How to Split Electricity and Water in a Rental

Electricity and water are the second most common source of arguments in a rental, right after deposits. Almost every one of those arguments has the same root: the tenant cannot see how the number was reached.

The fix is not a lower bill. The fix is a visible computation. Once a tenant can follow the reading and the rate, even a high bill stops being a fight.

Which setup fits you?

1. Separate meter in the tenant's name. The tenant holds the account with Meralco or the water district. They are billed directly and they pay directly. This is the cleanest arrangement: you never hold anyone else's money, and there is nothing to argue about.

It suits whole houses, townhouses, and larger units. The catch is cost and paperwork — a new service connection takes time and money, and the account has to be transferred again when the tenant leaves.

2. Submeters, read by you. One main meter is in your name and each unit has its own submeter. You read them monthly and bill each tenant for what they used.

This is the most common setup in apartments and boarding houses. It works fine, as long as the arithmetic is out in the open.

3. Included in the upa. One figure covers rent plus utilities, usually with a cap — say, up to a certain amount per month, with anything beyond that billed to the tenant.

This suits bedspace and small rooms where everyone uses roughly the same. Just be careful: with no cap, you are the one paying for the aircon that runs all day.

Computing a submeter charge fairly

The principle is simple: the rate you charge should be the rate you were charged. Take the total bill, divide it by total consumption, and that is your effective rate per kilowatt-hour.

If your bill covers 1,000 kWh, divide the peso total by 1,000 and use that figure against each submeter reading. Do not invent a round number that happens to sit above it.

Every charge you issue should show four things:

• Previous reading and its date
• Present reading and its date
• Consumption (present minus previous)
• Rate and the total amount

A photo of the meter each time you read it is better still. It answers most questions before they are asked.

The common area is where it leaks

There is almost always a gap: the submeters add up to less than the main meter. That is normal. The gap is the hallway light, the water pump, the gate light, and ordinary meter variance.

Two clean ways to handle it:

1. Fold it into the upa. Raise the rent slightly and stop billing common areas at all. Simplest, and nothing to explain each month.
2. Make it a CUSA. A fixed amount per unit per month for common utilities, written into the kontrata. Everyone pays the same and knows what it is for.

What is not fair: pushing the whole gap onto whoever moved in last, or splitting it by verbal agreement. If it is not written down, it is a charge you cannot explain.

What belongs in the kontrata

In the lease contract, state all of this plainly:

• Whose name the Meralco and water accounts are under
• The method: separate meter, submeter, or included in the upa
• If included, the monthly cap and who covers the excess
• The meter reading day and the payment due date
• Whether there is a utility deposit and when it is returned
• What happens when a bill goes unpaid — the written process, not a cut-off

One warning: disconnecting water or electricity to force a tenant out is risky and may be unlawful. If someone is not paying, follow the process — our guide on ejecting a tenant properly covers it.

The final bill after move-out

The last Meralco bill arrives weeks after the tenant has gone. Without an agreement, that is a problem. The usual answer is a holdback: keep a reasonable part of the deposit until the final bill arrives, show it to the tenant, and return the rest.

For that to work it has to be in the kontrata before the tenancy starts. More on this in our guides to security deposit and advance and the move-out checklist.

How MagpaUpa helps

In MagpaUpa, electricity and water are their own invoice lines rather than something quietly added to the rent, so a tenant can see exactly what they are paying for. If you read submeters, you can enter the consumption and amount each month and it stays on the invoice as a record. CUSA can be a standing line too. At move-out, the settlement includes the holdback for final bills. Try MagpaUpa.