Utility billing is common and generally legal
It's standard for a lease to make the tenant responsible for some or all utilities — electricity and gas are almost always billed to the tenant directly through the utility company. Water, sewer, and trash are more often handled by the landlord, who then either puts the account in your name, charges a flat monthly fee, or uses a formula — often called a ratio utility billing system, or RUBS — that divides the building's total utility bill among units based on square footage, occupancy, or a similar measure. None of these approaches is inherently illegal; the question is whether your lease actually discloses which method applies and how the amount is calculated.
What federal regulators are looking at
Utility-related charges are specifically named in the FTC's March 2026 inquiry into rental housing fees as one of the categories it's examining, including asking rental companies how common it is to charge a separate fee just for preparing, providing, or processing a utility bill, and whether a future rule should require estimated utility costs to be included in the advertised total rent when they're mandatory. That inquiry hasn't produced a rule yet; it's a request for public comment, and it's worth checking ftc.gov for whether that's changed.
Separately, the FTC's 2024 settlement with Invitation Homes and 2025 settlement with Greystar were both about excluding mandatory fixed monthly fees, which can include utility charges, from the rent a company advertised. The core issue in both cases was the same: if a fee is mandatory, it has to be part of the price you were quoted before you committed, not sprung on you afterward.
A concrete example
Say your building's total water bill for the month is $2,400, split across 20 units using a formula based on square footage and occupancy. Your unit is smaller than average and has one occupant, so your share comes out to $95 for the month, plus a $5 billing fee the property management company adds to cover processing. Nothing about a formula-based charge like that is automatically improper — but you're entitled to understand the formula and see that it was actually applied to your unit, not just be told "your share is $100" with no way to check the math.
What to check in your lease
- Does your lease say which utilities you're responsible for, and how the amount is calculated?
- If it's a RUBS-style formula, does the lease explain the formula, or just say you'll be billed "your share"?
- Is there a separate administrative fee on top of the actual utility cost for billing or processing?
- Are you being charged for a utility that's supposed to be included, based on the listing you responded to?
If a utility bill seems wrong
Ask your landlord in writing for the calculation behind your bill — the total building bill, the formula used, and your portion. A landlord using a RUBS-style formula should be able to show you the math; if they can't, or the number keeps changing without explanation, document it. If you believe the fee wasn't disclosed at all before you signed, treat it the same way you would any other undisclosed charge — see can a landlord add fees that aren't in my lease.
Utility shutoffs are a different, more serious issue
Being billed for utilities is different from having a utility shut off as leverage — a landlord generally cannot cut off your water, power, or heat to pressure you over a dispute, including a fee dispute. See can my landlord shut off my water, power, or heat if that's happened to you.
Submetering versus a shared formula
Some newer buildings install individual meters for each unit, so you're billed only for what you actually use, similar to a standalone house. Older buildings more often rely on one master meter for the whole property, which is why they need a formula like RUBS to divide the total. Neither approach is automatically better for you financially, but a submetered unit's bill is generally easier to verify, since it reflects your own usage rather than a shared calculation you can't independently check.
Honestkey™ checks your lease for how utilities are allocated and flags fee language that isn't clearly explained, so you know what you're actually on the hook for before a surprise bill arrives.