If you’re a property manager, landlord, or tenant in a multi-unit building, you’ve probably wondered how utility costs get divided fairly among residents. At EnergyChaser, we believe in complete transparency when it comes to utility billing. In this post, we’ll walk you through exactly how we calculate tenant invoices using a straightforward, fair pass-through rate model.
The Three-Step Process
Step 1: Start with the Master Meter Invoice
Everything begins with the actual utility invoice for your building’s master meter. This is the total amount the utility company charges the building, including all taxes, fees, and charges.
Example: Let’s say your building receives an electrical invoice for $10,000 for the billing period, and the total consumption was 40,000 kWh.
Step 2: Calculate the True Cost Per kWh
Next, we calculate the actual cost per kilowatt-hour (kWh) by dividing the total invoice amount by the total building consumption.
Formula: Rate = Total Invoice ÷ Total Consumption
Example: $10,000 ÷ 40,000 kWh = $0.25/kWh
This rate includes everything – not just the base energy cost, but also delivery charges, taxes, and fees. This ensures that the full cost of electricity is accurately reflected in what tenants pay.
Step 3: Apply the Rate to Individual Tenant Usage
Each tenant unit has a submeter that measures only their specific electricity consumption. We multiply each tenant’s actual metered usage by the calculated rate to determine their invoice.
Formula: Tenant Invoice = Tenant kWh × Rate
Example: If a tenant used 400 kWh during the period: 400 kWh × $0.25/kWh = $100
What About Common Areas?
You might be wondering: “Do tenant meters capture all the electricity used in the building?” The answer is no, and that’s completely normal.
In our example above, if the building has 70 units and each tenant used 400 kWh, that’s only 28,000 kWh total. But remember, the building consumed 40,000 kWh according to the utility invoice. Where did the other 12,000 kWh go?
This difference represents common area and building system consumption that tenants don’t directly control:
- Hallway and exterior lighting
- Elevators
- Laundry rooms
- HVAC systems for common areas
- Parking garage lighting
- Security systems
- Other building equipment
With EnergyChaser’s model, the landlord covers these common area costs as part of building operations. In our example, that’s 12,000 kWh × $0.25/kWh = $3,000 that the property owner pays.
Why This Approach is Fair
For Tenants:
- You pay only for what you actually use
- The rate reflects the true, all-in cost of electricity
- Your submeter provides accurate, individualized tracking
- You have control over your electricity costs through conservation
For Property Managers and Landlords:
- Complete cost recovery for tenant-consumed electricity
- Transparent, defensible billing method
- Reduced billing disputes
- Simplified utility management
- Clear separation between tenant and common area costs
The Math Always Works:
- Tenants collectively pay: $7,000 (28,000 kWh × $0.25)
- Landlord pays: $3,000 (12,000 kWh × $0.25)
- Total: $10,000 ?
No Markup, No Guesswork
Unlike estimated billing methods or ratio utility billing systems (RUBS), EnergyChaser’s approach eliminates guesswork. There are no arbitrary allocations based on square footage or number of bedrooms. Instead, you get:
- Actual consumption data from submeters
- Actual utility rates from real invoices
- Proportional cost sharing based on usage
This is utility billing at its most transparent and equitable.
Ready to Simplify Your Utility Billing?
Whether you’re managing a small apartment building or a large multi-unit complex, EnergyChaser makes utility billing straightforward, fair, and fully transparent. Our automated system handles the calculations, generates invoices, and provides detailed reporting for both property managers and tenants.