Managing utility billing across multiple states can be tricky due to varying regulations. Here's what you need to know:
- States differ on what billing methods are allowed, such as RUBS (Ratio Utility Billing System), submetering, or supplier consolidated billing.
- Some states, like Oregon, ban certain methods (e.g., RUBS for specific utilities) and enforce strict disclosure rules.
- Tenant protections, such as caps on fees and rights to inspect billing records, vary widely by state.
- Noncompliance can lead to hefty fines, legal issues, and reputational harm. Research shows noncompliance costs are 2.71 times higher than compliance costs.
Key state highlights:
- Oregon: Requires detailed disclosures and prohibits charging tenants more than the utility provider's actual costs.
- New Mexico: Allows RUBS and submetering, with capped administrative fees.
- Utah: Permits RUBS for water and waste but bans electric submetering.
- Florida: Allows RUBS and submetering but has strict local rules in some counties.
- Missouri: Flexible billing options but emphasizes tenant protections, such as limits on landlord liability for unpaid bills.
To stay compliant:
- Understand state-specific laws for billing methods, fees, and tenant protections.
- Use clear, transparent billing practices and provide detailed documentation.
- Consider property management software to automate compliance and streamline operations.
Failure to comply can result in penalties, tenant disputes, and operational disruptions. Staying informed and proactive is key to avoiding these risks.
Who Enforces Utility Regulations at the State Level? | Your Utilities Hub
1. Oregon
Oregon has implemented a detailed set of rules around utility billing to help property managers navigate compliance challenges while safeguarding tenants' rights. The state offers several billing options and requires clear disclosures to ensure fairness and transparency.
Permitted Billing Methods
Oregon allows five different ways to allocate utility costs to tenants[4]. One of the simplest methods is rent-included billing, where utility costs are bundled into the monthly rent. This approach eliminates the need for separate utility payments.
For properties that prefer to allocate actual utility costs, Oregon permits pro rata billing, which divides utility charges proportionally among tenants based on specific criteria[4]. Another option is submeter billing, where landlords charge tenants based on individual submeter readings. Additionally, park-specific billing is tailored for manufactured dwelling parks, particularly for water services[4]. These varied methods are tightly regulated to ensure compliance with the state’s tenant protection rules.
Required Disclosures
Oregon law mandates that landlords disclose any utilities they intend to bill tenants for in the rental agreement[6]. Utility bills must be sent within 30 days of receipt, and landlords must keep utility charges separate from rent payments[5]. Transparency is key - landlords must explain how utility charges are calculated, including how the provider determines the total bill and how costs are divided when one bill covers multiple units[5].
"A landlord in Oregon could charge the tenants for utilities no more than what the utility providers are charging the property. All the fees and the methods used for calculating the bills have to be disclosed to the residents." - BanyanUtility.com [7]
Landlords must either provide a copy of the utility provider’s bill with the tenant's bill or allow tenants to inspect the original bill at a reasonable time and location[5]. Tenants can also request copies, and landlords may only charge a reasonable fee for making these copies[5]. These disclosure rules are designed to ensure tenants have a clear understanding of their charges.
Resident Protections
Oregon law prevents landlords from charging tenants more than the actual amount billed by utility providers[10]. This rule ensures tenants aren't burdened with markups or inflated costs.
If a utility service is disrupted due to unpaid balances, tenants have several options. They can pay the outstanding amount and deduct it from their rent, negotiate a resolution with the landlord, or terminate the rental agreement[8]. In cases where the landlord’s failure to pay utility bills leads to a disconnection, tenants can cover the amount and deduct it from their rent or terminate the rental agreement with 72 hours' notice unless the service is restored promptly[8]. Importantly, landlords are not allowed to disconnect utilities as a penalty for nonpayment[9].
Key Restrictions
Tenants cannot be held responsible for utility charges tied to previous occupants[8]. If a landlord introduces a new public service charge in a month-to-month rental agreement, they must provide at least 60 days' written notice[8].
Utility charges are treated separately from rent. While failure to pay utility bills is not grounds for eviction due to nonpayment of rent, it can be a reason for termination for cause[4]. Landlords are also responsible for maintaining utility systems, including submeters, and must restore tenant spaces after installation or maintenance work[4].
If landlords fail to disclose utilities that benefit themselves or other tenants, tenants may recover either twice the actual damages or one month’s rent, whichever is greater[8].
