January 24, 2022
Can’t Use RUBS Billing? Here Are 3 Good Alternatives
Every property has unique utility billing needs. But what if standard RUBS calculations aren’t enough to create fair and accurate bills? Here are three methods utility billing companies use to improve cost recovery when a traditional RUBS calculation won’t suffice.
#1) Allocation by Metered Consumption – When A Utility is Partially Submetered
One advanced utility billing method is allocation by metered consumption. Under this method, utility billing companies allocate one utility based on a submetered utility.
The most common application is “hot water capture-cold water allocation.” In certain scenarios, there’s no way to submeter both hot and cold water, but you may be able to submeter the hot water each unit is using. If this is the case for your property, allocation by metered consumption provides a way to precisely allocate water expenses by factoring in the usage of hot water for each unit.
How Allocation by Metered Consumption Works
To calculate a water bill under allocation by metered consumption, you would take the following steps:
- Submeter the hot water for each unit
- Calculate total hot water consumption by adding up each unit’s consumption
- Calculate the billing factor by dividing hot water consumption by total water consumption of the entire building
- Calculate tenant water consumption based on their hot water consumption and the billing factor
This method works by using submetering to create billing factors for RUBS. You could just do standard RUBS, but a hybrid method works better because it provides a more accurate allocation.
#2) Allocation by Metered Deduction – When Some Units Are Submetered and Others Are Not
Sometimes, not every unit on a property is submetered.
If this is true for your property, you could try to divide the property into two different billing methods: RUBS and submetering, for instance. However, allocation by metered deduction is a better way to go for this scenario.
How Metered Deduction Works
With the metered deduction method, you bill the submetered units normally. Then, you subtract the consumption for metered units from the master bill. This leaves you with a preliminary bill that represents the total consumption by non-metered properties. The next step is to perform RUBS on this bill, allocating it across all non-metered units.
This method is effective because it maximizes the use of submeters, reduces the expenses you’re allocating and streamlines everything into one solution.
It’s also helpful in several billing scenarios.
- HOAs – In many homeowners’ associations, it’s common for owners to have the option to install a submeter. Since some will do it and some won’t, it’s helpful to have an efficient billing method to address everyone.
- Mixed-Use Properties – Allocation by deduction is also useful for properties that have both commercial and residential tenants. Sometimes, the downstairs commercial properties have submeters, but upstairs don’t. With metered deduction, you can allocate the submetered expenses back to commercial tenants before allocating the rest of the bill to residential tenants.
- Common Areas – Some landlords also use this method to bill common areas back to tenants. If each unit has a submeter, tenants would get billed for their own consumption and an allocated portion of the utilities consumed by the common areas.
#3) Niche RUBS Factors – For Any Other Billing Scenario
There are a number of ways to calculate a RUBS bill. In many situations, allocating based on simple factors such as square footage or the number of tenants is effective. However, sometimes a property can benefit from a more niche billing factor. One that plays to the characteristics of the property. Here are a few worth noting that you might be able to apply to your property.
Examples of Niche RUBS Factors
- Per unit – Allocates evenly by unit, not factoring size or occupancy.
- Ratio occupancy – Allocates based on occupancy, but accounts for the fact that each additional tenant impacts consumption differently. Can also be modified to account for the number of children and adults.
- Bedroom counts – Weights calculation based on the number of bedrooms. Useful for when you don’t know how many tenants are in each room.
- Fixed occupancy – Assumes a standard occupancy level for each unit.
- Common area deduction – Accounts for the existence of a common area.
- Ratio occupancy with vacant unit allocation – Assigns a factor to vacancies.
(For more info on RUBS factors, take a look at our guide to RUBS billing.)
Many of these advanced factors are combinations or blends of more fundamental factors. Having so many available RUBS factors is advantageous because it lets landlords customize the billing method for the unique needs of their property. In turn, they can bill tenants more accurately and fairly.
Traditional submetering and RUBS methods are both great ways to recover utility expenses. But sometimes a more advanced or customized allocation solution is needed to maximize your property’s performance. You’ll see a real improvement in your NOI if you use the right allocation method tailored to your property’s needs.
One last note: not all of these methods are possible with legacy RBC companies or a DIY approach. If there’s a chance you need a more customized solution, it’s worth consulting an expert utility billing company.