Colorado has gone from one of the quieter states for multifamily utility billing to one of the most actively legislated, and it happened in about eighteen months. Two bills passed in back-to-back sessions rewrote the rules on what owners can bill residents for, how it has to be disclosed, and, starting in 2027, how new buildings have to be metered in the first place.
This post walks through where Colorado law now stands on Ratio Utility Billing Systems (RUBS) and submetering, which statutes actually control, and what owners and managers with Colorado properties should be checking in their own programs.
Submetering and RUBS: The Two Billing Methods
Submetering means installing additional meters behind the property’s master meter to measure consumption in each individual unit. The “sub-” prefix means the meter sits below the main meter, further down the line. Residents are billed for exactly what they use, which creates a direct link between behavior and cost and, in practice, reduces consumption across the property. It is the most precise method of utility billing available.
Ratio Utility Billing System (RUBS) allocates the property’s total utility cost among residents using a formula rather than a meter reading. Common allocation factors include occupancy, square footage, a blend of the two, or an equal split across units. No unit-level meters are required; the building’s actual utility charges are simply divided and passed through. RUBS recovers cost accurately at the property level but cannot capture an individual household’s consumption.
For a deeper walkthrough of how each method works in practice, see our guides on how submetering works and what RUBS is.
The Legal Framework in Colorado
Colorado does not regulate multifamily utility billing through a single statute. Four separate bodies of law overlap, and a compliant program has to satisfy all of them at once.
1. C.R.S. § 6-1-737: Price Transparency (HB25-1090)
House Bill 25-1090 took effect January 1, 2026 and sits in the Colorado Consumer Protection Act at C.R.S. § 6-1-737. It is a broad “junk fees” law that applies well beyond housing, but it contains provisions aimed squarely at residential landlords.
Two pieces matter for utility billing:
- Total price advertising. Advertised rental prices must show a single, clear, and conspicuous total price that includes all mandatory non-government charges, displayed more prominently than any other pricing figure. Actual utility usage charges are excluded from that total price, which is exactly why usage-based billing remains a clean way to recover utility cost under this law.
- No utility markup. Subsection (4)(a) prohibits requiring a resident to pay more for utilities than the provider charged for service to that dwelling unit, with a narrow exception discussed below.
Violations are treated as deceptive, unfair, and unconscionable practices under the Consumer Protection Act. A resident can make a written demand for reimbursement, and the exposure includes actual damages and statutory penalties, so this is not a technicality to leave for the next lease cycle.
2. C.R.S. § 38-12-801: Prohibited Lease Provisions and the Fee Cap
Colorado’s rental agreement statute restricts what a lease can contain, and several provisions touch utility billing directly:
- Third-party fee cap. Subsection (3)(a)(VI) allows a lease to require the resident to pay either a markup or fee of up to 2% of the amount the landlord was billed, or a markup or fee of up to $10 per month, but not both. This is the provision that governs recovery of a billing service fee.
- Utilities are not rent. Subsection (3)(a)(V) prohibits characterizing anything other than the monthly payment for occupancy as “rent.” Utility charges cannot be labeled rent, which means the eviction remedies available for unpaid rent are not available for unpaid utility charges.
- Voucher households. A lease cannot allow a subsidy or voucher provider to pursue possession based solely on nonpayment of utilities.
A lease containing a prohibited provision is void as to that provision. Practically, this means Colorado lease and utility addendum language needs a real review, not a copy-forward from another state.
3. HB26-1013: RUBS Confirmed, With Four Guardrails
HB25-1090’s utility language created immediate uncertainty. Because a RUBS allocation is not tied to a meter serving “the tenant’s dwelling unit,” a strict reading suggested the law might have inadvertently outlawed RUBS across Colorado, affecting thousands of master-metered properties that had been allocating costs fairly and transparently for years. The Attorney General’s office issued guidance in late 2025 indicating the law was not intended to penalize those properties and signaled a legislative fix.
That fix is HB26-1013, signed March 26, 2026 and effective immediately under a safety clause. It amends § 6-1-737 to state plainly that the price transparency law does not prohibit allocating utility costs among residents of the same premises using a ratio utility billing system, provided four conditions are met:
- No overbilling in aggregate. The total billed to all residents cannot exceed the total the utility provider charged for service to the entire premises.
- No markup. No markup, surcharge, administrative fee, or other amount above the utility’s actual charges, except as otherwise permitted by law, meaning the $10-or-2% allowance in § 38-12-801(3)(a)(VI).
- Common areas excluded. Utility costs for common areas and shared facilities must be excluded from the resident allocation pool entirely.
- Clear and conspicuous disclosure. The allocation method for the unit must be disclosed in the lease or a lease addendum.
The same bill added a forward-looking requirement: for residential premises with building permits applied for on or after July 1, 2027, gas, electric, and water service must be metered either directly by the utility provider or by a submeter. RUBS is not available for those properties. The trigger is the permit application date, not occupancy. A project that pulls permits in June 2027 and delivers in 2029 retains RUBS optionality; one permitted a month later does not.
We covered the development and design implications of that mandate in detail in our HB26-1013 update.
4. Master Meter Rules for Gas and Electric
This is the layer most often missed, because it predates the recent legislation and lives in a different title of the code entirely.
