# Master Meter vs Submeter vs Direct Meter: Key Differences

Source: https://submeter.com/master-metering-vs-submetering/
Publisher: National Exemption Service (NES), https://submeter.com. Last reviewed September 2026.

How a master meter, a submeter and a direct utility meter differ: who owns the meter, who bills residents, and which setup fits your property best.

## What is the difference between a master meter, a submeter and a direct meter?
A master meter records utility use for an entire property on a single account, and the utility bills the property owner directly. Submetering leaves that master meter in place and adds private meters to individual units, so the owner bills each resident for actual use. With direct metering, the utility installs its own meter for every unit, bills each resident directly, and removes the owner from the process. Master metering hides individual use, while submetering and direct metering split costs based on what each resident consumes.

This guide is for owners, property managers, and board members managing communities with 80 or more units. You will learn how each utility setup works, what a retrofit involves, and how billing changes for your residents.
## The three metering setups in plain terms
Each setup draws a different line between the city utility and the property owner. That line decides who owns the pipe, who reads the meter, and who collects the money.
![A multistory apartment community under a blue sky.](https://submeter.com/wp-content/uploads/2021/04/NationalExemptionServiceSubmetering.jpg)
Most apartment communities are master-metered for water: one city meter and one bill for the whole property.
### Master meter
A master meter is one utility meter for the whole property or building. The utility reads this meter once a month and bills the owner for everything. You either absorb the water and power bills or build estimated costs into flat rent. When residents never see a bill for their own use, a running toilet in an empty bathroom can run for months unnoticed.
### Submeter
A submeter sits on an individual unit, downstream of the master meter. The utility still bills the property owner, and private submeters track what each home consumes. Those submeter readings decide each resident's share of the master bill. The total billed to residents never exceeds the property's master-meter cost, while common areas like pools and laundry rooms stay with the owner. Our guide to [what submetering is](https://submeter.com/what-is-submetering/) covers the basics.
### Direct meter
Direct metering means the utility installs its own meter for each unit and bills the resident directly. Each resident opens an account with the city or electric company, and the owner is out of the billing entirely. The utility handles meter repairs, monthly statements, and delinquent accounts. Direct metering is common for electric service in newer buildings, but city water departments rarely offer it for older multifamily properties.

## Comparing master meters, submeters, and direct meters
The choice between these setups determines who carries bad debt and who answers resident questions.
| Feature | Master meter | Submeter | Direct meter |
| --- | --- | --- | --- |
| Who owns the meter | Utility company | Property owner | Utility company |
| Who the utility bills | Property owner | Property owner | Resident directly |
| Who bills the resident | Nobody (or owner uses RUBS) | Owner or submetering company | Utility company |
| What the resident pays | Flat rent or allocated estimate | Actual metered consumption | Actual metered consumption plus utility fees |
| Effect on conservation | None; residents use utilities freely | High; water use typically drops 15 to 30 percent | High; residents pay for their own consumption |
| Setup work | None; standard base setup | Install private meters behind master meter | Extensive utility engineering, permits, and meter banks |
| Owner's role | Pays entire utility bill directly | Pays master bill, recovers unit costs via billing | Completely uninvolved in tenant accounts |

## Converting a master-metered property: submetering vs direct metering
Owners often ask why the local water department cannot simply put a city meter on every apartment door. Converting a master-metered property to direct metering usually means meeting rigid utility rules, building new service lines or meter banks, and enduring major construction. Most city utilities will not take on hundreds of individual water accounts inside private buildings.
![Hands fitting a water meter with a brass connector onto a unit's supply line.](https://submeter.com/wp-content/uploads/2019/05/WaterMetersNES.jpg)
A water submeter goes on the line that feeds one unit, behind the city's master meter.
Submetering avoids that disruption by keeping the master meter and adding private meters behind it. You do not need to trench the parking lot or bring city mains to each apartment wall. Technicians install meters inside each unit, often in a utility closet or under a sink, tapping directly into the existing branch line. Our guide to [water submetering](https://submeter.com/what-is-water-submetering/) covers how line access works.
Installation averages $150 to $300 per unit. Units where a water heater has to be moved to reach the line cost more, which is why one property can have a range of per-unit prices. Our guide to [submetering cost](https://submeter.com/how-much-does-submetering-cost/) walks through what moves the number.
When the line is easy to reach, a meter goes in in under 30 minutes, with the water off only briefly and notice given first. Nobody moves out. Most properties are billing within a few weeks to about 90 days and earn back the install in 12 to 18 months.
Water use typically drops 15 to 30 percent once residents pay for their own. At one 337-unit community, NES added meters as leases renewed, so for a while both setups ran side by side. The 168 submetered units averaged 3,868 gallons per unit per month, 34% less than the 5,846 gallons used by the 169 units not yet metered. Their average bill was $54.22 a month against $84.72, 36% lower, or about $30 per unit. Across all 337 units, that gap is worth roughly $123,000 a year.
Find out what your building can be metered for. Send your unit count and 12 months of bills. A specialist replies within one business day.

