Utility Billing

What Is RUBS Utility Billing and How to Set It Up for a Small Portfolio

The water bill on a master metered building lands on the owner. RUBS is how you pass it back. Here is what the term means, where Texas draws the legal lines, and how to run it on a handful of doors without hiring a billing company.

By Zach Hagwood · September 21, 2026

If you own a small multifamily building in Texas, there is a decent chance one water meter serves the whole property. The city bills you, not the tenants, and the number goes up every summer. RUBS is the industry's answer, and nearly every search result on it is written by a company that sells the service.

I practice law in Fort Worth and I build the software my own family uses to manage rentals. We run shared utility billing on our own doors, so this is written from the setup side. It covers what RUBS utility billing is, when the Texas rules kick in, the formulas the state allows, and a setup you can run yourself.

What RUBS utility billing is, in one paragraph

RUBS stands for Ratio Utility Billing System. The owner receives one master metered utility bill for the property, deducts the portion attributable to common areas, and divides the remainder among the occupied units using a fixed formula. The formula is the "ratio": by occupants, by bedrooms, by square footage, or some blend. Each tenant gets a share added to what they owe that month. No submeters are installed, nothing is measured at the unit, and the tenant's bill is an allocation, not a reading.

RUBS versus submetering
Submetering puts a meter on each unit, so the tenant pays for gallons actually used. RUBS has no unit meters, so the tenant pays a formula share. Submetering is more accurate and costs money to install. RUBS costs nothing to start, which is why small owners reach for it, and why regulators wrote rules about it.

The Texas rules, and the five-unit line most small owners miss

In Texas, water and wastewater allocation is regulated by the Public Utility Commission under Texas Water Code Chapter 13, Subchapter M and the PUC's rules at 16 Texas Administrative Code Chapter 24, Subchapter I. The rules used to sit at TCEQ, so older articles still cite Chapter 291. The section numbers changed.

Here is the detail that matters for a small portfolio. The subchapter applies to an "apartment house," which the rule defines as a building or buildings containing five or more dwelling units. It covers only drinking water and wastewater. So a duplex, triplex, or fourplex sharing one water meter is outside the PUC allocation rules entirely, and so is splitting a trash, gas, or electric bill at any size.

That does not mean anything goes on a fourplex. Your lease and ordinary contract law govern there. If the lease clearly says the tenant pays a stated share of a stated utility, calculated a stated way, you can collect it. If the lease says nothing, you cannot invent a charge mid-tenancy. The rules below are the PUC's requirements for five-plus unit buildings; under that line, following them is good practice rather than law.

1. Register with the PUC before you bill

Section 24.277(a): an owner who intends to bill tenants for allocated utility service, or who changes the billing method, must register with the commission on its form. Billing companies lean on this step in their sales pitch. It is a form.

2. The lease has to say specific things

Section 24.279 lists what the rental agreement must state in writing. The list includes that the tenant will be billed for allocated service, which utilities are included, a clear description of the allocation formula, the average monthly bill for all units in the prior calendar year along with the highest and lowest month, the meter reading and billing and due dates, how quickly you will fix leaks, and that the tenant has a right to the records needed to verify the bill. At lease signing you also have to hand the tenant a copy of the rules. A lease clause that waives any of this is void under 24.279(e).

Two consequences. You cannot start RUBS on an existing tenant without a signed agreement, and section 24.279(c) requires at least 35 days' notice before any billing method change. And you need last year's water bills before you can write the addendum, because the average, high, and low months go in it.

3. Deduct the common area first

This is the step small owners skip, and it is the one a tenant complaint will find. Section 24.281(e)(1) says that before allocating, you must deduct any per-unit base charges or customer service charges, and then deduct common area usage. If the common areas are not separately metered and the property has an installed irrigation system, you deduct at least 25 percent of the master meter bill. If there is no irrigation system, or irrigation is metered but a pool or laundry room is not, the minimum deduction is 5 percent. If everything common is metered, you deduct actual usage.

Run that on a real number. A 12-unit building with sprinklers gets a $1,480 water and sewer bill. You remove 25 percent, which is $370, and allocate $1,110. If you allocated the full $1,480, every tenant is overbilled by a third, and section 24.283(k) requires you to refund every overcharged bill, not just the one they caught.

4. Use one of the approved formulas

Section 24.281(e)(2)(A) gives an apartment house five choices for splitting the post-deduction amount:

Notice what is not on the list: an equal split per unit. On a five-plus unit apartment house that is not an approved method, and 24.281(f) says an owner using a non-approved formula has to give notice and either adopt an approved one, install submeters, or stop billing. On a fourplex the PUC list does not apply, and an equal split written into the lease is an ordinary contract term. Know which side of the line you are on.

