Water Sub-Meters – Who’s Responsible?

The impacts of COVID have many people rethinking how they spend their money, which includes utility costs such as water. Strata Communities have varying methods of how water costs are charged to residents, depending upon how the infrastructure is set up. The charge method will either be based on individual sub-metered use or per unit of entitlement recorder in the community management statement, which has no consideration to actual use by individual residents.

The charge method may be changed to sub-meters if agreed to by the affected parties, or by the local water authority to per unit of entitlement method if they deem the sub-meters to no longer be compliant with their standards and the meters are not upgraded to comply.

In this article we provide information to help you decide if sub-metering or upgrade of sub-meters is right for your scheme to enable equitable cost sharing to be adopted or continued.

To assist with understanding of each area of water billing, we explain the following:

1. The two main types of billing
2. What is sub-metering?
3. What are the benefits of sub-metering?
4. Things to consider if you are planning on installing meters
5. What to expect in terms of impact on your quarterly accounts

The two main types of billing

There are two common setups when it comes to water billing,

1. Property Share Percentage; and
2. Sub-metering

If a property only has a master meter and no sub-metering, the local water authority will split the total consumption based on entitlements listed in the schemes registered CMS.

The Body Corporate does not receive a bulk invoice as all water is recovered from the owners via direct billing from the local water authority.

When there is sub-metering that is read by the local water authority, the difference between the total from the sub-meter reads and the master meter is billed to the Body Corporate as common area consumption.

In the event the sub-metering is owned by the Body Corporate, a bulk invoice will be received by the body corporate for all water consumed via the master meter. The Body Corporate engages a third party billing agent to read the individual meters and issue invoices to owners.

Fixed Access Charges for water and sewerage are still billed to the owners via the local water authority.

What is sub-metering?

A sub-metering network is made up of two parts, a master meter and sub-meters.

The master meter, which is usually located near the property limits, measure all the water that comes into the property. From this point the water flows to individual meters that are attached to each lot and other relevant areas of the property

Any water that is consumed between the master meter and the sub-meters is classed as common use and is unmetered.

To calculate the common area consumption, you can deduct the total of all sub-metering from the master meter.

Examples of common area consumption include pools, watering gardens and sometimes leaks.

What are the benefits of sub-metering?

As we are all different, we consume water in different ways. For example:

• A 3-Bedroom apartment with a retired couple
• A 2-bedroom apartment with a family of four who rent
• A 1-bedroom apartment on Air BNB
• A lock up with owners who only visit during summertime

The consumption profiles for the above examples would be notably different. In the absence of sub-metering the low consumers are effectively paying for a portion of the cost for the high users.

The benefits of sub-metering to residents is that they can monitor their consumption and only pay what they use. In addition, leaks are easily identified by a significant increase in a units water consumption between two billing periods.

If you are an investor, sub-metering introduces the opportunity to on-charge the water consumption to your tenants.

To on-sell water there are 3 conditions set out by the RTA:

1. Sub-metering must be installed
2. The Property must be water efficient
3. The Tenancy Agreement must allow it

Things to consider if you are planning on installing meters:

If the Body Corporate decides to install sub-metering, there is some important things to think about that may impact the cost and installation.

This includes what type of metering you want to install.

Mechanical meters are low cost, and if installed in a common area cupboard can be read manually. If a mechanical meter is installed inside  you may need to install an Automatic Meter Reader which collects the meter readings in a centralised area such as a basement.

There are all different types of smart meters; some can be read via a website and others need a handheld device that collects the reads wirelessly.

We would recommend having a plumber who specialised in sub-metering to help identify what is best for your property. The Body Corporate will be responsible to ensure the meters are maintained and comply with local water authority technical specifications and sub-metering policies.

Although there is no licensing required to on-sell water, we recommend you engage a third party billing agent who specialises in water billing.

Lastly, it is important to identify where the meters will be located and ensure there is sufficient space and access to install the meters.

What to expect in terms of impact on your quarterly accounts

The below example of a 10-lot building that has sub-metering. If the property did not have meters each lot would be charged based on their entitlement which would be 48.4KL.

The table shows both the number of entitlements and the actual consumption per lot. You can see lots 1 and 10 are well outside the building’s average!

Our next example demonstrates that there is a significant difference between splitting on entitlement and using Sub-Metering in particular for lots 1 and 10. 86% of lot one’s invoice is made up of Fixed Charges and they are still $159 less than using the entitlement method, Lot 5 is in alignment with the entitlement amount and Lot tens invoice is up $297 compared to using the entitlement method.

The example demonstrates a material difference between a ‘pay what you consume’ model versus a split on entitlement method. These figures do not include the cost of setting up the metering infrastructure.

Summary

There is no right answer and every property is different, so before deciding to change the billing method, contact a plumber who specializes in sub-metering and speak to a billing agent such as ARC Utilities Management for guidance.

This article was contributed by Adam Ford – General Manager, ARC Utilities Management.