greater accuracy in utility billing.

Utility Billing with Submeters

Submeter installation enables property owners to bill tenants based on their actual utility usage, ensuring precise cost recovery each month. However, this option entails upfront expenses, as property owners must procure and maintain the submetering system. Despite these costs, investing in a submetering system proves worthwhile, as it leads to substantial savings in utility costs over time.

Collaborating with a Utility Billing Expert

Engaging a utility billing expert facilitates various aspects of the billing process:

• They assist in designing and implementing the most suitable billing system for your property.

• They ensure accurate and prompt billing, contributing to a high collection rate.

• They provide access to real-time usage data, enabling proactive management and early leak detection.

For multifamily property owners, grasping the disparity between master metering and submetering systems is crucial for informed decision-making in utility billing. Submetering represents a prudent investment in a property's overall profitability. By transitioning from master meter readings to billing based on usage, property owners can effectively reduce utility costs and enhance property profitability.