5. What the bill itself has to say

Section 24.283 governs the bill. Allocated charges must be separate from rent on any combined bill. The bill has to say the service is allocated, show water and wastewater as separate totals, name the retail utility while stating the bill is not from the utility, and give a dispute contact. The due date cannot be less than 16 days after delivery. A late penalty is capped at a one-time 5 percent and only if the lease states that percentage. Payment applies to rent first, then utilities. A written dispute gets a written investigation result within 30 days.

6. No markup, and a capped service charge

Section 24.281(a) bars passing through the utility's deposit, disconnect, reconnect, or late fees. Water Code 13.503 lets an apartment house add a service charge of up to 9 percent of the tenant's water and sewer charge, except for tenants in tax credit units or on Section 8 vouchers. That 9 percent is the only margin the statute contemplates. RUBS is a cost recovery tool, not a revenue line, and the state wrote it that way on purpose.

7. Keep the records

Section 24.277(e) lists what a tenant can demand to see: the utility's bills to you, the formula and occupancy counts, the total billed each month, and the total collected. Keep the current and prior calendar year. With no on-site office, you have 30 days from a written request to produce copies.

The setup, step by step

StepWhat to doWhy
1. Count unitsFive or more sharing the meter means PUC rules apply. Four or fewer means lease and contract law.Decides which rulebook you are in
2. Pull 12 months of billsCompute the average, highest, and lowest monthly bill.Required lease disclosure at 5+ units, and the honest number for your fourplex addendum
3. Pick the formulaBedrooms is the easiest to administer because it never changes. Occupancy tracks reality better but you have to keep occupant counts current.Must be an approved method at 5+ units
4. Set the common area deduction25 percent with unmetered irrigation, 5 percent otherwise, actual if metered.Skipping it is the most common overbilling
5. Register with the PUCFile the owner registration before the first bill.Section 24.277(a)
6. Write the lease addendumCover every item in 24.279(a) and hand over the rules at signing. Roll it out at renewal with 35 days' notice.No signed agreement, no charge
7. Bill monthly from the actual utility billEnter the bill when it arrives, allocate, and issue tenant bills promptly with the required content.Section 24.283
8. File the recordsUtility bill, allocation worksheet, and collection totals, kept two years.Section 24.277(e) and (f)

Do you need a billing company?

Third-party RUBS providers exist because a 300-unit property cannot do this by hand. On 8 doors it is a different calculation. You are paying someone every month to divide one number by a fixed ratio and print a bill, and you still have to send them the utility bill and keep the occupant counts current yourself.

My view for a small portfolio: under five units per meter, run it yourself with a clear lease clause. At five or more, you can still run it yourself, but do the registration, use a formula from the list, deduct the common area, and put the required content on the bill. None of that requires a vendor. It requires software that does the arithmetic the same way every month and keeps the record.

How I run it on our own doors

In KeyTurn, shared utility bills are a line on the property. When the water, trash, or sewer bill arrives, you enter the total and the month. The system splits it across that property's active tenants, adds each share to the tenant's next rent balance, and snapshots the tenant count when you save so a move-out next month does not scramble the historical bill. The tenant sees the share as its own line, separate from rent, which is what section 24.283(e) asks for.

I want to be precise about that split, because I just spent a section telling you the formula matters. KeyTurn's shared bill divides the amount evenly per active tenant. On our own properties, which are under the five-unit line, that is what the lease says and it is the right tool. If you run a bedroom or occupancy formula on a larger building, compute the shares from your worksheet and post each tenant's amount as an individual tenant charge, which KeyTurn also supports. Weighted allocation inside the shared bill is on my list, and if it is what stands between you and dropping a billing company, tell me.

What I would not do is run RUBS through a ledger note or a text message. The regulation is built around records: what the utility charged, what you deducted, what formula you applied, what each tenant was billed, and what was collected. If those five numbers live in the same place every month, a PUC complaint is a printout. If they live in your head, it is a refund.

See the utility bill split on a real portfolio

Lockwood Property Management moved their doors onto KeyTurn, shared bills and owner statements included. The case study covers what they paid before, what they pay now, and how long the migration took.

Read the Lockwood case study

If you manage in Texas and want a second opinion on your utility setup, the beta request form is on the KeyTurn home page. Tell me the unit count per meter and what the lease currently says about utilities. I will tell you which rulebook you are in and what I would fix first.

Related reading

Sources

Nothing here is legal advice for your situation and reading it does not create an attorney client relationship. Rules change, the PUC updates its forms, and every figure and section number above should be confirmed against the current text before you rely on it.