Requirements for Tenant Utility Billing

Second Regular Session Seventy-fifth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 26-0567.01 Christopher McMichael x4775 HOUSE BILL 26-1284 HOUSE SPONSORSHIP Phillips and Paschal, SENATE SPONSORSHIP (None), House Committees Senate Committees Transportation, Housing & Local Government A BILL FOR AN ACT CONCERNING THE BILLING OF UTILITY SERVICE FOR TENANT UTILITY BILLS.

Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.) The bill establishes requirements for landlords, unit owners, and associations governing common interest communities (association) for billing a tenant for utility service. A landlord, a unit owner, or an association may individually bill a tenant using a submeter or bill a tenant through a ratio utility billing system, which is a system that allocates utility service costs among individual tenants based on a unit's square Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.

Capital letters or bold & italic numbers indicate new material to be added to existing law. Dashes through the words or numbers indicate deletions from existing law.

footage, occupancy, or other physical characteristics. Starting on January 1, 2027, all new residential construction must install individual submeters for each individual unit to measure water consumption for each unit. A tenant's utility bill for water utility service must be calculated based on the individual submeter reading. For existing residential properties and other types of utility service other than water service, the landlord, unit owner, or association may use a ratio utility billing system if they meet certain requirements. A landlord, a unit owner, or an association shall disclose to a tenant in the tenant's rental agreement the method by which the tenant's utility bills will be calculated. If a landlord, a unit owner, or an association uses a ratio utility billing system, they must deduct at least 10% of the total utility service bill before allocating individual costs to tenants in order to account for utility service to common areas of a residential premises. If a landlord, a unit owner, or an association is found in violation of the provisions of the bill, the aggrieved tenant may file a civil action in court and, if the tenant prevails, recover actual damages from utility bill overages, additional damages in an amount not to exceed 25% of the utility bill overages, and any attorney fees or court costs.

Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. (1) The general assembly finds and declares that:

(a) The submetering of utility services produces substantial conservation benefits, especially for water utility service in multiunit residential buildings, such as apartment buildings, condominiums, and common interest communities; and

(b) Billing practices for utilities should be codified in Colorado law to provide clarity, promote transparency, and protect tenants. SECTION 2. In Colorado Revised Statutes, add part 16 to article 12 of title 38 as follows:

PART 16 TENANT UTILITY BILLING AND SUBMETERING

38-12-1601. Definitions.

AS USED IN THIS PART 16, UNLESS THE CONTEXT OTHERWISE REQUIRES:

(1) "ASSOCIATION" OR "UNIT OWNERS' ASSOCIATION" HAS THE MEANING SET FORTH IN SECTION 38-33.3-103 (3).

(2) "COMMON AREAS" HAS THE MEANING SET FORTH IN SECTION 38-12-502 (2) AND INCLUDES COMMON ELEMENTS, AS DEFINED IN SECTION "COMMON EXPENSES" HAS THE MEANING SET FORTH IN

SECTION 38-33.3-103 (7).

(4) (a) "COMMON INTEREST COMMUNITY" HAS THE MEANING SET FORTH IN SECTION 38-33.3-103 (8).

(b) "COMMON INTEREST COMMUNITY" INCLUDES:

(I) A CONDOMINIUM;

(II) A COOPERATIVE; OR

(III) A PLANNED COMMUNITY.

(5) "CONDOMINIUM" HAS THE MEANING SET FORTH IN SECTION 38-33.3-103 (9). (6) "DWELLING UNIT" HAS THE MEANING SET FORTH IN SECTION 38-12-502 (3).

(7) (a) "LANDLORD" MEANS THE OWNER, MANAGER, LESSOR, SUBLESSOR, SUCCESSOR IN INTEREST, OR AGENT OF THE OWNER OF A RESIDENTIAL PREMISES.

(b) "LANDLORD" INCLUDES A UNIT OWNER OR AN ASSOCIATION ACTING AS A LANDLORD WITH RESPECT TO ANY LEASED UNIT WITHIN A COMMON INTEREST COMMUNITY.

