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Updated about 9 years ago on . Most recent reply

Account Closed
  • Investor
  • Henderson, NC
208
Votes |
484
Posts

Does anybody add utility charges?

Account Closed
  • Investor
  • Henderson, NC
Posted

I have a large industrial building with a handful of different tenants. The building only has one incoming power meter from the utility, and then there are individual submeters for each tenant.

As a result of this, the single power bill I get is very large, and I get cheaper power because we are on an industrial rate schedule. The average small power consumer pays 11 cents per kilowatt in my area, but I only pay about 7.5 cents per kilowatt in bulk. 

I charge the tenants what the power company would charge them based on their own usage. This results in me earning a few hundred bucks each month when I pay the electric bill. I'm also taking the risk that if a tenant does not pay, I still have to pay the electric company. (and I have been left with a big bill before)

I'm curious if anybody does anything like this in a residential setting? I am interested in buying an apartment building, and I'm thinking the same method should work there. In my industrial building the only utility is power, no gas or water (on a well), but I'm looking at an apartment building with 7 gas, power, and water meters. I could potentially submeter all 3 utilities.

I've never owned or lived in an apartment before. How is power billing usually taken care of? Is it most common for each unit just to have it's own meter and pay the utility directly?

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Bill Gulley#3 Guru, Book, & Course Reviews Contributor
  • Investor, Entrepreneur, Educator
  • Springfield, MO
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Bill Gulley#3 Guru, Book, & Course Reviews Contributor
  • Investor, Entrepreneur, Educator
  • Springfield, MO
Replied

I assume it's industrial commercial, no apartments. But it's the same if you had residential units too.

Guess what, you charging more than the actual cost of utilities just put you in the utility services business, you are a utility provider, you have no idea of the federal and state regulations you just got involved in, besides being an unregulated utility provider! 

I suggest you divide the usage as to the actual use and charge no more than the actual cost at your rate, commercial tenants are business people, not uninformed residential tenants, if they wanted to they could nail you as a utility provider and compliance requirements for providing services. You really don't want to be a utility provider for a few cents on a KW! Don't believe me, call your utility commission and see what they say! Good luck :)

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