Stop raising rents to keep up with rising utility bills. How to sub-meter a rental property in California teaches you how to save money.
Tenants doing day jobs often complain about paying for heat or air conditioning used by the family down the hall who remain home all day. That’s because all the tenants get billed from one communal electricity meter.
How do you as a landlord fairly divide the electrical usage from every tenant all sharing the same meter? You don’t.
Are your tenants conserving energy? Probably not.
Instead, add sub-metering of all utilities in your rentals to save you and your tenants’ money.
A recent blog post here explained sub-metering and the benefits. Now we want to teach you how to sub-meter your rental property in California.
How To Sub-Meter a Rental Property in California Basics
A single utility meter servicing the entire rental property creates problems. Some tenants claim excessive usage by the other tenants causes unfair billing. This applies to electricity, gas, sewer, and water.
For instance, one gas meter for the whole rental building allows a tenant to heat the unit with a gas fireplace instead of using electricity. Should the other tenants pay more for gas because of one tenant’s excess?
Should you as the landlord pay more for gas because of that tenant’s excess use of the gas fireplace?
Sub-metering solves these problems by separating utility usage amongst common areas and every tenant. Pay only for the exact usage. Not for estimated usage based on square footage or other calculations.
As you read further down, options exist for hooking up sub-meters. Enjoy remote displays in an accessible location connected wirelessly or by wires.
Use a local PC or a remote device to read the individual sub-meters at your convenience.
As explained in our prior post, state laws and local ordinances differ about the use of sub-meters.
How to Sub-Meter Electricity Cheaply
One way to hook up an electrical sub-metering system cheaply requires using a Neurio Home Energy Monitor. Install it inside a panel that connects to your property’s Wi-Fi. It provides real-time usage to a web browser or a smartphone app.
Since cost per kilowatt-hour varies, this system allows you to set the cost per Kwh and the billing cycle. It also records historical usage which comes in handy when a tenant objects to a “sudden rise” in electrical usage.
A basic kit costs around $180 and easily installs within 15 minutes. You need a Wi-Fi signal and some electrical tools.
If the law allows, you may add a service fee on top of the actual usage billing.
Do It Yourself Electric Sub-Meter
Besides finding a cheap monitor and installing it yourself, here are the basics for measuring electric current.
The most common method involves a Current Transformer (CT) to measure electric current. The CT uses a loop of wire that you wind around the device several times.
Then, connect the wire to an alternating current (the primary) which produces a smaller (secondary) proportional current in the loop. Use an electric meter like a Rail 350 or an E-Mon to measure the electricity use.
CTs measure the current at every level. Including the power grid to small loads in the building. CTs also measure important pieces of equipment, tenant spaces, and individual floors of a building.
Do It Yourself Gas and Water Sub-Meters
Three primary methods measure flows insertion meters, in-line meters, and ultrasonic meters. The first two also offer options.
For instance, a diaphragm meter considered the most popular in-line gas meter. It directs the gas flow using internal chambers and valves. Also, orifice and rotary meters used for specific situations.
The cheapest method involves in-line flow meter. They work best with small pipes. But, the most difficult to install. You must install it within the water or gas pipe requiring shutting off the water or gas before installing it.
You must cut off a section of the pipe and replace it with the meter. Then, turn the gas or water back on. As the gas or water passes through the meter it measures the flow.
Tip: Beware of using pipes bigger than 3” in diameter as in-line meters become expensive for those types of pipes.
An ultrasonic flow meter costs more but installs easily. Ultimately, ultrasonic meters become the most cost-effective option. They use two bands at a pre-set distance apart and use a central display. Ultrasonic pulses get sent by the bands which calculate the flow by measuring the speed.
Assessing the Sub-Meter Data
In the old days, someone performed a monthly ritual of viewing every meter with a clipboard to record the numbers. A very time-consuming process subject to human errors.
Nowadays, modern solutions exist to avoid walk-throughs.
Most meters use pulses making conversion of data easier. For instance, a pulse-enabled electrical meter measures every Kwh which passes through. If 30 pulses pass through every hour the meter records a 30 Kwh usage. The data then reroutes to a digital gateway where a computer reads them.
Another method involves using a Modbus communications protocol that transfers the information instead of pulses. Experts consider this method more reliable and transfer the details in a meaningful manner.
Small rental property owners save money by choosing a wireless sub-meter system.
No wiring or any electrical work saves money. Also, many wireless system suppliers provide their own technicians to install them.
State Laws about Utility Sub-Meters
Washington, D.C. along with 23 states and several counties enacted laws and ordinances regulating utility submetering.
California enacted separate laws regulating water sub-meters.
California Water Sub-Meters Laws
Since 1992, California requires utility water meters for all new water service connections. In 2004, California water meters became required for every pre-existing urban water suppliers servicing at least 3,000 customers.
From 2010, California required urban water suppliers to charge customers based upon actual water usage from March 2013 and beyond. The California Water Code allows water companies to recover their costs through fees, rates, or charges. Source
In 2018, California began enforcing new regulations requiring water usage sub-meters. It applies to new multi-family construction.
San Diego Water Sub-Meters Ordinance
In 2010, San Diego enacted an ordinance requiring sub-meters in every new multi-unit building with at least three residential units and every existing one when the entire potable water supply becomes replaced. But, several exceptions exist.
How to Sub-Meter a Rental Property in California Conclusion
Our explanation of how to sub-meter a rental property in California includes ways to save money.
A benefit of sub-metering eliminates the need to constantly raise the rents whenever utility bills rise.
Another benefit includes saving your tenants money by creating a fair utilities billing system based on actual use.
We explained how to cheaply install electric, gas, and water sub-meters and how to assess the data.
We also explained California laws and San Diego ordinances about water sub-meters.
Our past posts here offered you tips on saving money such as:
- Rental properties Tax Deductions here;
- Rental property improvements for under $500 here;
- How to Invest in Rental Properties with Little Money here; and
- Rental Investors Share Secrets here.
If You Don’t Want to Install Sub-Meters Yourself
Contact Us to help you find reliable and cost-effective professional sub-meter installation companies. Also, we provide your rentals with professional property management services in the Greater San Diego region.
Steven Rich, MBA – Guest Blogger
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