Defining Allocated Water

Odessa, TX – More and more properties across the Permian Basin are adding ‘allocated water’ to their lease agreements.  What is it and are there guidelines to the charges many are receiving for water and sewage?

Under a lease agreement, a property owner or management company will bill you for water and sewage using an allocation method. The property receives water and sewage service from the local utility and passes through the cost of these services to each dwelling unit on the property. At the time you discuss a rental agreement, the property owner must provide you with a free copy of the rules on utility allocation (Title 30, Texas Administrative Code, Chapter 291, Subchapter H), or a copy of this summary of the rules that has been prepared by the Texas Commission on Environmental Quality (TCEQ).

So, how does allocation work?
You will receive a bill from the property, not from the local utility company. The allocated bill is not based on your actual usage. Instead, the property has a master meter, which is used by the utility to measure all water used by the entire property. The property owner gets a master meter bill from the utility. From this bill, the owner or billing company calculates each tenant’s share of the charges for water and sewage using an allocation method approved by the TCEQ.

There are several methods for allocating utility bills, including various combinations of occupancy level, square footage, and number of bedrooms, as well as the sub-metering of the hot or cold water. Alternatively, the owner may install sub-meters and begin billing on a sub-metered basis, or discontinue billing for utility service. The TCEQ has adopted rules designed to provide safeguards for you, the tenant. The rules require the property owner to provide you with specific information about your bills and to include disclosures about their billing practices in your rental agreement.

Your rental agreement, lease, or a lease addendum, needs to disclose the following information:

  • Disputes about the calculation of your bill are between you and the property owner
  • Information from the owner to verify your utility bill including a clear description of the allocation method the property owner will use to calculate your bill.
  • The average monthly water/sewage bill for all dwelling units in the previous calendar year, and the highest and the lowest bill in that year.

What utility charges can be passed through to tenants?
Allocated bills for water and sewage may only include utility charges for water, sewage, and surcharges directly related to those services. Tenants may not be charged for fees the utility has billed the owner for a deposit, disconnect, reconnect, late payment, or other similar fee. Texas law does not allow property owners to profit from allocated billing by adding extra fees or hidden charges to water and sewage bills. Before applying the selected allocation method, the owner must first subtract charges related to common areas outside the dwelling units (including pools, laundry rooms, and installed irrigation systems for landscaping), as required by TCEQ rules.

The TCEQ rules require property owners to make the billing records available to you for inspection during normal business hours. Information that must be made available to you includes: the statute that allows owners to bill tenants for water and sewage service (Texas Water Code, Chapter 13, Subchapter M), TCEQ rules that regulate this practice (Title 30, Texas Administrative Code, Chapter 291, Subchapter H), rates charged to the property by the utility, bills from the utility to the property, data on occupancy and square footage used to calculate allocated bills, calculations showing deductions for common areas, and the total amount billed to tenants each month for water/sewage.

For more information on the TCEQ guidelines, you can visit  Educate yourself and know the rules and guidelines before you sign or initial any lease that includes allocated water.

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