Current Trends In Utility Submetering For Multifamily, Military Housing & Federal Facilities

Traditionally submetering/RUBS companies made money from both installing the equipment & ongoing billing revenue. Competition has driven the margins for equipment installation in multifamily into single digits but the margins for billings can be in excess of 80% and more than offset the slim installation profits. In fact, much of the multihousing industry has chosen to forego equipment in favor of RUBS billings. RUBS (Ratio Utility Billing System) allows residents to be billed for usage based on occupancy or square footage and requires no equipment. Once set up there is very little ongoing attention needed and margins for RUBS billings usually exceed 100%. These can be so profitable that many billing companies only do RUBS billings.

With over 150,000 utility companies & water districts in the U.S., some sub-metering companies, have begun to branch out into third party billing services for these entities. The cities of Pontiac MI, Seattle WA, Denver Water Board to name a few, all use sub-metering companies to provide billing services. Energy procurement, Energy management, Master meter audits & bill payment plus vacant unit loss recovery are other areas that the industry has begun to get involved in.

Long term, two of the more interesting events concern the federal government, The military intends to privatize over 700,000 units over the next ten years and all units must be metered. This is a huge market where margins are high and have the potential for decades long contracts. At present there are only three companies competing for this business. For now this is only installation work but billing is expected to start at some bases as early as this year. One advantage of privatization is that you are not dealing with the government. Under privatization a Prime Contractor is given a 50yr contract in exchange for their agreement to rehab existing units & build additional housing. The billing company contracts with the contractor not the government.

There are over 15 million federal facilities that are required to be sub-metered under various federal initiatives. At present no company has gotten GAO certification to be an approved supplier to federal facilities. The first company that completes the process will have a huge advantage.

Paul Cronan is the President of PAC Consulting. The business provides business research for companies serving the multifamily community. His clients have included utility billing companies, meter manufacturers, software companies, property owners and managers along with companies interested in entering the industry through start up or acquisitions. The company develops business & marketing plans, sales programs, referral sources, subcontractor lists and web advertising programs. It conducts research on products and competition, seeks out acquisition candidates, and makes preliminary contact to determine the desirability to proceed.

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