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  • Category: Miscellaneous

    Division of Electricity charges between tenant and owner in winter when bill is based on MMC

    Have a query about the sharing of electricity bill between the house owner and tenant? Searching for details of how to collect the portion of electricity bill from the tenant? Here, find advice from experts for all your queries.

    MMC (means minimum monthly charges). I need to clarify or seek your opinion on a issue:
    In summers we divide the bill as per meter reading of tenant multiplied by rate per unit charged in actual electricity bill e.g actual Bill is 7000 for 496 units so rate =7000÷496=14.112.

    Now the tenant consumes 240 units, so we calculate his charges as 240×14.112=3386 approx.

    Confusion arises in winter when consumption of units is very low on each floor of the building because no AC or fans are used but only few lights are used in the evening (in my business office/showroom).
    So we get 3200 approx fixed charge even if we consume low electricity.
    In that case what I prefer to do is divide the electricity bill of 3200 by 4 floors which comes out to be 800 for each floor. I have 3 floors and tenant has 1 floor.
    So the tenant pays 800 fix if the bill comes out as minimum bill label.
    Is that perfectly ok? I feel it is because neither I nor my tenant uses much of the gadgets. Just due to MMC format we get bill near about 3200 approx.

    So equitably I divide into 4 parts equally as 800 each. My tenant says that this method is vague.
    He wants to pay on single applicable way i.e.just by reading units consumed from submerged and multiplying it with average rate per unit.
    However the issue is for the owner. Tenant can pay as usual according to submerged reading but in that case owner has to pay more. This is because he has to bear the remaining difference of charges due to MMC format.
    Can you advice?
  • Answers

    5 Answers found.
  • It is a matter of understanding between the two parties involved. I understand you have a submeter for each floor. Basing on the submeter readings you are taking the charges form the tenant. That is very fair. You can follow the same method even when you get the minimum amount bill. You take the units consumed on each floor and total it. Divide the bill with 4. You will get the average value for a unit consumed for that month. Then units consumed by the tenant can be multiplied by the average cost per unit.

    Let me taken an example:

    The minimum charge payable by you is 3200 rupees.
    The meter reading of your tenants is 18 let us say. Your consumption of 3 floors is said 42 units. Now the average cost per unit will be 3200/ 18 + 42 = 3200/60= 53.3.
    Then the tenant has to pay, 18 X 53.3 = 959.4.

    Another way is to have a separate connection to the tenant so that he will have his bill separately.
    Another way is to decide a minimum charge to the tenant also if his consumption is less than some units as per the standard.

    always confident

  • It will depend upon how the agreement between the tenant and the house - owner has been made and the agreement - scheduled is to be followed upon. There are multiple ways to settle this issue. Options are as follows-
    1) Get your accommodation to have a separate meter and the pay the bill on the basis of your actual power consumed. Of course, the bill supplied by the company will reflect the amount to be paid by you.
    2) In case, there is no such provision and the entire electrical expense of the different tenants and the house - owner is clubbed together due to installation of the single meter, the entire expense has to be devided by actual benificiaries consuming the power.
    3) If there is an agreement between the house - owner and the tenant regarding payment of monthly - rent including the electricity - bill, you are exempted from payment of separate electricity - bill.

  • From the thread details, it looks that you have calculated the charges appropriately and sincerely for your tenant. Please have a chat or discussion with the tenant and common friends and try to convince him that the charge split that you have worked out is fair.
    In the meanwhile please check the rental agreement, it would often has the words ...from time to time..., usage and sharing common resources as mutually agreed upon.. or how exactly will the electric and water bills be shared.
    As a landlord,you cannot use the option of stopping electric supply as it would have leagal implications.
    If you are going to rent the place regularly, then have a seperate meter connection. See how much is the difference between what you suggest and what he want for the few winter months. Is it worth the headache?

  • There are many methods and ways to resolve this issue but the simplest one is based on historical data.

    In this method we have to find out that during the months when the bill is more than the minimum how much the tenant is paying monthly on an average. Let us say this average is 40% of the bill.

    So he should pay in winters 40% of the minimum value which in your case comes to 40% of 3200 = 1280.

    If tenant goes for a separate connection he will have to shell out almost same independently in winters. By taking only 800 you are in fact doing him a unintentional favour.

    Knowledge is power.

  • If the actual ,consumption can be ascertained, then the charges also have to be born in that proportion. In that case the consumption can be ascertained at the time of low consumption also. The charges have to be shared in the proportion at that time also.

    However if there is only one meter for all the combines users, then it is going to be difficult and one hast to work as per mutual accommodation and understanding. It can be on a general guess of the consumption gauged by the wattage and time used by each consumer.
    Obtaining separate meters for each consumer/ floor is better. However then even the low consumer will have the burden of paying a minimum separately. So in comparisons, sharing the minimum also in proportion is the fair choice..

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