Working on a lease audit for an office building in Billings served by NorthWestern Energy. Landlord installed submeters for individual suites but is still passing through costs based on the master meter bill. Tenants are paying twice - once through their individual submeters and again through CAM charges for the master meter. Is this legal in Montana? The lease says tenants pay for 'actual electricity usage' but doesn't specify the billing method.
Question about submetering vs. master meter billing in Montana
Craig, that sounds like double billing to me. Up here in Seattle, Washington state law requires landlords to choose either direct billing through submeters OR master meter pass-through, not both. You might want to check Montana's landlord-tenant statutes. What's the total monthly overcharge per tenant?
I've seen this in South Carolina with Duke Energy properties. Usually it's an oversight when landlords retrofit buildings with submeters but forget to remove utility costs from CAM calculations. The individual tenant overcharges aren't huge but they add up across all suites. Did you check if they're also passing through demand charges separately?
Margaret, good point about demand charges. They're passing through both energy and demand costs in CAM even though tenants have direct submeter billing. Total overcharge is about $340 per month across 8 suites. Not huge individually but that's over $32K annually for the building. Going to recommend they eliminate utility pass-through from CAM since tenants are directly billed.