By Geoff Lubbock
The Legal Challenge of Submetering
Under the Public Utility Regulatory Policies Act (PURPA) and Federal Power Act, an “Electric Utility” is defined as: “Any person, state agency, or federal agency that sells electricity to end users” (16 U.S. Code § 2602(4)).
Obviously, to make a building owner who would like to submeter individual units into a regulated utility could impose an immense regulatory burden. However, many utility commissions view submetering as a tool to encourage conservation by providing direct cost signals to customers. As utilities and public service commissions seek to improve demand-side management and equitable cost allocation, submetering has become a critical policy lever. Used correctly, electric and water submetering allows for granular tracking of tenant consumption, encourages conservation, and supports utility decarbonization goals. Many states waive utility classification for submetering systems, though enforcement remains in a legal gray area.
Varying Responses Across the U.S.
The regulatory treatment of submetering varies widely across jurisdictions—raising important questions about utility status, billing fairness, and consumer protections. This article outlines legal frameworks, regulatory models, and conservation mandates governing submetering across U.S. states.
- A. Minimum Regulatory Oversight: In 40 states—including Arizona, Alabama, Florida, Georgia, Colorado, Iowa, and Kansas—building owners can install submeters and bill tenants without being classified as a utility, provided no markup occurs. Utility commissions generally lack jurisdiction unless billing is abusive or the landlord acts as a provider.
- B. Partial Regulatory Oversight: States like Connecticut, Illinois, Maryland, North Carolina, and Ohio require landlords to certify submeters, register with the PUC, or follow strict billing practices. Concerns include late fee abuse, markup limits, and tenant complaint pathways.
- C. Mandatory Submetering: In places like California, NYC, and Seattle, submetering is required for certain building types, often linked to conservation goals or energy codes. For example, Title 24 in California mandates submeters for new multifamily buildings.
- D. Forbidden Submetering: Massachusetts bans electric submetering except in pre-1997 buildings. New Jersey allows it only in select legacy systems.
Conclusion
Submetering is no longer niche—it is a regulatory standard emerging at the intersection of climate policy, utility oversight, and tenant fairness. The challenge is balancing:
- Accurate measurement
- Fair tenant treatment
- Administrative feasibility
- Conservation and decarbonization goals
As regulators revisit definitions and utility policies, submetering will remain central to the conversation.
Table – Electric Submetering Regulatory Model
| Jurisdiction | Submetering Status | Oversight/Standards | Notes |
|---|---|---|---|
| California | Mandatory | Title 24, PUC §739.5, CTEP | Required for all new MF housing (post-2018) |
| New York | Allowed with petition | 16 NYCRR Part 96, HEFPA | PSC approval required; full utility obligations |
| Texas | Permitted | PUC Rule 25.141, NEC | Utility-like billing, tenant protections required |
| Maryland | Regulated | PSC, ANSI/NEC standards | Meter certification & housing authority approval |
| Massachusetts | Prohibited | Only utility-installed meters allowed | No landlord-managed electric submetering |
| North Carolina | Permitted with rules | NCUC, NEC | Strict billing & estimation caps |
| Seattle (local) | Mandatory (sized base) | NEC, Seattle Energy Code | Applies to commercial and large residential buildings |
| Arizona, Georgia | Freely allowed | NEC, ANSI | No utility designation if billing is cost-based |