The Short Version

  • Electric submetering in California is a strategy for older, master-metered buildings and mobilehome parks. Residential units permitted on or after July 1, 1982 are individually metered by the utility.
  • You bill each tenant exactly what the utility would charge them. Your compensation is the utility's master-meter discount, not a markup or a fee.
  • Rebates and California Climate Credits pass through to tenants, and bills must be itemized like a utility bill.
  • Every billing meter must be type-approved, certified before use and open to inspection by the county sealer.
  • Splitting an electric bill by formula (RUBS) is effectively not lawful for electricity in California. A dedicated submeter is the lawful way to bill for what each tenant uses.

What Electric Submetering Is

In a master-metered building, the utility installs one meter for the whole property and sends one bill to the owner. Every apartment, every hallway light and every laundry room machine sits behind that single meter. The owner pays for all of it.

Submetering adds a second layer of metering inside the property: a dedicated meter for each tenant's premises, owned and maintained by the property owner. The utility still bills the owner through the master meter. The owner reads each submeter and bills each tenant for the electricity that tenant actually used.

That sounds simple, and physically it is. What makes it a specialist job in California is the rulebook around it. The price you may charge, the fees you may not charge, the credits you must pass on, the format of the bill and the certification of the meter are all set by statute, utility tariff and state weights-and-measures regulation. Get the hardware right and the paperwork wrong, and you have an expensive liability rather than a billing system.

This guide is the overview. It links out to deeper guides on each topic as it goes.

Which California Buildings Can Submeter Electricity

This is the question that trips up more owners than any other, so start here.

New Residential Construction Is Not a Candidate

Public Utilities Code §780.5 requires every residential unit with a building permit obtained on or after July 1, 1982 to be individually metered for electric and gas service, with narrow exceptions for college dormitories and farmworker housing. Utility tariffs read that as metering by the utility. If your apartment building was permitted after that date, each unit should already have its own utility meter and its own utility account, and landlord electric submetering is not an option for it.

So residential electric submetering in California is a retrofit strategy for older buildings that are still served through a master meter. The utilities closed their submetered residential schedules to new customers decades ago:

  • PG&E (Electric Rule 18) permits residential master-metering only for customers who were master-metered on June 13, 1978 with electricity absorbed in the rent, or who were submetering on December 14, 1981 at utility rates. Mobilehome parks built after January 1, 1997 are excluded.
  • SCE closed Schedule DMS-1 (submetered multifamily) to new construction as of December 7, 1981, and Schedule DMS-2 (mobilehome parks) to parks started after January 1, 1997.
  • SDG&E closed Schedule DS to new installations on December 13, 1981.

In practice, the buildings in play are:

  • Older apartment buildings on a master meter whose tariff status permits submeter billing. For PG&E, that generally means buildings already submetering on December 14, 1981; a building that absorbs electricity in the rent is grandfathered to keep doing so, not automatically to start billing.
  • Mobilehome parks served through a master meter, subject to each utility's cut-off date for parks.
  • Similar residential complexes on a master meter. Section 739.5 covers tenants of "a mobilehome park, apartment building, or similar residential complex."

The historical dates matter because each tariff ties eligibility to how the building was metered and billed on a specific day. An owner who wants to start billing tenants in a building that has always absorbed electricity in the rent should confirm with the utility which schedule the building holds and what it allows before changing anything. We check that status as part of every assessment.

If your building is in Los Angeles and served by LADWP, the picture is different. See the LADWP section below.

What You May Charge

For buildings served by a CPUC-regulated utility such as PG&E, SCE or SDG&E, the controlling law is Public Utilities Code §739.5. It is short, and it is strict.

1

The Rate: Exactly the Utility's Rate

You must charge each tenant "at the same rate that would be applicable if the user were receiving" service directly from the utility. Same tiers, same time-of-use periods, same schedule the tenant would be on as a direct customer.