(8) "RATIO UTILITY BILLING SYSTEM" MEANS THE ALLOCATION OF UTILITY SERVICE COSTS AMONG TENANTS ACCORDING TO FACTORS SUCH AS SQUARE FOOTAGE, OCCUPANCY, OR OTHER PHYSICAL CHARACTERISTICS OF A TENANT'S DWELLING UNIT.

(9) "RENTAL AGREEMENT" HAS THE MEANING SET FORTH IN SECTION 38-12-502 (7).

(10) "RESIDENTIAL PREMISES" MEANS A DWELLING UNIT, THE STRUCTURE THAT THE UNIT IS A PART OF, AND THE COMMON AREAS.

"SUBMETER" MEANS A DEVICE THAT MEASURES THE CONSUMPTION OF UTILITY SERVICES FOR A DWELLING UNIT WITHIN A RESIDENTIAL PREMISES AND IS OWNED OR OPERATED BY THE LANDLORD OR LANDLORD'S AGENT, THE UNIT OWNER, OR THE ASSOCIATION.

"TENANT" HAS THE MEANING SET FORTH IN SECTION

(13) "THIRD-PARTY BILLING AGENT" MEANS A PERSON, OTHER THAN A LANDLORD, THAT IS ENGAGED TO PROVIDE UTILITY MANAGEMENT SERVICES ON BEHALF OF THE LANDLORD, WHICH SERVICES MAY INCLUDE:

(a) INSTALLING A SUBMETER;

(b) READING A SUBMETER;

(c) CALCULATING RATIO UTILITY BILLING SYSTEMS; OR

(d) HANDLING UTILITY BILLING AND COLLECTIONS.

(14) "UNIT" HAS THE MEANING SET FORTH IN SECTION 38-33.3-103 (30). (15) "UNIT OWNER" HAS THE MEANING SET FORTH IN SECTION 38-33.3-103 (31).

(16) "UTILITY SERVICE" MEANS SERVICE PROVIDED BY A UTILITY TO A RESIDENTIAL PREMISES AND INCLUDES WATER SERVICE, GAS SERVICE, ELECTRICITY SERVICE, TRASH OR RECYCLING SERVICES, AND HEATING OR COOLING SERVICES.

(17) "WATER SERVICE" MEANS UTILITY SERVICE RELATED TO WATER TREATMENT, WATER DISTRIBUTION, OR WATER USAGE THAT IS PROVIDED BY A UTILITY TO A RESIDENTIAL PREMISES, INCLUDING WATER, SEWER, STORM WATER, AND FLOOD CONTROL SERVICES.

38-12-1602. Utility service billing methods.

(1) EXCEPT AS PROVIDED IN SUBSECTION (2) OF THIS SECTION, A LANDLORD, A UNIT OWNER, AN ASSOCIATION, OR A THIRD-PARTY BILLING AGENT MAY USE A RATIO UTILITY BILLING SYSTEM OR A SUBMETER TO DETERMINE THE AMOUNT TO CHARGE A TENANT FOR UTILITY SERVICE TO THE TENANT'S DWELLING UNIT.

(2) (a) A LANDLORD, A UNIT OWNER, A DEVELOPER, OR AN ASSOCIATION FOR A NEWLY CONSTRUCTED RESIDENTIAL PREMISES THAT APPLIES FOR INITIAL WATER SERVICE ON OR AFTER JANUARY 1, 2027, SHALL INSTALL SUBMETERS FOR EACH DWELLING UNIT AT THE RESIDENTIAL PREMISES.

(b) A LANDLORD, A UNIT OWNER, OR AN ASSOCIATION SHALL MAINTAIN THE SUBMETERS INSTALLED AT THE RESIDENTIAL PREMISES AND SEND A BILL TO THE TENANT OF THE DWELLING UNIT FOR WATER SERVICE BASED ON THE DWELLING UNIT'S SUBMETER MEASUREMENT OF WATER USAGE.

