Compliance Alert
- RUBS (Ratio Utility Billing) is heavily restricted for water in new California construction
- RUBS for electricity is effectively not lawful in California, whatever the permit date: electricity is either included in fixed rent, submetered at the utility's rates, or billed by the utility
- All billing meters must be "type-approved" by CDFA; electric submeters must read within 1% when installed and 2% in service
- Expect tenants to ask to inspect meters and billing calculations
- Non-compliance can expose you to refund claims and penalties
Understanding California SB-7
California Senate Bill 7 (SB-7), signed into law in 2016 and fully effective since 2018, fundamentally changed how landlords bill tenants through water submeters. The law was designed to promote water conservation by having submetered tenants pay for their actual usage. It defines ratio billing (RUBS) but takes no position on it (Civil Code §1954.216(c)), and it does not govern a condominium or HOA association billing its owners.
SB-7 covers water. Electricity is governed by the weights and measures rules below and by the utilities' tariffs.
Electricity is stricter than water. Where a tenant is not served directly by the utility and electricity is not included in fixed rent, California's weights and measures regulations require a dedicated electric submeter for that tenant (4 CCR §4027.5). There is no RUBS option for electricity, residential or commercial, at any permit date.
The Three Pillars of Compliance
Measurement Requirements
If you bill a tenant for measured usage, that tenant needs a dedicated, type-approved meter. The days of "splitting the bill by square footage" are numbered.
- A dedicated meter for every tenant you bill for measured usage (residential units permitted after July 1, 1982 are metered by the utility)
- Meters must be accessible for inspection
- RUBS (Ratio Utility Billing) for electricity, in any building
- Unmetered water units in new, non-exempt buildings whose water connection was applied for after January 1, 2018 — each unit needs its own meter or submeter
- "Estimated" electricity usage without metering
Accuracy Standards
All billing meters must meet strict accuracy requirements set by the California Department of Food and Agriculture (CDFA).
- Type-approved by CDFA Division of Measurement Standards
- Electric submeters accurate to within 1% at installation and 2% in service, at full and light load
- Written utility certification for each electric submeter connection, provided to the county sealer before billing
- "Smart home" grade meters not certified for revenue billing
- Inverter-reported data (not from a dedicated meter)
Transparency Obligations
Tenants have explicit rights to understand and verify their bills.
- Tenants can request to inspect the meter serving their unit
- Bills must show actual meter readings (not just totals)
- Rate structure must be disclosed in writing
- Billing methodology must be documented and available
The Risk: What Happens if You're Non-Compliant?
Potential Penalties
If you use "Amazon-grade" WiFi meters that are not CDFA type-approved, or if you use "estimated" billing software, you can expose yourself to refund claims and penalties on the utility charges you collected.
In class action scenarios, that exposure multiplies across every unit in your building, every month of non-compliance.
In a dispute, expect to be asked for:
- The specific meter model and its type-approval status
- An unbroken audit trail of readings
- That no third party could have manipulated the data
The "RUBS vs. Submetering" Decision Tree
Water only: when was your building's water connection applied for?
RUBS may still be legal for water, but submetering is strongly recommended for legal protection and NOI optimization.
Unless the building is exempt (qualifying low-income housing, for example), every unit must have its own water meter or submeter, and a submetered bill charges for the usage the submeter measured. If the water utility does not meter each unit, you install the submeters.
This tree covers water. For electricity there is no branch to choose: RUBS is not an option at any permit date.
Compliance Checklist
Self-Audit Your Property
The Safe Path Forward
The easiest way to ensure compliance is to work with a licensed electrical contractor who specializes in revenue-grade submetering. They understand the regulatory landscape and can install systems that are:
- CDFA type-approved and within the 1%/2% tolerance
- Directly connected (no API dependencies)
- Fully auditable with local data storage
- Documented for legal defense
About this guide
This guide is general information about California submetering requirements, written from a licensed electrical contractor's perspective. It is not legal advice. Regulations change and their application depends on your building's permit history, unit count, and jurisdiction — confirm your obligations with your own counsel before changing how you bill tenants.
Sources (checked September 2026): Cal. Code Regs. tit. 4, §4027.5; Bus. & Prof. Code §12500.5; Water Code §537–537.1; Civil Code §§1954.202, 1954.204, 1954.216.
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