  • Bill each tenant at the rate they would pay the utility directly
  • Markups, "spreads" or a rate above the utility's
2

Your Compensation: The Master-Meter Discount

The owner is compensated through the utility's master-meter rate differential: the discount on the master-meter bill, intended to cover the reasonable average cost of providing submeter service. That discount is the owner's return for reading, billing and maintaining the system.

  • Keep the master-meter discount the utility provides
  • Separate billing, administration, meter-reading or service fees
3

Credits and Rebates Pass Through

Under §739.5(b), rebates and California Climate Credits the utility pays on the master account go to the tenants, pro rata. They are not income to the building.

  • Credit rebates and Climate Credits to tenants on a pro-rata basis
  • Submetered tenants cannot be refused CARE eligibility because other units in the complex are not submetered (§739.5(h))
4

Itemized Bills and a Posted Rate Schedule

Section 739.5(e) requires bills itemized in the manner of a utility bill, and the owner must post the applicable rate schedule or its web address. Under §739.5(d), the owner maintains the submeter system.

  • Opening and closing meter reads on every bill
  • Usage broken out by rate block
  • The rate schedule, or where to find it, posted for tenants
  • The owner keeps the meters in working order

Put plainly: under §739.5, electric submetering is not a profit line on the electricity itself. It is a way to stop paying for electricity your tenants use, with the utility's discount compensating you for running the system. Any pitch that promises a margin on residential electricity resale in CPUC territory is selling something the statute does not allow.

LADWP Plays by Different Rules

LADWP is a municipal utility, not a CPUC-regulated one, so §739.5 does not apply to its customers. LADWP's own Rule 18 governs instead. It prohibits resale, but permits submetered pass-through of electricity costs to tenants at no more than LADWP would charge, and it bars "additional costs, fees, service charges… of any nature." Costs may be allocated only if each tenant is charged for the amount "actually used," which in practice means a submeter.

CPUC Utilities vs. LADWP at a Glance

Governing rule (PG&E, SCE, SDG&E)PUC §739.5 plus each utility's tariff
Governing rule (LADWP)LADWP Rule 18
Residential price ceilingThe utility's own rate, in both cases
Extra feesNot permitted, in both cases
Commercial tenants (CPUC utilities)Generally absorbed in rent only
Commercial tenants (LADWP)Submetered pass-through at LADWP rates

Summary only. The full text of the statute and tariffs controls; see Sources below.

Commercial Tenants

Owners of retail centers, office buildings and mixed-use properties often assume the residential rules are the hard part and commercial is a free-for-all. In CPUC territory it is closer to the reverse.

  • PG&E Rule 18 allows a nonresidential master-meter customer to charge tenants for electricity only if it is absorbed in the rent. The exception is a single-owner high-rise allocating dynamic-pricing costs at the master-meter rate.
  • SDG&E Rule 19 states that "submetering of non-residential service is prohibited," with exceptions for high-rise allocation and EV charging.

So for commercial tenants of a CPUC-regulated utility, electricity is generally recovered through the rent, not through a submeter bill. EV charging is the notable carve-out. Every major utility tariff has an EV motor-fuel exception, and our guide to billing for EV charging covers what is settled there and what is not.

LADWP is the exception on the commercial side too: its Rule 18 permits submetered pass-through for commercial units, at no more than LADWP's own rates and with no added fees.

Whatever the tenant type, submeters remain useful for the owner's own purposes: setting rents on real data, and spotting a unit that is using far more than it should.

Why Not Just Split the Bill?

Ratio utility billing, or RUBS, divides a master bill among tenants by square footage, occupancy or a similar formula. It is permitted for water. For electricity, it is effectively off the table.