38-12-1603. Submeter requirements.

IN ACCORDANCE WITH SECTION 38-12-1602 (2)(a), A LANDLORD, A UNIT OWNER, AN ASSOCIATION, OR A THIRD-PARTY BILLING AGENT SHALL BILL A TENANT FOR WATER SERVICE BASED ON THE ACTUAL SUBMETER READING FOR THE SUBMETER ASSOCIATED WITH THE TENANT'S DWELLING UNIT. THE TENANT'S BILL FOR WATER SERVICE MUST INCLUDE:

(a) THE SUBMETER READINGS FOR THE BEGINNING AND END DATES OF THE BILLING CYCLE;

(b) THE RATE AT WHICH THE UTILITY SERVICE IS BEING PROVIDED; AND

(c) ANY SUBMETER READINGS THAT ARE ESTIMATED.

(2) (a) IF A TENANT SUSPECTS THAT A SUBMETER IS MALFUNCTIONING, THE TENANT SHALL NOTIFY THE LANDLORD, UNIT OWNER, OR ASSOCIATION IN WRITING OF THE MALFUNCTION.

(b) (I) A LANDLORD, A UNIT OWNER, OR AN ASSOCIATION THAT RECEIVES NOTICE OF A MALFUNCTIONING SUBMETER SHALL INVESTIGATE WHETHER THE SUBMETER IS PROPERLY RECORDING THE TENANT'S UTILITY SERVICE WITHIN FOURTEEN BUSINESS DAYS AFTER RECEIVING THE NOTICE.

(II) IF A LANDLORD, A UNIT OWNER, OR AN ASSOCIATION DETERMINES THAT A SUBMETER IS INACCURATE, THE LANDLORD, UNIT OWNER, OR ASSOCIATION MUST REPAIR OR REPLACE THE SUBMETER AT NO COST TO THE TENANT.

(3) IF A SUBMETER READING CANNOT BE OBTAINED, AN ESTIMATED READING FOR UTILITY SERVICE MAY BE USED FOR NO LONGER THAN SIX CONSECUTIVE MONTHS, AND ANY ESTIMATE MUST BE BASED ON PRIOR USAGE OF UTILITY SERVICES FOR THE DWELLING UNIT.

(4) FOR A UTILITY SERVICE SYSTEM THAT CALCULATES USAGE WITHOUT A SUBMETER, INCLUDING VARIABLE REFRIGERANT FLOW SYSTEMS, A SYSTEM-PROVIDED CONSUMPTION READING MAY BE USED FOR BILLING A TENANT FOR THE UTILITY SERVICE.

38-12-1604. Rental agreement requirements.

(1) BEFORE EXECUTING A RENTAL AGREEMENT WITH A TENANT, A LANDLORD, A UNIT OWNER, OR AN ASSOCIATION THAT INTENDS TO CHARGE THE TENANT FOR UTILITY SERVICE SEPARATELY FROM RENT SHALL CLEARLY DISCLOSE TO THE TENANT, IN WRITING, THE FOLLOWING:

(a) THAT THE TENANT WILL BE BILLED FOR UTILITY SERVICE SEPARATE FROM THE TENANT'S RENTAL PAYMENT;

(b) ANY ADMINISTRATIVE FEE THAT WILL BE CHARGED BY THE LANDLORD, WHICH FEES MUST NOT EXCEED THE AMOUNTS FOR FEES SET FORTH IN SECTION 38-12-801 (3)(a)(VI);

(c) THE METHOD BY WHICH THE LANDLORD, UNIT OWNER, OR ASSOCIATION WILL BILL THE TENANT FOR UTILITY SERVICE; AND

(d) THAT THE TENANT MAY REQUEST, IN WRITING, A COPY OF THE INVOICE SENT TO THE LANDLORD BY A UTILITY SERVICE PROVIDER AND AN EXPLANATION OR CALCULATION OF CHARGES FOR THE TENANT'S UTILITY SERVICE, WHICH SHALL BE PROVIDED TO THE TENANT WITHIN FOURTEEN BUSINESS DAYS AFTER THE TENANT'S REQUEST.

