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What Is an Electric Submeter? Introducing Your Tenants to Submetered Utility Billing

If you are a property owner in New York City who has been frustrated by footing the bill or by trying to divide your electricity costs between tenants, electric submetering is the ideal solution. What is an electric submeter system? Here’s a review of how submeters work, their benefits, and how to educate your tenants about this alternative to utility billing.

What Is an Electric Submeter?

Individual billing for each unit

You and your tenants are probably already familiar with the broad concept of submetering. In most New York City rental properties, certain utilities and services are already provided that way, like internet and cable television.

It simply means each unit pays individually for their service. Many utilities can be submetered, including gas and water. Electricity is one of the easiest utilities to convert to submetering. Rather than having one meter for the entire building, individual meters are installed for each unit.

As part of a city-wide initiative to convert large rental properties to smart meter use, submetering may also ultimately be required. Bigger commercial properties are first on the list, but properties of any size with two or more units can be submetered. So, even if you own a duplex or four-plex, this may be a great problem solver for you as a landlord.

Why Is Submetering Beneficial for NYC Landlords and Tenants?

Fairer with fewer headaches… and more

Why do landlords like submetering so much? For property owners, submetering gets rid of a lot of hassles and calculations. Rather than trying to figure out how much to charge tenants by dividing up your total electric bill for “electricity included” leases, tenants pay their own, as if they were single-family property owners.

And you don’t have to worry about tenants running up your property’s electric bill with supplemental plug-in heaters, electronics, and the like, which can really add up if you have a lot of units. If the price of electricity goes up, you don’t have to wait until tenants re-sign their leases to raise their fees.

Once tenants are paying their own electric bills, you are left only with charges for the public and other non-rental spaces in your building. This permits landlords to see what they’re actually paying for non-tenant electricity and adjust usage accordingly if the bill is still too high.

Many tenants enjoy electric submetering, too. If they feel they’ve been paying a larger electric bill than they should to compensate for their neighbors’ high electricity use, submetering is more fair. For example, a family of five with two spouses who work from home probably uses more electricity than a couple who are gone from their apartments during the day – and yet they still may be paying the same extra charge on their rent for electricity.

Another reason tenants like this system is that new meters in New York City are nearly always smart meters. This lets them monitor their electricity use in real time, which makes budgeting easier and allows users to see where they could potentially cut back electricity use for savings. Using less electricity is better for the city and for the planet overall, as it reduces energy consumption to generate electricity in the first place.

How Should You Introduce Electric Submetering to Your Renters?

Education for a smooth transition

If you’re planning to switch your building to submetered electricity from a single master meter, it’s wise to include your tenants in the process with some advance notice and basic education. Start by explaining what submeters are and their advantages, as described above, so they see the change as a positive one.

If your tenants seem resistant or confused, you could try what’s called shadow billing for a couple of months prior to switching over entirely to the new system. This means charging tenants just like you always have for their electricity but using the submeters to inform them about their electricity consumption. They can then cut back, if necessary, before having to pay their own individual bills.

Some tenants may be shocked by how high their bills are once they’re paying their own way. Offering tips for saving on electricity can help.

• Turn off lights and unplug devices when they’re not in use.
• Use insulating window treatments and turn down the heat at night if using electric heat.
• Supplement air conditioning with fans in summertime.
• Switch to LED light bulbs, which last longer and use less electricity.

Clarify that you do not profit off the new submeters. In fact, Local Law 88, created in 2009, forbids landlords from making a profit off electricity. Only the amount shown on the tenants’ meters must be paid.

Let tenants in commercial properties over 50,000 square feet who lease at least 10,000 square feet know that submetering is required by the city by January 1, 2025 and that you are complying with city regulations.

There may be some brief disruption for tenants as you add new meters, depending on the age and anatomy of your building. We find this is particularly common with pre-war apartment buildings. Outdated aluminum wiring may need to be replaced with copper wire. If you don’t have hallway electrical closets, meters will need to be installed in each unit. Let tenants know well in advance about any necessary intrusion so they can plan around it.

Need Help Getting Ready to Submeter Your Building?

Call Bolt Electric

Whether you have questions about electric submetering or want to get an estimate for work to prepare for the switch, Bolt Electric can help. In most cases, a licensed electrician must do the work for you, and coordination with the city is required as well. We can act as a liaison and make sure everything goes smoothly so you and your tenants are happy with the results. Call us at 212-434-0098 or schedule an appointment at your convenience using our easy online form.