California's weights-and-measures regulation, 4 CCR §4027.5 (UR.3.1, operative February 12, 2009), says that when a tenant is not directly served by the utility and electricity charges are not included in fixed rent, "a dedicated electric watt-hour submeter… shall be used." That leaves three lawful options for electricity: include it in fixed rent, submeter it at utility rates, or have the utility meter each unit directly. Our RUBS vs. submetering guide walks through the comparison, including where RUBS is still allowed for water.

Meter Accuracy, Type Approval and the County Sealer

A submeter that bills tenants is a commercial measuring device in the eyes of the state, the same legal category as a gas pump or a deli scale. That brings three layers of oversight.

Type Approval

Business and Professions Code §12500.5 makes it unlawful to sell or use a device for commercial purposes unless its type is approved. "Commercial purposes" includes any measurement on which a charge is based (§12500(e)). An unapproved meter cannot lawfully be used to bill a tenant.

Accuracy Tolerances

Under 4 CCR §§4027–4027.5, electric submeters must be within 1% at acceptance and 2% in maintenance, at both full and light load. Current and voltage transformers used for billing must be accuracy class 0.3 or better. Each meter serves one tenant premises and is labeled with it.

Certification Before Use

Before a submeter goes into billing service, the owner obtains written certification for each connection from the utility or its designee and provides it to the county sealer (UR.2.2). PG&E's Rule 18 separately requires accuracy certification from a lab acceptable to PG&E, and PG&E may audit.

Ongoing Inspection

County sealers inspect and test commercial devices (§12210). Counties may charge up to $3 per electric submeter per year (§12240(g)), and 4 CCR §4070 sets a maximum inspection interval of 10 years for electric submeters.

A Note on Meter Standards

You will still see "ANSI C12.20" on spec sheets. Its accuracy classes have been merged into ANSI C12.1-2024, so it is not the current standard. For a California submeter the legal test is the 1% acceptance / 2% maintenance rule above, plus type approval. Ask any vendor which approval their meter holds, not which label it carries.

How the data gets from the meter to the bill matters as much as the meter. A certified meter feeding a billing system through a third-party cloud you do not control is a weak link in an otherwise compliant chain. Our API Trap guide explains why we connect meters directly, and the meter retrofit checklist covers what a retrofit involves on site.

Why Owners Still Do It

If you cannot mark up the electricity, why bother? Because for many older master-metered buildings the alternative is worse: the owner pays the entire electric bill, has no visibility into who is using what, and has no lever to bring consumption down.

1. Stop absorbing a cost that belongs to tenants

Where the building's tariff status allows submeter billing, each tenant pays for their own usage at the utility's rate, and the owner stops carrying it as an operating expense. The master-meter discount compensates the owner for running the system. For an owner currently paying every unit's electricity out of rent, if the tariff status permits a switch, recovering that cost can change the property's operating numbers, and our Cap Rate Multiplier guide explains how operating-expense changes flow through to value.

2. Tenants use less when they see the bill

The strongest evidence on this comes from a 2017 study in the Proceedings of the National Academy of Sciences (Elinder, Escobar and Petré). Looking at Swedish apartment buildings, it found that individual metering and billing cut electricity use by about 25% compared with electricity included in the rent.

Two cautions on reading that number. It compares individual billing against electricity in the rent, not against a formula split, and it comes from Swedish buildings, not Californian ones. It is a strong signal about behavior when people pay for what they use. It is not a forecast for your building.

3. Data you can act on

Interval data from each unit shows you which units draw far more than their neighbors, which can point to failing equipment, an unreported appliance or a wiring fault. It also gives you a clean, auditable record if a tenant ever disputes a bill.

4. A cleaner story at sale

A buyer's due diligence will ask how utilities are handled. A certified, documented submeter system with itemized bills and a posted rate schedule answers that question. An informal split or a spreadsheet does not.

