Ratio Utility Billing Systems (RUBS) and submetering are two different methods used by property owners or managers to allocate utility costs among multiple tenants in a building. The need for submetering or RUBS is often determined during the construction of the property.
If the utility company installs a meter in each unit during construction, then the utility provider bills each unit directly for their utility consumption and there is no need for the property to install their own submeters or use RUBS.
However, if the utility company does not install a meter in each unit during construction, the utility company will usually install one or two master meters that service the entire property. In this case, the property receives the utility bill for all the utility usage and passes those charges on to tenants by installing their own submeters (Submetering) or by allocating the charges (using RUBS) based on an allocation factor such as the square footage or occupancy of each unit.
Here’s a brief overview of Submetering and RUBS:
Submetering
- The property installs a meter in each unit to measure that unit’s specific consumption of water, gas, or electricity.
- The property calculates the utility charge for each unit based on the usage recorded by the individual meter. The submetered usage of the unit is multiplied by the utility rate determined from the utility bill from the utility company.
- Submetering is considered a more precise billing method since tenants are billed according to their actual consumption.
Ratio Utility Billing System (RUBS)
- Utility costs are allocated to tenants based on an allocation factor such as the square footage of the unit, the number of occupants in the unit, or some other factor.
- The allocation is done using a mathematical formula. For example, if the utility costs are allocated on occupancy, the mathematical formula might calculate the percentage of the total utility cost that should be allocated to each unit using the number of people in each unit as the numerator and the total number of occupants in the building as the denominator. In this example, the utility cost for a unit with 2 people would be twice the cost of a unit with a single occupant.
- RUBS does not use a submeter in each unit, but relies on a proportional and equitable allocation method.
How a RUBS allocation is calculated
A RUBS program starts with the property’s actual utility bill and divides it among occupied units by a formula. The common formulas:
- Occupancy. Each unit’s share equals its number of residents divided by the building’s total residents. Common for water and sewer, since use tracks people.
- Square footage. Each unit’s share equals its square footage divided by total unit square footage. Common for gas heat, since use tracks space heated.
- Hybrid. A weighted blend, for example 50 percent occupancy and 50 percent square footage.
- Equal. Every unit pays the same share. Simple, and least defensible when unit sizes vary.
Before the formula is applied, common-area and vacant-unit consumption is deducted so residents are not billed for the pool, the laundry room, or empty apartments. Most states require this, and the well-run programs do it regardless.
Worked example. A 40-unit building receives a $4,000 water bill. Common-area use is estimated at 10 percent, leaving $3,600 to allocate. The building has 72 residents on leases. A two-person unit’s share is 2 ÷ 72 × $3,600 = $100.
Where RUBS is allowed, and with what conditions
RUBS is legal in most states, but the conditions are tightening.
- Minnesota (Minn. Stat. 504B.216, leases entered or renewed from January 1, 2025): electricity may not be allocated by formula at all. Gas must be allocated by square footage and water and sewer by occupancy, with common areas and vacant units excluded. Administrative fees are capped at $8 per billing period and late fees at $5 per month. Specific lease disclosure is required. See our Twin Cities page for the full list.
- Colorado (HB26-1013, 2026): RUBS is permitted if the total billed does not exceed the utility charge, no markup is added, common-area use is excluded, and the allocation method is clearly disclosed in the lease. Residential projects permitted on or after July 1, 2027 must be directly metered or submetered. Details.
- Illinois regulates both submetering and RUBS. Our Illinois guide.
- North Dakota: our guide.
- Florida permits RUBS at the state level but leaves fee limits to PSC jurisdiction and county ordinances; Miami-Dade prohibits allocation entirely and requires full submetering. See our Florida and Miami-Dade guides.
- Elsewhere, requirements typically center on lease disclosure and a prohibition on billing residents more than the property paid. Check your state before launching a program, and re-check annually.
RUBS vs. submetering
| RUBS | Submetering | |
|---|---|---|
| Install cost | None | Per-unit meter and install |
| Accuracy | Formula estimate | Measured use |
| Conservation effect | Modest | Strong, since residents see their own use |
| Resident disputes | More common | Fewer, bills show meter reads |
| Regulatory trend | Tightening, prohibited for electric in some states | Increasingly required for new construction |
| Best fit | Existing buildings where metering is impractical | New construction, and retrofits where plumbing allows |
When to move from RUBS to submetering
Three triggers: a state rule that restricts your formula or utility, a new-construction or major-renovation project where meters can go in cheaply, and resident pushback on allocation fairness that is costing leasing staff time. Many properties run both, submetering water and using RUBS for gas, and a billing provider that handles both can tell you which utility is worth metering first. Our guide to how submetering works covers what an installation involves.
Frequently asked questions
Can a landlord profit from RUBS?
No. Residents in total cannot be billed more than the utility charged the property, and most states prohibit any markup. An administrative fee may be allowed, often capped.
Does RUBS require resident consent?
It requires lease disclosure. The allocation method should be in the lease or a utility addendum the resident signs.
Is RUBS fair?
It is an estimate. A single resident who conserves water pays the same as a single resident who does not. That is the core argument for submetering where it is practical.
Can RUBS be used for electricity?
Not in Minnesota for leases since 2025. Other states vary. Electricity is also the utility most often directly metered by the provider, so RUBS for electric is rarer than for water or gas.
Not sure whether your RUBS program is compliant, or whether submetering would pay off? Talk to us.