"If the rental agreement does not outline how the amount charged to the tenant for utilities was figured out, the tenant can get a copy of the bill from the landlord before paying the charge. If your landlord fails to follow the requirements explained in this paragraph, you may sue your landlord and ask for damages in the amount of twice the amount you were wrongfully charged or one month's rent, whichever is more." - Oregon Law Help [9]
2. New Mexico
New Mexico takes a more flexible approach to utility billing compared to states like Oregon, while still ensuring tenants are protected. Property managers in New Mexico have the option to choose between submetering and the Ratio Utility Billing System (RUBS), offering adaptability in how utilities are billed. The Public Regulation Commission doesn’t directly oversee submetering methods, but there are clear rules regarding disclosures and tenant rights. Let’s break down the key elements of New Mexico’s utility billing framework.
Permitted Billing Methods
Landlords in New Mexico can use either submetering or RUBS to charge tenants for utilities. This applies to a range of services, including water, electricity, gas, sewer, and trash. This flexibility allows property managers to tailor their billing systems to the needs of their properties[11][12].
Required Disclosures
State law mandates that landlords disclose all administrative fees in writing within the lease agreement. If there’s an increase in these fees, tenants must be notified at least 60 days in advance[13].
"A landlord shall fully and accurately disclose in writing to a resident any increase in the administrative fee. The disclosure shall be provided to a resident at least sixty days prior to implementation of an increase in the administrative fee." - New Mexico Statutes Section 47-10-21[13]
Resident Protections
New Mexico prioritizes transparency in utility billing. Landlords are required to provide tenants with copies of master utility bills or RUBS calculations upon request[12]. To prevent overcharging, any administrative fee for providing these details is capped at $5.00 per month. Additionally, the Public Regulation Commission’s Consumer Relations Division is available to investigate disputes related to utility rates, service quality, and billing issues. Utility providers are also obligated to offer budget payment plans to help tenants manage fluctuations in seasonal utility costs[17].
Key Restrictions
The state imposes several restrictions to protect tenants and ensure fairness:
- Administrative fees are capped at $5.00 per month[12].
- Municipalities may hold property owners responsible for unpaid tenant utility bills unless written notice absolves them[14].
- Water service can be discontinued after 30 days of nonpayment.
- Late fees are limited to 8% annually on unpaid balances[15][16].
"The important point we want to get out to the rental property community is to contact us when the initial notifications go out to establish a dialog and process towards resolution. LCU files liens on a property as a last resort because some property owners do not respond to our efforts to communicate and resolve." - Steven Valdez[14]
This combination of flexibility and tenant protections makes New Mexico’s utility billing system both adaptable and fair, ensuring both landlords and tenants have clear guidelines to follow.
3. Utah
Utah strikes a balance between flexibility and regulation in utility billing. While the state allows the use of RUBS for water, wastewater, and trash services, it firmly prohibits electric submetering. This creates a distinctive regulatory landscape that property managers need to navigate carefully. The Division of Public Utilities in Utah plays an active role in ensuring utility services are both safe and reliable, making compliance a priority for multifamily property operators.
Permitted Billing Methods
In Utah, Ratio Utility Billing Systems (RUBS) are permitted for water, wastewater, and trash services[2]. However, the state does not allow electric submetering. Instead, electric utilities are required to meter electricity usage for each apartment, and in many cases, this is mandatory[2]. Utah law requires separate electric meters for each unit within multi-tenant properties, with only a few exceptions[24]. Given the complexities of these regulations, consulting a utility billing expert is highly recommended to avoid potential penalties[24].
Required Disclosures
Utah has introduced strict disclosure requirements, which will become even more detailed starting May 7, 2025. Landlords must provide written disclosures to tenants before accepting any payments[19]. These disclosures include a good faith estimate of the rent amount, along with details of each fixed, non-rent expense included in the rental agreement[18]. Additionally, landlords must outline the type of use-based, non-rent expenses and specify the criteria used to evaluate potential tenants. This includes factors such as income, credit history, employment, rental history, and criminal background checks[18][19].
For mobile home parks, disclosure requirements are even more comprehensive. Leases must clearly detail all costs associated with public utility services and explain how individual utility bills are calculated[22]. Since June 1, 2021, mobile home parks have been required to provide a clear breakdown of how utility charges were determined over the previous 12 months[22].