When a property buys gas or electric service through a master meter and redistributes it to residents, the owner is acting as a master meter operator (MMO) under C.R.S. § 40-1-103.5. The statute allows the Public Utilities Commission to exempt an MMO from rate regulation, but only if the operator does not charge end users anything above the actual cost billed by the serving utility, explicitly including costs of construction, maintenance, financing, administration, metering, or billing. The sum of the individual billings also cannot exceed what the MMO was billed.
In other words, gas and electric sub-billing carries a stricter no-profit standard than the general landlord-tenant fee rules suggest, and the interaction between the § 38-12-801 fee allowance and the MMO conditions is worth confirming with counsel before you build a fee into an electric or gas program. Water and sewer, which are not PUC-regulated in the same way, do not carry this particular layer.
Local Rules Still Apply
Colorado water is delivered by a patchwork of municipal utilities and special districts, and some impose their own requirements on how multifamily properties bill residents. Colorado Springs Utilities, for example, has historically restricted monthly administrative charges on water billing. Before launching or converting a program, confirm the rules of the specific serving utility rather than assuming statewide uniformity. Several providers, including Denver Water, also run conservation rebate programs; check current terms during budgeting, since some fixture and efficiency rebates can offset part of a broader metering project.
A Colorado Compliance Checklist
If you own or manage in Colorado, these are the items worth verifying now:
- Common-area exclusion. Are irrigation, pool, clubhouse, corridor, and laundry loads carved out of the allocation pool, or are they riding along in the master bill you divide? This is the most common gap we find when onboarding portfolios.
- Aggregate reconciliation. Can you demonstrate, month by month, that total resident billings never exceed the utility invoice for the premises?
- Fee structure. Is any billing fee you pass through within the $10-or-2% limit, and structured as one or the other rather than both?
- Lease language. Does the lease or addendum disclose the allocation method clearly and conspicuously? Is anything mischaracterized as “rent”?
- Advertising. Do your listings show a compliant total price?
- 2027 pipeline. For any Colorado project whose permit application may land on or after July 1, 2027, is unit-level metering in the design from the start?
The Attorney General’s office indicated it would not apply § 6-1-737 retroactively, with enforcement tied to leases entered into, renewed, or amended on or after January 1, 2026. That makes renewal season the natural checkpoint.
Benefits and Trade-offs
For owners. Both methods recover utility cost far more accurately than building it into rent or charging a flat monthly fee, and both create a conservation incentive that reduces consumption at the property. Submetering produces the strongest response because the signal is tied to the individual household. Submetering also removes the allocation-fairness question entirely, which matters more in Colorado now that disclosure and calculation methods are exposed to consumer protection remedies.
For residents. Charges reflect usage rather than an arbitrary flat fee, and residents gain real control over their bill. Most residents prefer submetering, since they pay only for what they consume.
The trade-offs. Submeter installation carries upfront capital cost and requires ongoing maintenance to keep readings accurate, and retrofitting an occupied building is meaningfully harder than designing meters in from the start. RUBS avoids that capital cost but invites disputes over allocation fairness, particularly in buildings with wide variation in occupancy, unit size, or how much time residents actually spend at home. In Colorado, RUBS now also carries a documentation burden that submetering largely sidesteps.
Frequently Asked Questions
Is RUBS legal in Colorado?
Yes. HB26-1013 confirmed that allocating utility costs via RUBS is permitted, provided the aggregate billed does not exceed the utility’s charge to the property, no markup is applied beyond what law allows, common-area costs are excluded, and the allocation method is clearly disclosed in the lease or an addendum.
Can a Colorado landlord profit on utility billing?
No. Billing above the utility’s actual charges is prohibited. A limited administrative fee is permitted under C.R.S. § 38-12-801(3)(a)(VI), either 2% of the billed amount or $10 per month, but not both, and gas and electric master meter operations carry additional no-profit conditions under C.R.S. § 40-1-103.5.
When does Colorado require submetering on new construction?
For residential premises with building permits applied for on or after July 1, 2027, gas, electric, and water must be metered directly by the utility provider or by a submeter. The trigger is the permit application date, not the certificate of occupancy.
Do the new rules apply to existing properties?
The metering mandate does not; it is keyed to future permit applications. The RUBS guardrails and the price transparency requirements do apply to existing properties, with enforcement tied to leases entered into, renewed, or amended on or after January 1, 2026.
Can common-area water be billed back to residents in Colorado?
No. Utility costs for common areas and shared facilities must be excluded from any allocation to residents.
Getting It Right
Colorado’s rules are now detailed enough that the difference between a compliant program and an exposed one often comes down to mechanics: how the common-area load is carved out, how the fee is structured, and what the addendum actually says. Those are solvable problems, but they are easier to solve deliberately than in response to a resident demand letter.
With more than 20 years of experience in meter installation and utility billing, UMS designs and operates water, electric, and gas submetering systems and resident billing programs built around each state’s requirements. Whether you need a compliance review of an existing Colorado RUBS program or a submetering system designed for a project breaking ground ahead of 2027, we would like to be in that conversation early.
Get a quote or call 877-934-4346 to speak with an expert.
This article is provided for general information and is not legal advice. Consult counsel regarding your specific properties and lease documents.