Many policymakers want to lower the costs of rental housing given the high rates of housing cost burden affecting households and communities across the country. Though many focus on the cost of rent, rising utility costs are increasingly adding to affordability issues. Nationally utility bills have increased in the past few years, with surges in sewer, water, and electricity prices that have outpaced consumer prices. Utility costs can substantially strain households earning lower incomes, who already face high rates of housing cost burden.
Many renter households face unique additional challenges around utility costs. First, many have little transparency into their utility charges. Many landlords don’t submeter, which makes it difficult to gauge actual energy use. In some localities, landlords use Ratio Utility Billing Systems (RUBS), which allocate building-level utility costs to renters using opaque or undisclosed formulas that make it difficult or impossible for renters to understand how much the building has been charged, whether the landlord is marking up services, or how their share is being assigned to them.
Second, in some regions, third parties can buy discounted electricity and gas from a public utility and resell it to renter households, leading to unexplained higher costs and excessive fees that aren’t subject to state oversight because they are considered “private entities” or “agents of the landlord.” In these areas, costs may be higher because utility practices bypass state price caps and consumer protection laws.
The lack of utility cost transparency and oversight may allow property managers to use utility charges to bypass consumer and renter protections. For example, California’s attorney general reached a settlement with a national property management firm in which the state alleged the firm had used utility increases in ways that violated the state’s limits on how landlords can raise rents.
New analysis sheds light on rental utility charges
Tracking what renters are charged for utilities and how they affect overall housing cost is difficult, as rent ledgers are often proprietary and difficult to access. But understanding the true cost and impact of utilities on renter households is critical given the ongoing housing affordability crisis. To fill this gap, this analysis uses a novel approach to extract and examine fines and fees charged to a subset of 1,109 cost-burdened tenants in Colorado between 2021 and 2024. We analyze charges for electricity, gas, and sewer and water, finding that individual and aggregate utility costs experienced a rapid rise from 2021 to 2024. We highlight ways policymakers can help reduce the negative impact on renters.
Monthly combined utility charges increased more than 40 percent from 2021 to 2024
The average renter in our study saw a monthly net charge increase of 42 percent, from $67.30 in 2021 to $95.38 in 2024. In total, this adds an average of $336 per year for renters who are already struggling to make their rental payment, driving utility costs to shift from an average of $807 to $1,145.
The largest jump in costs was for monthly gas prices, which increased 73 percent from an average of $13.33 to $23.09 per month in 2024. Monthly net electricity costs increased 50 percent from $16.31 in 2021 to $24.53 in 2024. Water and sewer charges increased 22 percent over the study period, reaching an average monthly charge of $58.73 in 2024.
Volatility in utility costs increased 150 percent over time, creating unpredictability for renters
Beyond just the increase in overall costs, the volatility and unpredictability of charges increased 150 percent from 2021 to 2024, from $29.68 to $74.26. Looking at the standard deviation within monthly ledger charges for various utility categories, across all categories, the standard deviations increase over time. Sewer and water increased by 53 percent, electricity grew by 65 percent, and gas increased by 218 percent.
The variation highlights the substantial volatility in the charges being passed to renters over time. Not only are costs increasing, but they’re becoming more unpredictable for renters. This is challenging given the lack of transparency most renters have into their utility bills. This makes it hard for many to budget or anticipate changes in utility charges. Given that two-thirds of working-age renters struggle already to afford basic needs, and many are living paycheck to paycheck, the inability to budget and anticipate changes may be leading to late rental payments, eviction notices, and displacement.
Policymakers can focus on encouraging transparency and reducing harm
Inflated utilities increase the total monthly cost of housing and, when billed on the ledger, heighten the risk of eviction and instability for tenants. Without clear guidance on monthly costs, renters cannot evaluate leases when searching for housing or budget effectively once they have signed a lease. State and local policymakers can help support renter stability by supporting provisions that inject transparency and predictability into rental utility billing. Some cities and states provide examples that can work:
- Prohibit landlords from adding utility billing fees, marking up utility bills, contracting for services with related, third-party entities, or receiving reciprocal revenue from utility billing services. On-ledger utilities should be billed to tenants at the cost of service, with clear bars on fees and markups. To limit inflated submetering and reselling fees, Columbus, Ohio passed legislation that requires property managers to bill tenants for water, gas, and electricity at the same rate the city or utility company charges and prohibits administrative markups or hidden service fees.
- Require public transparency and disclosure of building-wide utility costs and formulas. Transparency and the ability to predict and understand utility costs is critical to promoting stability. Some states, such as Colorado, are exploring legislation that requires submetering and disclosure of utility allocations. Proposed legislation mandates that property managers disclose how utility bills are calculated, and if a RUBS system is used, deduct at least 10 percent of the total utility bill to account for utility use in common areas. It also requires that tenants have direct access to the utility company’s billing statements.
- Empower state and local administrative agencies to investigate and take action. A critical component of ensuring transparency and fairness is enforcement and monitoring against illegal markups and fee shifting. Public enforcement deters predatory billing practices and creates accessible legal options for tenants subject to economic abuse. State attorneys general in Minnesota, Arizona, and California have used enforcement power to pursue property managers overbilling tenants for utilities.