Resident Protections
Utah has established several safeguards to protect residents from billing-related issues. Utilities are required to offer a 12-month deferred payment plan for residents facing financial emergencies[21]. If a security deposit is required, residents must be allowed to pay it in three installments[21]. Additionally, utilities must follow specific procedures before disconnecting services, including sending a notice postmarked at least 10 days before disconnection[21]. Residents are given a minimum of 20 days from the bill's issuance date to settle their balance[23].
Importantly, residents cannot have their service disconnected for nonpayment of a disputed portion of their bill, as long as they continue paying for all other services[21]. If billing disputes arise, residents can seek assistance from the Division of Public Utilities[21].
Key Restrictions
Utah enforces additional restrictions to protect both residents and property managers. Electric submetering is prohibited in most cases[24]. For mobile home parks, the state caps service charge revenue, ensuring that annual income from these charges does not exceed the actual cost of providing the services[22]. In Saratoga Springs, utility accounts must remain in the property owner's name, making it the landlord’s responsibility to share billing details with tenants[20]. Furthermore, public utilities cannot disconnect basic services due to nonpayment of third-party charges[21].
Property managers in Utah should familiarize themselves with Administrative Rules R746-200 and R746-240, which outline the relationships between utility companies and consumers[21]. Understanding these rules is crucial for maintaining compliance and ensuring smooth operations in multifamily properties.
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4. Florida
Florida’s utility billing regulations combine state-level permissions with various local restrictions, creating a complex landscape for property managers to navigate[25].
Permitted Billing Methods
At the state level, Florida allows both submetering and Ratio Utility Billing Systems (RUBS) for electricity, gas, and water[25]. Landlords can use individual or shared meters to allocate costs based on actual usage, RUBS formulas, or flat fees[26]. However, local rules can impose additional limits. For instance, Miami-Dade County bans RUBS for water and electricity billing[25], while Osceola County’s Toho Water Authority prohibits administrative fees in submetering setups and requires that these systems be approved and regularly inspected for accuracy[25].
The Florida Administrative Code offers clear guidance on allocation methods, stating:
"Where individual metering is not required and master metering is used in lieu thereof, reasonable apportionment methods, including submetering may be used by the customer of record or the owner of such facility solely for the purpose of allocating the cost of the electricity billed by the utility."[25]
Required Disclosures
Florida focuses on transparency and energy efficiency in its disclosure requirements. Under Florida Statute 553.996, prospective property buyers must be informed of their option to obtain an energy-efficiency rating for buildings intended for occupancy[27]. This applies to all improved real estate, including commercial properties, and is usually included in standard real estate contracts. The typical disclosure reads:
"Energy-Efficiency Rating. In accordance with Section 553.996, Florida Statutes, Purchaser is notified that it may have the energy-efficiency rating of the Improvements determined."[27]
Additionally, Florida Statute 83.51 requires landlords to explain utility billing practices - such as cost allocation methods - before finalizing lease agreements[26].
Resident Protections
Tenant protections in Florida emphasize fairness and transparency. Landlords must provide timely, itemized bills and make utility bill copies accessible[26]. They are also required to disclose the billing methodology, including any formulas or criteria used to allocate costs[26]. If tenants dispute charges, landlords must address these concerns promptly. Tenants who believe billing practices are unfair can file complaints with regulatory authorities, which may result in penalties for non-compliant landlords[26].
Key Restrictions
Florida enforces several rules to ensure fair utility billing. Municipalities cannot cut off services due to a previous tenant’s unpaid bills[28]. Similarly, unpaid charges from a former tenant cannot lead to liens against the property or legal action against the current tenant - unless the current tenant or owner directly benefited from the service[28]. Utility charges must also remain reasonable, and landlords cannot overcharge tenants for utilities they did not directly use[26].
To stay compliant, property managers in Florida should keep detailed records of utility usage and billing while staying up-to-date on local regulations, which can vary significantly across counties and municipalities.
5. Missouri
Missouri strikes a balance between offering landlords billing options and ensuring tenants have strong protections. The state allows both submetering and Ratio Utility Billing Systems (RUBS) for electricity and water, giving landlords flexibility in how they allocate utility costs among tenants[29]. For natural gas, while reselling is not allowed, landlords can charge tenants strictly based on their consumption without adding any markup[29]. Studies show that RUBS can lead to a reduction in water and utility usage by 5% to 27%[30], making it an appealing choice for properties aiming to encourage conservation.
