Rent payment is an important consideration when choosing your apartment. However, you should also ask how utility bills will be paid. Electricity bills tend to be highest during summer, due to air conditioning. On the other hand, space heating systems tend to increase gas bills during winter.
Landlords follow several approaches when charging utility services to their tenants. This should be an important consideration when comparing apartments. The most common options are the following:
- Splitting the utility bills equally among all tenants.
- Splitting the bills proportionally, based on the floor area of each apartment.
- Metering each tenant separately, and charging based on the usage of utility services.
The best option is the third, since tenants pay for what they use: efficient apartments are rewarded, while wasteful apartments pay more. Before signing a lease, ask if energy and water are metered separately for each apartment.
Disadvantages of Splitting Utility Bills Evenly
Splitting utility bills equally among tenants is a simple solution for landlords. However, this approach has a key disadvantage: it benefits tenants who are wasteful, while reducing the savings for tenants who conserve water and energy.
For example, assume you have reduced your monthly energy and water expenses by $50. If you live in a building that splits the bills equally among 10 tenants, everyone gets to save $5 per month. In other words, you don’t get the full benefit of your water and energy conservation efforts.
The opposite also applies if a specific tenant is wasteful. Assume a new tenant consumes $100 more per month compared with the previous occupant. In a building with 10 apartments and equal payments, everyone pays $10 more. Even if you are saving water and energy like in the previous example, you pay more – the $100 in waste offset the $50 in savings.
Splitting the bills based on the size of each apartment is slightly more just, since larger units tend to consume more water and energy. However, this does not account for the habits of each tenant. A large apartment can still use less energy and water than a small one, if the occupants focus on conservation habits.
Why Separate Metering Is the Best Option
Ideally, landlord should meter and bill utility services separately for each tenant. With this configuration, frugal tenants get their full savings, while wasteful tenants are charged for all the water and energy used.
Since a building with separate metering allocates expenses more accurately, it promotes energy and water efficiency. As a tenant, you may be less motivated to save water and energy when you are charged part of the waste caused by others.
Checking the Appliances and Plumbing Fixtures Before Renting
Even if you focus on conserving water and energy, the potential savings may be limited if an apartment building has old installations. Before you sign the contract, check the existing appliances and plumbing fixtures. Consider the following guidelines:
- Incandescent and halogen lamps are the least efficient, while fluorescent lights have decent efficiency. LED lighting is the best option available.
- Old window-type air conditioners have a very high power consumption, especially in summer. Mini-split systems are much more efficient, especially if their Seasonal Energy Efficiency Ratio is above 20.
- Furnaces, boilers and combustion heaters use an efficiency metric called the Annual Fuel Utilization Efficiency, and modern units exceed 90%.
- Hot water systems that use gas combustion or a heat pump are the most economic. Avoid electric resistance heaters, since their running cost is very high.
- Watch out for leaky plumbing fixtures, since they can increase both your water bills and your heating bills.
You can minimize your energy and water bills if you find an apartment with separate metering and modern installations. If the building has old installations and utility bills are split evenly, you will pay a lot more even if you conserve water and energy.
About Author: Michael Tobias, PE, LEED AP, CEM. He is the founder and principal of Chicago Engineers, an Inc 5000 Fastest Growing Company in America. He leads a team of 30+ mechanical, electrical, plumbing, and fire protection engineers from the company headquarters in New York City; and has led over 1,000 projects in Chicago, New York, New Jersey, Pennsylvania, Connecticut, Florida, Maryland and California, as well as Singapore and Malaysia.