Utilities

A landlord may shut off any utility (electricity, water, wastewater, and gas) to carry out repairs or construction or in an emergency. But, there are only limited times when a landlord can shut off the electric service because of money the tenant owes the landlord. A landlord may NEVER shut off water, wastewater, or gas because the tenant is delinquent with a rent or utility payment. Any provision of a lease that purports to waive any of the tenant’s rights, liabilities, or duties under the utility shut-off law is void.

Note: The Texas Commission on Environmental Quality (TCEQ) believes that the Texas Property Code does not prohibit a landlord from shutting off water utilities if the landlord follows TCEQ rules. The Austin Tenants’ Council disagrees.

Section 92.008 of the Texas Property Code regulates when and how a landlord may turn off the electric service of a tenant who is delinquent on rent or a utility bill. To understand whether a landlord has the right to shut off the electricity, the type of utility service must be determined first. There are four types of utility services that tenants encounter in rental units.

1. Submetered Utilities. The landlord receives one bill for all of the rental units, and this bill is split among the tenants based on the tenants’ actual usage according to the submeter.

2. Non-Submetered, Master-Metered Utilities. The landlord receives one bill for all of the rental units. But because there are not individual submeters, the landlord uses an approved method to divide the utility bill among the tenants. You will find a more detailed description about these methods later in the brochure.

3. All Bills Paid. The landlord receives and pays for all utility bills, so the utilities are included as part of the rent.

4. Tenant Pays Utility Company Directly. The fourth type of service is when the tenant pays the utilities directly to a utility company, such as Austin Energy.

Electric utilities may be shut off for non-payment of rent in “all bills paid” rental units. Electric utilities may also be shut off for non-payment of submetered and master-mastered utility bills, but only when the landlord follows the specific procedures described next.

Shutting Off Electric Service for Non-Payment
Submetered and Master-Metered Rental Units
If utilities are in the landlord’s name and the tenant is charged for these services separately from the rent, the landlord may shut off the electric service only for the tenant’s non-payment of the electric bill and only by following the rules adopted by the Public Utility Commission:

If the tenant has not paid the submetered or master-mastered electric bill within 12 days of it being issued, the landlord may give the tenant a notice stating the landlord intends to shut off the electricity if it is not paid. This notice must either be mailed or hand-delivered to the tenant at least five days before the shut off and contain the words “termination notice” or similar language. The notice must contain an address where the tenant can go during normal business hours to make arrangements for payment of the bill and reconnection of service.

Electric service cannot be disconnected on a day, or on a day immediately preceding a day, when management is not available to receive payments and reconnect the service. As soon as the tenant pays the delinquent electric bill and it is during the landlord’s normal business hours, the landlord must restore services within two hours.

There are three instances when a landlord is prohibited from disconnecting submetered or master-metered electric service:

  1. If the disconnection will cause an occupant of the dwelling to become seriously ill or more seriously ill. The occupant must have a physician or other public health official contact the landlord before the date of disconnection and provide a written statement;
  2. If the landlord receives notification from an energy assistance provider promising to pay the delinquency; or
  3. If the previous day’s highest temperature did not exceed 32? Fahrenheit and the temperature is predicted to remain at or below that level for the next 24 hours. Also, if the National Weather Service has issued a heat advisory for any county in the electric utility’s service territory or if such an advisory has been issued on any one of the preceding two calendar days.

All Bills Paid Rental Units
In an “all bills paid” rental agreement, the landlord has the right to shut off the electricity only when the tenant owes rent and only by following the procedures in Section 92.008 of the Texas Property Code.

If the tenant is at least seven days late in paying the rent, the landlord may give the tenant a notice stating the landlord’s intention to shut off the electricity if the rent is not paid. This notice must be hand-delivered or mailed at least five days before the landlord intends to shut off the electricity and must state:

  1. The earliest date the electricity may be shut off,
  2. The amount of rent the tenant must pay to avoid the shutoff, and
  3. The name and location of the individual to whom or the location of the on-site management office where the delinquent rent may be paid during the landlord’s normal business hours.

The shutoff must not begin before or after the landlord’s normal business hours nor begin on a day, or on a day immediately preceding a day, when the landlord or other designated individual is not available to receive the rent and restore electrical service. As soon as the tenant pays the delinquent rent, and it is during the landlord’s normal business hours, the landlord must restore services within two hours.

Tenant Pays Utility Company Directly
If the tenant pays the utility company directly, the landlord may never shut off any utility services for nonpayment of rent.

Tenant Remedies for Illegal Shut Off
If a landlord or a landlord’s agent violates any of the rules for shutting off electrical service, the tenant may:

If the Landlord Fails to Pay the Utility Company in an All Bills Paid Rental Unit
If a landlord fails to pay the utility company for utility services in an “all bills paid” unit, Section 92.301 of the Texas Property Code addresses a tenant’s remedies if the utilities are disconnected or notice is received from the utility company stating the utility service is about to be disconnected. The tenant’s remedies are as follows:

  1. Pay the utility company the amount owed to reconnect or avert the shutoff;
  2. Terminate the lease with a written notice within 30 days from the date the tenant has notice from the utility company of a future shutoff, or notice of an actual shutoff, whichever is sooner;
  3. Deduct the amount paid to the utility company to reconnect or avert the shutoff from the rent, without the necessity of judicial action;
  4. If the tenant terminates the lease, the tenant can deduct the security deposit from the rent, without judicial action, or obtain a refund of the deposit;
  5. If the tenant terminates the lease, the tenant can recover a pro-rated refund of any advance rental payments;
  6. Recover actual damages including, but not limited to, moving costs, utility connection fees, storage fees, and lost wages; and
  7. Recover court costs and attorney fees.

