RUBS vs. Submetering in California: What's Legal, What's Accurate

Why This Question Keeps Coming Up

Ratio Utility Billing Systems — RUBS — are sold nationally. The software is mature, it needs no hardware, and it can start billing next month. For a California owner staring at a master-metered building and a rising electric bill, it looks like the obvious fix: divide the bill by a formula and pass it through.

For water and sewer, that instinct is sound. California law explicitly contemplates allocation-based water billing. For electricity, it is the wrong answer, and it is one of the most common misunderstandings we see from owners who have been quoted by out-of-state billing vendors. A platform offering electric allocation as a menu option does not mean California allows it.

This guide goes deeper than the quick decision tree in our California SB-7 compliance guide. It covers what RUBS actually is, why the electric answer is different, how accuracy and fairness compare with real metering, what the consumption research says, and when RUBS is still a perfectly reasonable choice for water.

What RUBS Is, and How the Formulas Work

RUBS takes one master bill for a building and splits it among units using a formula instead of a meter. Nobody measures what a given unit used. The formula decides what it probably used, and the tenant pays that share.

California's water statute describes the idea directly: charges allocated "based on the square footage, occupancy, or other physical factors" (Civil Code §1954.202(d)). In practice, most RUBS formulas are built from one or more of these inputs:

• Occupancy. Each unit's share follows the number of people living there. A household of four pays more than a single occupant.
• Square footage. Each unit's share follows its floor area. It is simple and hard to argue with on paper, but a large unit with one quiet resident can end up subsidizing a small unit with a full household.
• Weighted combinations. Many formulas blend the two — for example, a portion by area and a portion by headcount — or adjust for fixtures, bedrooms or bathrooms. This is the "other physical factors" in the statute.

A well-run RUBS program also carves out the common-area share first — landscaping, laundry rooms, pools, leasing offices — so tenants are only allocated the portion that plausibly serves the units. Whatever formula you use, the principle is the same: the bill is an estimate, and the formula is the whole case for it.

The Electricity Answer: California Requires a Meter

California's weights-and-measures rules for utility submeters are in Title 4 of the California Code of Regulations. Section 4027.5, user requirement UR.3.1, operative February 12, 2009, reads:

Read it as a fork in the road. Either the tenant has their own utility account, or electricity is folded into the fixed rent, or there is a dedicated submeter measuring that tenant's usage. A formula-based electric charge fits none of the three. The rule applies to commercial-purpose submeters generally, so this is not only a residential issue: RUBS for electricity is effectively off the table in California for apartments and commercial space alike.

Los Angeles owners sometimes assume they sit outside this because LADWP is a municipal utility rather than a CPUC-regulated one. The regulator is different; the conclusion is not. LADWP Rule 18 prohibits resale, allows submetered pass-through at no more than LADWP would charge with "no additional costs, fees, service charges… of any nature," and permits allocation only where it charges each tenant for the amount "actually used." A ratio formula does not measure what anyone actually used.

Which Utility Are You Billing Back?

Your Three Lawful Options for Electricity

If RUBS is out, what is in? For a building where you want tenants to bear the cost of their own electricity, there are three paths.

What submetering under §739.5 actually requires

Public Utilities Code §739.5 governs a master-meter customer serving tenants of "a mobilehome park, apartment building, or similar residential complex." The rules are specific, and a compliant program follows all of them:

• Same rate as the utility. Each tenant is charged "at the same rate that would be applicable if the user were receiving" service directly from the utility.
• No separate admin fee. Your compensation is the utility's master-meter rate differential — the discount intended to cover the reasonable average cost of providing submeter service. The statute authorizes no separate billing or administration fee on top.
• Credits pass through. Rebates and California Climate Credits go to tenants pro rata (§739.5(b)).
• Itemized, transparent bills. Bills are itemized like a utility bill, including opening and closing reads and rate blocks, and you post the rate schedule or its web address (§739.5(e)).
• You maintain the system. The submeter system is the owner's responsibility (§739.5(d)).
• CARE stays available. A submetered tenant can't be refused CARE eligibility because other units in the complex aren't submetered (§739.5(h)).

Why new buildings don't face this choice

PUC §780.5 requires every residential unit with a building permit obtained on or after July 1, 1982 to be "individually metered for electrical and gas service," with narrow exceptions for college dormitories and farmworker housing. Utility tariffs read that as metered by the utility. So electric submetering is a retrofit option for older, master-metered buildings; a newer apartment building should already have a utility meter per unit, and there is nothing to allocate. Whether a particular older building can move to submetering also depends on its history under the serving utility's tariff — PG&E's Rule 18, for example, ties residential master-metering to how a building was served on specific dates in 1978 and 1981 — which is one of the first things we check on a retrofit. Our meter retrofit checklist walks through the rest.

Accuracy: Allocation vs. Measurement

Set the legal question aside for a moment and look at what each method does. A submeter measures a unit's consumption. RUBS assigns a unit a consumption based on a proxy.

Every RUBS formula carries an assumption about how people use utilities. Occupancy-based formulas assume everyone in the building uses about the same amount per person. Square-footage formulas assume usage scales with floor area. Real households don't cooperate: one tenant works from home and runs a dishwasher twice a day; the neighbor travels for work and is rarely there. The formula bills them as if they were the same.

