national multiple family submetering and allocation billing program ...

CHAPTER 1 INTRODU CTION
More and more buildings in the multi-family housing sector are converting to billing
systems where the occupants in each dwelling unit pay for water and wastewater directly through
actual metering or allocation programs instead of including these charges as part of the rent. The
three most common ways to convert to direct billing are through the use of water submeters,
billing allocation formulas, or a combination of these two methods. Submetering and allocation
issues are becoming more and more prevalent as these conversion systems spark the interest of
property managers, water conservationists, and government officials across the country.
Submetering and allocation have gained recognition primarily because of the steep
increase in water prices. Between 1990 and 1998, the cost of water and wastewater to consumers
increased 45 percent, as measured by the Consumer Price Index. This rise is almost double the
25 percent increase in consumer prices in general during that period (Goodman 1999). An
analysis of water and wastewater prices from 1986-1998 in 38 cities projected that urban water
and wastewater prices would escalate at a rate that is 3% above inflation in the coming decades
(DOE 2000). This trend has continued over the past five years and is not expected to abate. The
rising price of water can be attributed to the increasing need for utility infrastructure repair and
the need to meet more stringent regulations at the federal, state, and local levels.
Water price increases have had a pronounced effect on multi-family property owners,
raising the cost of doing business. Although individual metering has become standard in single
family housing, multi-family housing is typically built with one master meter for all units.
Traditionally, property owners have paid the water and wastewater bill and recovered the costs
through monthly rent payments. However, as water prices rise at a faster rate than inflation,
property owners are seeking ways to control these costs. Some multi-family housing owners are
opting for submetering and other methods of allocating water costs, effectively passing the
burden of cost increases onto the residents.
Water billing in multi-family properties stands in contrast to the seemingly routine
manner in which other utilities like electricity and gas are billed directly to residents. Direct
billing of any utility (beyond telephone service) in the multi-family sector was uncommon prior
to energy shortages and attendant price spikes of the late 1970s. President Carter issued
Executive Order 12003, which addressed the issue of energy efficiency and made specific
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