What Tenants See

A well-run submeter program should feel to tenants almost like being a direct utility customer:

  • A bill that looks like a utility bill: opening and closing reads, usage by rate block, and the charges for each.
  • The same rate they would pay the utility, with no added billing or service fee.
  • Their share of rebates and Climate Credits, credited pro rata.
  • A posted rate schedule or a link to it, so they can check the math themselves.
  • Continued access to CARE, which cannot be refused because other units in the complex are not submetered.
  • A labeled meter tied to their unit, and a county sealer who can test it.

That transparency is not only a legal requirement. It is what keeps billing disputes rare.

Is My Building a Candidate?

Work through these questions. If you can answer yes to the first three, it is worth a closer look.

Is it served through a master meter?

If each unit already has its own utility meter and account, there is nothing to submeter. The utility is already billing tenants directly.

For residential, was it permitted before July 1, 1982?

Residential units permitted on or after that date must be individually metered by the utility under §780.5. Newer residential buildings are not candidates.

What does your utility's tariff say about your building?

Check which schedule the account is on and the eligibility dates in PG&E Rule 18, SCE's DMS schedules or SDG&E Rule 19. For mobilehome parks, note the January 1, 1997 cut-off. For LADWP, check Rule 18.

Are the tenants residential or commercial?

Commercial tenants of a CPUC-regulated utility generally cannot be submeter-billed for electricity outside EV charging. LADWP commercial tenants can, at LADWP rates.

How is electricity handled today?

Absorbed in rent, an existing submeter system, or a formula split. An existing system may need meters replaced or recertified. A formula split for electricity needs fixing regardless.

Can each unit be metered on its own?

Each submeter must serve one tenant premises. Units sharing circuits, or house loads wired through a unit's panel, need to be sorted out on site. That is an electrical question, and it is where a licensed contractor earns their fee.

Are you adding EV charging?

EV charging has its own tariff exceptions and its own meter rules. Read the EV charging billing guide before you set a price.

How Blueline Handles It

At Blueline, the team that reads your tariff is the same team of licensed electricians that opens your panels. A submetering project with us covers:

  • Confirming the building's utility schedule and eligibility before any work starts
  • Type-approved meters, one per tenant premises, labeled and installed to code
  • Utility certification of each connection, filed with the county sealer
  • Direct, hardwired data collection with no dependence on a vendor cloud
  • Itemized bills at the utility's rate, with rebates and Climate Credits passed through

Frequently Asked Questions

Can I add a monthly billing fee to cover my costs?

Not for residential tenants in CPUC territory. Section 739.5 compensates the owner through the master-meter discount and authorizes no separate billing or administration fee. LADWP's Rule 18 likewise bars additional fees or service charges of any kind.

I just built a new apartment building. Can I submeter it?

Not for electricity. Residential units permitted on or after July 1, 1982 must be individually metered by the utility. EV charging and water have their own rules, covered in our other guides.

Does my building's solar change what I can charge?

On-site generation raises its own questions about what a master-meter operator may bill. Get your specific arrangement reviewed before billing tenants for it.

How is this different from water submetering?

Water has its own statute, Civil Code §§1954.201–1954.219, and permits formula allocation in some cases. Our California SB 7 guide covers water.

About this guide

This guide is general information, not legal advice. Statutes, utility tariffs and weights-and-measures rules change, and how they apply depends on your utility, your building's metering history and your leases. Confirm your position with your own counsel and your utility before changing how you bill tenants.

Sources

All sources accessed September 2026.

  • California Public Utilities Code §739.5 (as amended by SB 1117, effective January 1, 2021)
  • California Public Utilities Code §780.5
  • PG&E Electric Rule 18; SCE Schedules DMS-1 and DMS-2; SDG&E Rule 19 and Schedule DS
  • LADWP Rules and Regulations, Rule 18
  • California Business and Professions Code §§12210, 12240(g), 12500(e) and 12500.5
  • California Code of Regulations, Title 4, §§4027–4027.5 and §4070
  • Elinder, M., Escobar, S. and Petré, I. (2017), Proceedings of the National Academy of Sciences 114(12)

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