## When each utility setup fits best
Physical layout and budget dictate which strategy works:
- Master metering. Fits properties where plumbing lines cannot be isolated, local rules ban utility billing, or the owner plans to sell quickly without making plumbing upgrades.
- Direct metering. Fits new developments where the power company requires individual accounts, or single-family subdivisions with street access to every lot. Learn how developers plan these systems in our [new construction submetering guide](https://submeter.com/developers-new-construction/).
- Submetering. Fits existing communities of 80 or more units with centralized water or gas lines where the owner wants to stop absorbing utility bills without replumbing the whole building. Read about hardware options in our guide on [types of submeters](https://submeter.com/submetering-meters/).
- Ratio utility billing (RUBS). Fits properties where split plumbing makes meter installation impractical. Ratio utility billing splits the master bill by a formula such as occupants or square footage. It needs no equipment, recovery starts with the first billing cycle, and it is not allowed everywhere. Read our comparison of [submetering vs RUBS](https://submeter.com/submetering-vs-rubs/) to see which method works for your building.

## What changes for residents during a submetering conversion
Living under a master meter teaches residents that utility use is free. A running toilet or a leaking faucet does not change their monthly rent, so leaks go unreported for weeks.
Once submeters go in, each home receives a monthly bill based on actual consumption. Modern wireless submeters report several times a day. NES offers daily leak detection through its MyReads portal, which flags continuous flow (a running toilet, a leak) so it gets fixed before it adds up. Maintenance can knock on the door that afternoon instead of waiting for a swollen municipal bill a month later.
Residents will have questions about the first bill, so it helps if someone other than your leasing office answers them. NES reads the meters, sends the bills, handles collections and takes resident calls with its own bilingual team in English and Spanish. You can see how the program runs on our [NES submetering services](https://submeter.com/water-gas-electric-submetering/) page.
Billing rules also change from state to state and sometimes city to city. Texas, for example, requires registration with the Public Utility Commission of Texas, and North Carolina requires a certificate from the North Carolina Utilities Commission before the first bill. Our compliance team checks the rules for your exact address before we quote. The meters we install are nonproprietary and yours to keep, with a warranty, so you are never locked in to NES.

## Questions
**Is submetering the same as direct metering?**
No. Direct metering means the city or power company installs its own meter, owns it, and bills the resident directly. Submetering leaves the utility master meter in place and installs private submeters behind it. The owner pays the master bill, while the submeters determine each resident's share. Residents pay for their exact use, but the utility account remains with the property.

**Can a master-metered building be submetered?**
Yes. Most master-metered properties can be retrofitted if each apartment has a dedicated cold-water feed. Installers need an accessible pipe, usually near the water heater in an interior closet. If plumbing runs through multiple vertical risers inside finished walls, installing individual meters can be difficult. In those properties, ratio utility billing (RUBS) can allocate the master bill without adding hardware.

**Who pays the utility in a submetered property?**
The property owner pays the master bill directly to the utility. The submeters track unit use to determine what portion belongs to each resident. A billing provider reads the meters, sends statements, collects payments, and reimburses the property. The total billed to residents never exceeds the master-meter cost. Common-area water for pools, clubhouses, and landscaping stays with the owner.

**Why don't utilities just install meters in every unit?**
Utilities avoid direct metering in multifamily properties because reading and maintaining hundreds of private meters inside buildings takes too much labor. City utilities often want easements, outside meter banks and separate service lines from the street. Meeting those standards in an existing building requires expensive repiping. Submetering solves this by keeping the master meter and handling unit billing privately.

**Does submetering change what residents pay?**
Yes. Instead of paying an estimated fee or having utility costs hidden in rent, residents pay for what they use. Light users see lower costs, while residents who run laundry daily pay for their extra volume. When residents pay for their own water, water use typically drops 15 to 30 percent across the property, reducing overall utility costs.

**Can electricity be submetered like water?**
Yes. Direct metering is common for electric service in newer construction, but many older properties still have master-metered electric feeds. Electric submeters install directly inside or adjacent to individual breaker panels to measure kilowatt-hour use for each apartment. Learn more about panel requirements in our guide on electric submetering.