ADU Utilities: Separate or Shared Meters?

# ADU Utilities: Separate or Shared Meters?

Most ADUs share utility meters with the main house because separate meters cost $5,000-$15,000 and many cities don't allow them anyway. This works fine - you just pass costs through to tenants by including utilities in rent or using submeter monitoring. For family use, shared meters are simpler and cheaper. Separate meters offer cleaner accounting but rarely justify the added expense and complexity.

The right choice depends on your local regulations, whether you're renting or housing family, and how much simplicity matters to you.

## What Your City Allows

**Shared meters (most common):**
ADU pulls from same utility meters as main house. This is how most jurisdictions require ADUs to work. One water meter, one gas meter, one electric meter for the entire property.

**Separate meters (limited availability):**
Some cities allow ADUs to have their own utility meters. This requires utility company involvement and typically costs thousands to set up.

**Check first:** Before planning separate meters, verify your city and utility company allow it. Many don't, making the decision easy.

## Shared Meters: How It Actually Works

**For rentals:** You have two main approaches:

**1. Utilities included in rent (most common)**

You pay all utilities, tenant pays fixed rent. You estimate average utility cost and build it into monthly rent.

**How to price it:**
Research typical utility costs for similar-sized rental units in your area. For 600 sq ft ADU:
- Electric: $60-$100/month average
- Water/sewer: $40-$70/month
- Gas (if applicable): $30-$60/month
- Internet: $50-$80/month (if provided)

Total: $180-$310/month depending on location and usage.

Add this to your base rent. If market rent is $1,600 and utilities average $230, you charge $1,830 all-inclusive.

**Real homeowner:**
"We charge $1,900/month all-inclusive. Our actual utility costs average $210/month. The simplicity is worth occasionally having a tenant who uses more. No arguments, no meter reading, no hassle." - Portland homeowner

**Pros:**
- Simpler for you and tenant
- Competitive in rental market (many tenants prefer predictable rent)
- No meter reading or utility calculations
- No disputes about usage

**Cons:**
- Tenant has no incentive to conserve
- You absorb cost if tenant uses more than average
- Might attract tenants who use utilities heavily

**2. Submetering (growing trend)**

Install separate meters inside your property that measure ADU usage. Tenant pays based on actual use.

**How it works:**
Electric submeter costs $200-$500 installed. Water submeter costs $300-$600. You read meters monthly, calculate tenant's usage, and bill them separately from rent.

**Pros:**
- Tenant pays only what they use
- Incentivizes conservation
- Fair for both parties
- Works well for long-term tenants

**Cons:**
- Upfront submeter cost
- Monthly meter reading and billing
- Need written procedure in lease
- Potential disputes about billing

**Many landlords use:**
Base rent + utilities billed separately using submeters. Rent is $1,600, utilities billed at actual cost based on submeter readings. Tenant writes two checks monthly.

**3. Flat utility fee (simplest compromise)**

Charge fixed monthly utility fee regardless of usage. Rent is $1,600 + $200 utilities = $1,800 total.

**Pros:**
- Predictable for tenant
- Protects you from extreme use
- Simpler than submeter billing

**Cons:**
- Still no conservation incentive for tenant
- You absorb overages if fee is too low

## For Family Use: Keep It Simple

**When family member lives in ADU:**
Shared meters without tracking individual usage is standard. You're not trying to profit from utilities; you're housing family.

**Options:**

**Included (most common):**
Family member pays fixed rent (often below market) and you cover utilities. Simple, family-friendly.

**Contribution:**
Family member pays nominal utility contribution - "$100/month toward utilities" without tracking actual use. Acknowledges they're using resources without complicated accounting.

**Submeter (rare for family):**
Only makes sense if you want precise accounting or if relationship is more business-like. Most families find this adds unnecessary tension.

## Electricity: The Biggest Variable

**ADU electric use (typical):**
- Lighting: $10-$20/month
- Appliances: $20-$40/month
- Heating/cooling: $30-$80/month (varies wildly by climate and season)
- Water heater: $15-$30/month

**Total: $75-$170/month** depending on season, climate, and tenant habits.

**Winter vs summer:** Heating/cooling causes biggest swings. Phoenix ADU might use $150/month in summer, $60 in winter. Minnesota ADU might use $120 in winter, $50 in summer.

**Electric vs gas heating:** All-electric ADUs (heat pump or baseboard) have higher electric bills. Gas-heated ADUs split costs between electric and gas.

**Separate electric panel recommended:**
Even with shared meter, install separate electrical panel for ADU. Costs $800-$1,500 but provides:
- Clear separation of ADU circuits
- Easier troubleshooting
- Option to add submeter later
- Better for property value

## Water and Sewer: Usually Small Costs

**Typical water/sewer for ADU:** $40-$80/month including wastewater fees

**This covers:**
- Drinking, cooking, bathing
- Laundry (if washer in unit)
- Outdoor water use (if tenant has garden/plants)

**Water is harder to submeter** because it requires physical plumbing separation. Water submeters exist but installation is more invasive than electric submeters.

**Most landlords:** Include water in rent unless tenant demonstrates extreme use (then address via lease terms).

## Gas (If Applicable)

**ADU gas use:** $25-$70/month depending on:
- Gas furnace for heating (major use)
- Gas water heater (moderate use)
- Gas stove/range (minimal use)

**Many new ADUs are all-electric:** Heat pumps for heating/cooling, electric water heater, induction stove. This eliminates gas entirely, simplifying utilities.