A submeter used for billing in California, by contrast, has to meet a legal accuracy standard. Business and Professions Code §12500.5 makes it unlawful to use a device for commercial purposes unless its type is approved, and any measurement on which a charge is based counts as commercial. Electric submeters must hold 1% accuracy at acceptance and 2% in maintenance, at full and light load (4 CCR §4027–4027.5). Each meter serves one tenant premises and is labeled with it, is certified before use, and falls under county sealer inspection on an interval of up to 10 years (4 CCR §4070).

Water figures are from the 2004 National Multiple Family Submetering and Allocation Billing Program Study and apply to water only.

Tenant Fairness and Disputes

Tenants rarely object to paying for utilities. They object to paying for someone else's. That is the structural weakness of RUBS: every tenant's bill depends on every other tenant's behavior, and no individual can check their share against anything physical.

RUBS disputes tend to follow a few familiar patterns:

• "I live alone and I'm never home." Low users feel they are subsidizing heavy users, and under a ratio formula they are right.
• "That's not how many people live here." Occupancy-based formulas are only as good as the headcount on file. When the count is stale or disputed, so is the bill.
• "Why did my bill go up when I used less?" Under RUBS, a leak in another unit, a running toilet down the hall or a hot month for the whole building lands on everyone's share.
• "Show me how you calculated this." If the formula isn't written into the lease and applied consistently every month, it is hard to defend.

Submetering changes the nature of the conversation. The question stops being "is the formula fair?" and becomes "is the meter right?" — and that question has an answer. Under §739.5, an electric submeter bill shows opening and closing reads and the rate blocks applied, the rate schedule is posted, and each meter is labeled with the premises it serves. A tenant who doubts a bill can compare it with the meter serving their own unit. Most disputes end there.

Does the Billing Method Change How Much People Use?

Yes, and the research is clearest on water. Two studies are worth knowing, and it is worth being precise about what each one measured.

For a California owner, that second comparison is the relevant one anyway. With RUBS unavailable for electricity, the real choice for a master-metered building is between including electricity in rent and submetering it.

When RUBS Is Still the Right Call for Water

None of this makes RUBS a bad tool. For water and sewer, it is lawful, and in some buildings it is the sensible choice.

RUBS is a reasonable fit for water when:

• The plumbing makes per-unit meters impractical. Many older buildings feed each unit from several risers, so metering one apartment would mean several meters and opened walls. When there is no single point where one unit's water can be measured, allocation may be the only workable method.
• The building is small or the water bill is modest. The case for metering is strongest where there is enough consumption to reward conservation. In a small building, a clear, fair formula may be all that is needed.
• You need a starting point. RUBS can recover water costs while you plan a larger renovation that makes metering practical later.

If you run RUBS for water, run it well. Write the formula into the lease in plain language, keep occupancy data current, take common-area use off the top before allocating, and apply the formula the same way every month. Our California SB-7 compliance guide covers the broader water submetering framework, and your building's permit date and local rules can change the answer, so confirm your specific obligations before you start.

A mixed approach is common and entirely consistent with the law: submeter electricity at utility rates, and allocate water by RUBS where the plumbing leaves no practical alternative. Where the plumbing does allow it, water submetering brings the same accuracy and dispute benefits as electric metering.

A Note on AB 1248

In 2025, Assembly Bill 1248 proposed banning RUBS in California except for water and sewer. The bill died on February 2, 2026, and did not become law. We mention it only as context: it shows the direction of the policy conversation, and it happens to line up with where electricity already stands under 4 CCR §4027.5. Nothing in current law changed because of it.

How to Decide

1. Separate the utilities. Treat electricity and water as two different questions, because California does.
2. For electricity, rule out RUBS. Choose among rent inclusion, submetering at utility rates, and direct utility metering. If the building was permitted on or after July 1, 1982, the units should already be utility-metered.
3. For a master-metered older building, check eligibility. Confirm how the building is served under the utility's tariff before committing to a submetering retrofit.
4. For water, look at the plumbing. If one unit's supply can be metered at a single point, submetering is the more accurate and more defensible choice. If not, a well-documented RUBS formula is a lawful fallback.
5. Get the hardware right. Whatever you meter must be type-approved, certified and maintained. A meter that fails the legal standard is no better than a formula.

Frequently Asked Questions

Sources

Accessed September 2026.

• California Public Utilities Code §739.5 — submetered rates, fees, credits, billing and CARE
• California Public Utilities Code §780.5 — individual metering for units permitted on or after July 1, 1982
• California Civil Code §1954.202 (part of §1954.201–.219, SB 7) — water submetering and allocation
• California Code of Regulations, Title 4, §4027–4027.5 and §4070 — submeter tolerances, UR.3.1 and inspection intervals, via CDFA Division of Measurement Standards
• California Business and Professions Code §12500 and §12500.5 — type approval for commercial devices
• LADWP Rule 18; PG&E Electric Rule 18; SDG&E Rule 19 — utility tariff rules on resale and submetering
• Assembly Bill 1248 (2025–2026) — proposed RUBS restrictions; died February 2, 2026
• Aquacraft et al., National Multiple Family Submetering and Allocation Billing Program Study (2004)
• Elinder, M., Escobar, S. and Petré, I., Proceedings of the National Academy of Sciences 114(12), 2017