Two parts of a bill, two different behaviours
Look at any utility bill and you will find a fixed charge — a basic service charge, a customer charge, a meter charge, a standing charge, the name varies — and a usage charge. The fixed part is the price of having a connection. It arrives when the unit is empty. The usage part is the only part a meter attributes to anyone.
The consequence for splitting a shared bill is arithmetic, not opinion. Suppose the bill is $168, of which $28 is fixed and $140 is usage, and the unit accounts for 35 percent of usage. Split the whole bill at 35 percent and the unit pays $58.80. Split the fixed charge evenly and the usage by meter and the unit pays $14.00 plus $49.00, which is $63.00. The unit pays more under the second method — and that is the correct direction, because the unit is using a connection that costs $28 a month to exist whether it draws anything or not, and half of that is a fairer attribution of a shared fixed cost than 35 percent of it.
Reverse the usage share and the same logic pushes the other way. The point is not that one method is always kinder; it is that a usage-proportional split of the whole bill silently prices a fixed cost as if it were variable, and the error runs every month for as long as the arrangement does.
The three arrangements
| Arrangement | Up front | Every month | Who does the arithmetic |
|---|---|---|---|
| Separate service | Connection fee, equipment, trench, permits | A second fixed charge, forever | Nobody — the utility bills each account |
| Sub-meter | Sub-meter and enclosure, wiring or piping | One fixed charge, split | You, every month, and you also collect |
| Shared by agreement | Nothing | One fixed charge, split | You, and the split is a negotiation |
The comparison people get wrong is the first row against the second. A separate service looks expensive up front and then it is finished; a sub-meter looks cheap and then it costs a monthly task and a recurring conversation. But the second fixed charge on a separate service is also recurring, and over five or ten years it is often the same order of magnitude as the installation. Both recurring costs belong in the comparison and usually only one of them gets counted.
What this page refuses to decide
Whether you may sub-meter a rental unit, what you may charge for what you measure, what has to be disclosed in the lease, whether an administrative fee is permitted, and whether any of it is affected by local rent regulation are questions of state law, utility tariff and sometimes municipal ordinance. They differ between states and between utilities in the same state. Nothing here is legal advice and nothing here is a rate. Ask the utility what they permit and a lawyer in your state what you owe a tenant.
Whether the utility will grant a second service to a second dwelling on one parcel is likewise theirs to answer, and it is worth asking early — it occasionally decides the shape of a whole project. The other fees in that conversation belong in the ADU build cost calculator, and the ongoing operating side in the rental reserve calculator and the rental stress test. If this is a move rather than a build, the utility transfer timeline calculator handles the dates.
Trenching, which is where the money and the danger are
The per-foot rate for a trench run is the least predictable number in this whole calculation. Rock, tree roots, a driveway that has to be cut and repaired, a lawn that has to be restored and a required depth that differs by service can move it by a factor of several. Get it quoted for your actual route rather than assuming a rate. And note that the danger is not in the price: buried lines are never quite where anyone remembers, and an unshored trench collapses without warning on people standing in what looks like a harmless hole. Locates are free and required. This page prices the work and describes no method for doing it.
Questions people ask
Is it cheaper to sub-meter an ADU or give it a separate service?
Put both into the fields and compare over a realistic number of months. A separate service costs a connection fee, equipment, a trench and permits once, then a second fixed monthly charge forever. A sub-meter costs far less up front and then costs you a monthly reading, a monthly calculation and a monthly collection. The recurring standing charge is the part people leave out of the comparison, and over five or ten years it is frequently the same size as the installation.
How should a shared utility bill be split between two units?
Split the usage by whatever measurement you have and handle the fixed service charge separately, because it does not vary with consumption. Splitting the entire bill in proportion to usage charges a fixed cost as if it were variable and moves money onto whichever side uses less, every month. The page shows both results side by side so you can see the size of the gap before deciding which one to write into an agreement.
Can I legally bill a tenant from a sub-meter?
That depends on your state, on the utility tariff, and sometimes on a local ordinance, and the answer is genuinely different in different places. Some jurisdictions permit it with disclosure requirements, some restrict what may be charged, some prohibit any markup, and some tie it to rent regulation. This page has no view and cannot have one. Ask the utility what they allow and a lawyer licensed where the property is what you owe the tenant.
What does a utility connection fee cover?
Whatever that utility says it covers, which typically ranges from the physical work of bringing service to the property to a capacity or impact charge for adding a customer to the system. The figure varies by provider, by service and by year, and it is not unusual for water and sewer connection charges to be the largest single line in an ADU budget. Ask each provider directly and get the number in writing before the design is finished.
Do I need a separate water meter for an ADU?
Some water utilities require one for a second dwelling, some permit a shared service, and some will not grant a second connection at all on a single parcel. It is their decision and their rule, not a building code question and not something a calculator can answer. Call them early, because the answer sometimes changes the plan rather than just the budget.