CT Banned Ratio Utility Billing - What Southington Landlords Do Now

The law changed today, not next year

If you own a 2-4 unit in Southington, Berlin, or anywhere in Central CT and you've been splitting one gas or electric bill among tenants based on square footage or headcount, that lease clause is unenforceable as of today. Not next renewal cycle. Today.

PA 26-113 took effect October 1, 2026. Basically, it says a residential lease cannot require a tenant to pay for utilities unless there's a dedicated meter measuring what's delivered exclusively to that tenant's unit. No separate meter, no formula billing. That's it.

This isn't a surprise out of nowhere. It codifies what the Connecticut Supreme Court already ruled in 2024 in Northland Investment Corp. v. PURA - that ratio utility billing on a master-metered building violates state law. The legislature just made it statute instead of case law. So if you'd heard about that court case and figured it only applied to the one building in the lawsuit, that's not how it works anymore. It's the law for every landlord in the state now.

What ratio utility billing actually was

For anyone who inherited this practice from a prior owner or just copied a lease template years ago - ratio utility billing, sometimes called RUBS, is when a landlord takes one master utility bill for the whole building and splits it among tenants using a formula. Square footage is the most common one. Number of occupants is another. Sometimes it's a flat percentage written right into the lease.

Most landlords who did this weren't trying to pull anything shady - it's a practical way to recover costs on an older multifamily building that was never wired or plumbed for individual meters. The problem the court identified, and that the legislature is now putting into law, is that tenants paying under these formulas have no way to verify the bill reflects their actual usage. One unit runs the AC constantly, another barely uses hot water, and they split the cost the same way. That's the part that got challenged.

What's still legal - the building-in method

Here's the part landlords actually need, because the law doesn't say you have to eat the utility cost yourself. You just can't bill it separately using a ratio.

The method that survives is called building-in. Basically, you estimate your annual utility cost for the building, and you fold that estimated amount into each tenant's fixed monthly rent. Instead of "rent plus a variable utility charge calculated after the fact," it's just rent. One number. The utility cost is baked in before the lease is ever signed.

• Ratio billing (now unenforceable): Base rent + a monthly utility charge calculated by formula after the bill arrives
• Building-in (still legal): One fixed rent number that already accounts for your estimated utility cost
• Dedicated metering (always legal): Each unit has its own meter and the tenant is billed directly by the utility company for their own usage

The law isn't telling you to stop recovering utility costs. It's telling you that you have to price that cost into the rent upfront instead of passing through a variable formula every month. Price is the only lever.

What this does to your NOI math

This is where it gets real for landlords, especially if you've got a 3 or 4 unit with one gas meter feeding the whole building. Under ratio billing, utilities functioned like a pass-through cost - unpredictable month to month, but ultimately someone else's problem financially. Under building-in, utilities are now a fixed landlord cost that you estimated once and locked into the rent roll.

That shift matters for a few reasons. If utility prices spike mid-lease, and electric rates in CT have not been shy about moving, you're absorbing that increase until the lease renews. You can't go back to a tenant mid-term and say the formula changed. So your rent number at renewal has to actually account for where utility costs are heading, not where they were last year.

Run your cash flow assuming a margin of error on your utility estimate. If you guess low when building-in the cost, you're the one eating the difference for the full lease term. That's just how it works now.

Auditing your leases before renewal season

If you've got leases renewing this fall or winter, this is the moment to actually look at your paperwork instead of rolling it over on autopilot. A few things worth doing before you sign anything new:

• Pull every active lease and check for ratio, RUBS, or formula-based utility language - even old boilerplate clauses buried in an addendum count
• Confirm whether each unit has a dedicated meter or shares a master meter with the rest of the building
• If master-metered, get a real number on your trailing 12-month utility cost before you build it into new rent figures
• Talk to your property manager or insurance agent about how this affects your lease templates going forward
• If you have existing tenants under an old ratio clause, don't try to guess your way through it - talk to an attorney about how to transition that specific lease

That last one is important. I'm not going to tell you exactly how to unwind an existing ratio clause mid-lease because that depends on your specific lease language and your tenant relationship. That's a conversation for a real estate attorney, not a blog post. But I can tell you the clock already started today, so this isn't something to put off until spring.

What I'd actually do if I owned a master-metered building

And if I had a 2-4 unit in Southington or Berlin right now running on one meter, I'd stop billing by formula immediately. I'd re-price my upcoming renewals using the building-in method, with a real trailing utility number behind it instead of a guess. I'd rather build in a slightly conservative estimate and adjust at the next renewal than get caught absorbing a winter heating spike on a lease I can't touch for 12 months. And for any tenant currently under an old ratio clause, I'd get an attorney involved before the next bill goes out, not after a tenant pushes back. This law isn't a reason to panic. It's a reason to fix your paperwork before it becomes a problem instead of after.

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