Let’s take a closer look at Missouri’s regulations and protections.
Permitted Billing Methods
Missouri allows landlords to use submetering and RUBS for electricity and water billing. For natural gas, landlords are restricted to billing tenants only for their actual usage, with no additional fees or markups[29].
Required Disclosures
Transparency is a key requirement in Missouri. Under the state's Tenant Bill of Rights, landlords must disclose past utility bills or provide tenants with the option to request this information directly[33]. Landlords are also obligated to supply an address where tenants can contact them or send rent payments[33].
Additionally, SB274 grants landlords the authority to allocate water and sewer charges to tenants, but this must be done with clear documentation and proper disclosure of how the charges are calculated[31].
Resident Protections
Missouri law prohibits landlords from using lockouts or shutting off utilities as a way to force tenants to leave their rental units[34]. In cases where a heat-related service stoppage is imminent in master-metered, multi-tenant buildings, tenants have the right to petition the court to prevent disconnection[34].
Tenants also have the right to address habitability issues through repair and deduct measures. If a landlord fails to resolve such issues after receiving 14 days’ written notice, tenants can arrange for repairs themselves and deduct the costs from their rent[34].
Key Restrictions
Landlords are barred from using lockouts or utility shut-offs as enforcement tactics. They are also allowed to verify tenant billing by requesting copies of utility bills[34][32].
To ensure compliance with state laws, property managers should consider working with utility billing companies when implementing RUBS systems. Conducting a thorough analysis can help determine whether these systems are a good fit for their properties[30].
Benefits and Drawbacks
Understanding each state's utility billing laws is crucial for managing multi-state properties effectively. This section highlights key differences at the state level, offering property managers actionable insights to streamline operations and make informed decisions.
Flexibility vs. Restrictions: A State Comparison
Some states, like New Mexico and Utah, provide more leeway for property managers. For example, in New Mexico, landlords can use individualized billing for sewer and trash services and are allowed to charge up to $5 per request for utility bill copies and RUBS (Ratio Utility Billing System) calculations[2]. Utah permits RUBS for water, wastewater, and trash services, though it generally prohibits electricity submetering[2]. Interestingly, properties where landlords cover energy costs experience 26% higher energy usage[1].
On the other hand, Oregon enforces stricter rules, such as banning administrative fees for RUBS. While this simplifies compliance, it shifts the cost burden onto property managers. Missouri, meanwhile, prioritizes tenant protections by limiting landlord liability for unpaid utility bills beyond 90 days. Missouri also requires landlords to be notified of delinquencies after 30 days, with potential consequences like water service suspension if payments remain unresolved[35].
These differences highlight the trade-offs between flexibility, administrative demands, and tenant protections.
Cost Recovery and Administrative Challenges
Property managers must balance regulatory flexibility with the need for cost recovery. Here's how some states compare:
| State | Billing Methods Allowed | Administrative Fee Rules | Documentation Requirements |
|---|---|---|---|
| Oregon | RUBS permitted | No administrative fees allowed | Must provide master utility bills upon request |
| New Mexico | RUBS and individualized billing | Up to $5 per request allowed | Must provide bills and calculations upon request |
| Utah | RUBS for water, wastewater, trash | Varies by municipality | Standard disclosure requirements |
New Mexico's allowance for administrative fees helps offset costs, while Oregon's prohibitions mean landlords absorb those costs entirely. Administrative burdens can vary significantly, depending on the state.
Tenant Protections and Their Impact
Strong tenant protections can be a double-edged sword for property managers. In Oregon, failure to comply with billing and disclosure rules can result in tenants recovering one month's rent, creating financial risks for landlords[2]. As Rep. Athena Hollins explained:
"When tenants in buildings are direct customers of our state's utility companies, they all have consumer protections... But when tenants live in buildings in which the utility service comes from the building and is passed through by the housing provider, they have none of these protections."[36]
In Missouri, landlords face limited liability for unpaid utility bills after 90 days, but they must manage delinquencies carefully to avoid disruptions in essential services like water[35]. Striking the right balance between protecting tenant rights and maintaining cost efficiency is key to long-term success.