**If you have gas:** Usually included in rent. Small enough cost that submetering isn't worth the complexity.

## Internet and Cable

**Most landlords provide internet for ADUs.** Cost is low ($50-$80/month) and providing it is competitive advantage in rental market.

**Options:**

**Extend your WiFi:**
If ADU is close enough, mesh network or WiFi extender reaches it. Tenant shares your internet. Costs you nothing extra beyond router upgrade ($100-$200).

**Separate internet line:**
Second internet account to ADU. Costs $50-$80/month. Cleaner separation, especially for long-term tenants who want their own network.

**Tenant arranges their own:**
Less common. Works if ADU is far from house or you prefer complete separation. Tenant pays $50-$80/month for their own service.

**Cable TV:**
Rarely included. Tenants who want it subscribe to streaming services or arrange cable themselves.

## Trash and Recycling

**Usually shared:** ADU tenant uses same bins as main house. Most cities size bins to handle both residences.

**If city charges by bin size:** You might need larger bins (added cost $10-$20/month) but typically include this in rent rather than separating it.

**Rare case of separate service:** Very large ADUs or properties where city requires separate trash service. Adds $30-$60/month.

## Actual Cost Examples

**Phoenix, AZ (all-electric ADU, 600 sq ft):**
- Summer (cooling heavy): $180/month electric
- Winter: $70/month electric
- Water/sewer: $50/month
- Internet: $65/month (separate line)
- Average annual: $135/month utilities

**Portland, OR (gas heat, 650 sq ft):**
- Summer: $60 electric + $25 gas + $55 water/sewer = $140/month
- Winter: $80 electric + $65 gas + $55 water/sewer = $200/month
- Internet: $70/month (separate line)
- Average annual: $240/month utilities

**Atlanta, GA (heat pump, 550 sq ft):**
- Summer: $110 electric + $45 water/sewer = $155/month
- Winter: $95 electric + $45 water/sewer = $140/month
- Internet: $60/month (shared WiFi)
- Average annual: $210/month utilities

## Passing Costs to Tenants: Lease Language

**If utilities included:**
"Rent includes all utilities (electric, gas, water, sewer, trash, internet). Tenant is responsible for cable TV or streaming services if desired."

**If using submeters:**
"Rent is $1,600/month. Tenant pays actual utility costs based on submeter readings, billed separately on the 1st of each month. Estimated average utility costs are $210/month."

**If flat fee:**
"Rent is $1,600/month plus $200/month fixed utility fee. Total monthly payment: $1,800."

**Important:** State utility arrangement clearly in lease to avoid disputes.

## Separate Meters: When Worth It?

**Scenarios where separate meters make sense:**

**1. Your city allows and encourages it**
Some California cities offer incentives for ADU separate metering. If city subsidizes cost, consider it.

**2. Long-term rental where tenant wants control**
Tenant who plans to stay 5+ years might prefer separate meters and direct utility accounts in their name.

**3. Property management simplification**
If you have property manager handling ADU rental, separate meters mean one less thing to manage and bill.

**4. Future sale value**
Some buyers prefer properties with separately metered ADUs (cleaner accounting if they're keeping it as rental).

**Separate meter costs:**

**Electric:** $2,000-$5,000 (utility company connection fees, trenching, new meter base)

**Water:** $3,000-$8,000 (second meter, connection fees, often city impact fees)

**Gas:** $1,500-$3,000 (new meter, connection)

**Total for separate utility metering:** $6,500-$16,000

**Annual savings:** None directly - you just transfer utility costs to tenant instead of including in rent. Payback is through potentially higher base rent or reduced management complexity.

## What Most Homeowners Choose

**For rentals:**
- 70% include utilities in rent (simplest)
- 20% use electric submeter + include other utilities
- 10% use separate meters or tenant pays all utilities directly

**For family use:**
- 90% keep utilities shared and included
- 10% have family member contribute fixed amount monthly

**The trend:** More homeowners installing electric submeters as they become cheaper and easier. Water/gas still usually included.

## Smart Home Monitoring Without Submeters

**Track usage without formal submetering:**

**Smart plugs:** Monitor individual appliance use (fridge, washer, etc.). Good for identifying waste, not for formal billing.

**Whole-home energy monitors:** Sense, Emporia Vue track total ADU electric use through your main panel. Costs $200-$300. Great for your own information.

**Smart thermostats:** Track heating/cooling costs and allow remote monitoring if needed.

These tools help you understand usage patterns and verify your utility-included rent is priced right, without formal submeter billing complexity.

## Start With What's Easiest

Most homeowners overthink utilities. The simplest approach:

1. Check what your city allows
2. Estimate average utility costs for your ADU size
3. Include utilities in rent with 10-20% buffer for variation
4. Adjust rent annually if utilities increase significantly

**Your next steps:**

Check if your property qualifies for an ADU [property checker link], then talk to local builders [builder directory link] about typical utility arrangements in your area. They've seen hundreds of ADUs and know what works locally.

Utilities are one more detail in ADU ownership, but they don't need to be complicated. Most homeowners find shared meters with utilities included in rent is the sweet spot of simplicity and fairness.