If the tenant deducts money from the rent after paying the utility bill, the tenant must provide a copy of a receipt from the utility company showing the amount paid to reconnect or avert the utility shutoff.

NOTE: The tenant loses the above-mentioned remedies if, before the tenant terminates the lease or files suit, the landlord provides the tenant with written evidence from the utility company that all delinquent sums have been paid.

Rules for Allocating Non-Submetered, Master-Metered Utility Bills
There has been a trend among landlords over the last couple of years of switching from “all bills paid” to master-metered bills, especially in large apartment complexes. This means that the landlord no longer pays for the utilities, but now makes the tenant pay the bill. The problem is that most apartments are not individually metered and the landlord does not usually want to spend the money to install meters for each rental unit. Because there are not individual meters to measure the tenant’s actual usage, the tenant may end up paying more than his share because of how the bill is allocated, or divided.

The Texas Public Utility Commission regulates how a landlord may allocate an electric bill; the Texas Commission on Environmental Quality (TCEQ) regulates how a landlord may allocate a water and wastewater bill; and the Texas Railroad Commission regulates how a landlord may allocate a gas bill. Gas allocation is very rare so it will not be discussed in this brochure.

Electricity — Applies to Rental Properties With Two or More Units
If a tenant lives in a rental unit where the electricity is master-metered, there are several rules the landlord needs to follow. First, the rental agreement must contain a clear written description of the method the landlord will use to allocate the bill and a statement of the average monthly bill for the previous calendar year for that rental unit. Second, a landlord may not charge the tenants more than the actual amount charged to the landlord. Third, the landlord must maintain adequate records that are available to the tenant for inspection during normal business hours. Finally, the electric bill must be separate from any other amounts due and the tenant shall have at least seven days in which to pay the bill.

Currently, the only approved method for allocating a master-metered electric bill, is to base it on the total square footage of the living area of the rental unit.

For example, if a tenant lives in an apartment complex that contains five 800-square-foot apartments and five 1,000-square-foot apartments, the final bill would be a percentage based on the total square footage of living space in the apartment complex. In this example, the total square footage is (5 x 800) + (5 x 1,000) = 9,000 square feet. A tenant who lives in an 800-square-foot apartment would pay 800/9000 or 8.88 percent of the total bill.

Water and Wastewater — Applies to Rental Properties With Five or More Units
If a tenant lives in an apartment complex with five or more units and the tenant is billed for the water or wastewater using an allocation method, the landlord must comply with the following rules. First and foremost, the landlord must disclose in the lease agreement:

  1. That the tenant will be billed for water on an allocated basis;
  2. That the tenant has a right to information from the landlord to verify the bill;
  3. The average monthly bill amount and the highest and lowest bill amount for all units in the past calendar year;
  4. The date bills are usually issued and the date bills are usually due; and
  5. A clear description of the allocation method used to calculate the bill.

A landlord has four options when it comes to allocating a water bill. Some of them are complicated so tenants are encouraged to contact either TCEQ or the Austin Tenants’ Council for additional clarification. A landlord must use one of the following methods for allocating a water bill:

1. Use the number of occupants in the tenant’s dwelling as a percentage of the total number of occupants in all apartments.

For example, in a complex of 50 tenants, an apartment with two occupants would pay 2/50 or 4 percent of the total bill.

2. Recognizing that apartments with two or more occupants do not typically use two or more times as much water as a single occupant, this method assigns a fractional portion for each occupant in excess of one. It must use a fractional portion of no less than that on the following scale:

For example, in a complex of 50 tenants, an apartment with two occupants would pay 1.6/50 or 3.2 percent of the total bill.

3. So that landlords do not have to calculate the total number of tenants every month as in methods 1 and 2, the rules allow the landlord to use a fixed formula that estimates the number of occupants based on the number of bedrooms in each unit. The total number of occupants in the entire apartment complex is estimated using the same formula. The percentage a tenant pays is then determined by dividing the estimated (not actual) number of occupants in the tenant’s apartment by the estimated number of occupants in the entire complex:

For example, in a complex with five one-bedroom units and five two-bedroom units, the landlord would first estimate the total number of occupants as (5 x 1.6) + (5 x 2.8) = 22 occupants. A tenant living in a two-bedroom unit would then pay 2.8/22 or 12.7 percent of the total bill.

4. A landlord may also use a method combining the square footage and total occupancy in which no more than 50 percent is based on square footage. The square footage portion is based on the total square footage living area of the tenant’s unit as a percentage of the total square footage living area of all units of the apartment complex.

For example, suppose the square footage of a tenant’s apartment is 8.88 percent of the total and the total number of tenants living in the apartment complex is 3.2 percent of the total. The landlord could decide that 40 percent of the bill will be based on square footage and the other 60 percent is based on the number of occupants. The tenant would then pay (0.40 x 0.0888) + (0.60 x 0.032) = 5.47 percent of the total bill.

The information in this brochure is a summary of the subject and other pertinent matters. It should not be considered conclusive or a substitute for legal advice. Unique facts can render broad statements inapplicable. Anyone needing legal assistance should contact an attorney.

Austin Tenants’ Council • 1640-B East 2nd Street • Austin, TX 78702 • 512.474.7006