Financial Risks and Liabilities
Missouri's regulations place some responsibility for unpaid utility bills on landlords, but they also require cities to notify owners of delinquencies within 30 days. If payments aren't made, water service could be suspended, potentially impacting the property's habitability[35]. In Utah, restrictions on electricity submetering can complicate cost recovery, although individual meters provided by utility companies may help mitigate disputes over RUBS calculations.
Conservation and Usage Considerations
RUBS can encourage resource conservation, with studies showing reductions in water and utility usage ranging from 5% to 27%[30]. This not only supports environmental goals but also lowers operating costs. However, RUBS calculations can sometimes lead to disputes, particularly in states with complex disclosure requirements, which may cause tenant dissatisfaction during periods of high utility usage.
Compliance Risks and Management
Navigating varied state regulations requires meticulous documentation and proactive management. Non-compliance penalties differ widely: in Oregon, tenants can recover one month's rent for violations, posing an immediate financial threat to landlords. In Missouri, while liability for long-term delinquencies is limited, timely notifications and accurate records are essential to avoid legal issues. Managing these differences across states often necessitates tailored procedures, specialized training, and robust documentation systems, all of which add to administrative overhead and the risk of errors.
Conclusion
Managing utility billing across multiple states is no small task. It requires a detailed understanding of state-specific laws and regulations, particularly when it comes to cost allocation, disclosure requirements, and prohibited practices like administrative fees [3]. Staying compliant means consistently monitoring these regulations, conducting regular audits, and ensuring staff are well-trained to handle the nuances of each jurisdiction. By addressing these areas, property managers can avoid costly mistakes and maintain smooth operations.
Automation plays a key role in simplifying this process. Modern property management software can handle cost tracking, automate payments, and produce detailed documentation to meet regulatory standards [38]. These systems not only reduce human error but also save time, allowing teams to focus on other priorities. At the same time, clear and transparent communication with tenants is equally important. Providing straightforward, professionally formatted bills that break down charges helps build trust, reduce disputes, and improve tenant satisfaction [37].
The financial risks of non-compliance are growing. Regulatory changes and increased scrutiny now rank among the top concerns for utility sector executives [39]. To address these challenges, property managers should adopt proactive measures - such as keeping up-to-date with legal requirements, conducting regular audits, and establishing clear policies across all properties [40]. Taking these steps not only minimizes compliance risks but also enhances operational efficiency, ensuring a more reliable and trustworthy billing process for all stakeholders.
FAQs
What are the risks for property managers who don't follow state utility billing regulations?
Failing to comply with state-specific utility billing laws can lead to hefty financial penalties, legal troubles, and harm to your company’s reputation. Beyond fines, non-compliance can spark disputes with tenants, open the door to lawsuits, or even nullify billing agreements altogether.
For property managers operating in multiple states, it's crucial to stay on top of local regulations. This includes understanding rules around systems like RUBS (Ratio Utility Billing System), mandatory disclosures, and tenant protections. Keeping up with these requirements isn't just about following the law - it’s about safeguarding your business and maintaining trust with your tenants.
How can property managers stay compliant with utility billing regulations across different states?
Property managers handling utility billing across several states face the challenge of navigating a patchwork of regulations. Each state has its own rules, particularly when it comes to RUBS (Ratio Utility Billing Systems), disclosure requirements, and tenant protections. To stay on the right side of the law, it’s important to regularly review state-specific laws and adjust billing practices to meet those requirements.
One way to simplify this process is by using utility billing software designed for compliance. These tools can automate essential tasks like tracking usage, generating reports, and ensuring accurate billing, saving time and reducing errors. Seeking advice from legal professionals or participating in property management associations can also offer valuable insights and reduce compliance risks. For property managers overseeing multi-state portfolios, staying informed and proactive is key to navigating these complex regulations.
What can tenants do if they believe their utility bills are inaccurate or lack transparency?
If tenants believe they’re being overcharged for utilities or feel the billing lacks transparency, they have a few ways to address the situation:
- Reach out to local consumer protection agencies for advice and to report the issue.
- Seek help from a legal professional or tenant advocacy group to better understand their rights and options.
- Consider filing a formal complaint or taking legal action, such as an Emergency Tenant Remedy Action, if the problem persists.
Tenants should make sure to document any irregularities, save copies of their bills, and clearly communicate their concerns in writing to their landlord or property manager before taking further steps.