38-12-1605. Ratio utility billing standards - monthly billing requirements - prohibition on profits for utility service charges.

(1) IF A LANDLORD, A UNIT OWNER, OR AN ASSOCIATION USES A RATIO UTILITY BILLING SYSTEM TO CHARGE A TENANT FOR UTILITY SERVICE, THE LANDLORD, UNIT OWNER, OR ASSOCIATION SHALL:

(a) DISCLOSE TO THE TENANT IN THE RENTAL AGREEMENT THAT THE TENANT WILL BE CHARGED FOR UTILITY SERVICE BASED ON A RATIO UTILITY BILLING SYSTEM;

(b) PROVIDE THE TENANT WITH THE FORMULA USED BY THE LANDLORD, UNIT OWNER, OR ASSOCIATION TO CALCULATE THE TENANT'S UTILITY COST AND STATE THAT FORMULA ON THE TENANT'S UTILITY BILL EACH MONTH; AND

(c) DISCLOSE WHETHER THE RATIO UTILITY BILLING SYSTEM FORMULA TAKES INTO ACCOUNT THE OCCUPANCY OF A DWELLING UNIT AND HOW MANY OCCUPANTS ARE ASSOCIATED WITH THE DWELLING UNIT.

(2) A LANDLORD, A UNIT OWNER, OR AN ASSOCIATION THAT EMPLOYS A RATIO UTILITY BILLING SYSTEM TO CHARGE A TENANT FOR UTILITY SERVICE SHALL DEDUCT AT LEAST TEN PERCENT OF THE TOTAL AMOUNT OF THE UTILITY BILL RECEIVED BY THE LANDLORD, UNIT OWNER, OR ASSOCIATION TO ACCOUNT FOR UTILITY SERVICE TO COMMON AREAS OF A RESIDENTIAL PREMISES BEFORE ALLOCATING CHARGES TO A TENANT FOR THE TENANT'S DWELLING UNIT.

(3) A TENANT'S MONTHLY BILL FOR UTILITY SERVICE MUST ONLY INCLUDE THE FOLLOWING CHARGES:

(a) THE AMOUNT DUE FOR THE UTILITY SERVICE PROVIDED TO THE TENANT AS CALCULATED BY:

(I) A MEASUREMENT FROM A SUBMETER FOR THE UTILITY SERVICE; OR

(II) A RATIO UTILITY BILLING SYSTEM;

(b) A FEE IN THE AMOUNT AUTHORIZED PURSUANT TO SECTION 38-12-801 (3)(a)(VI); AND

(c) IF A UNIT OWNER OR AN ASSOCIATION RECOVERS FROM THE TENANT ANY PORTION OF AN ASSOCIATION ASSESSMENT THAT IS ATTRIBUTABLE TO UTILITY SERVICE, AN ITEMIZED STATEMENT THAT IDENTIFIES THE UTILITY SERVICE PORTION OF THE ASSESSMENT THAT IS SEPARATE FROM ALL OTHER COMMON EXPENSES.

(4) THIS SECTION DOES NOT PROHIBIT A LANDLORD, A UNIT OWNER, AN ASSOCIATION, OR A THIRD-PARTY BILLING AGENT FROM INCLUDING OTHER LAWFUL CHARGES, INCLUDING RENT, ON THE SAME BILL THAT IS PROVIDED TO A TENANT FOR UTILITY SERVICE.

38-12-1606. Damages - attorney fees.

(1) IF A LANDLORD, A UNIT OWNER, OR AN ASSOCIATION VIOLATES THIS PART 16, THE AGGRIEVED TENANT MAY FILE A CIVIL ACTION IN COURT AND, IF THE TENANT PREVAILS, RECOVER:

(a) ACTUAL DAMAGES RESULTING FROM BILLING OVERAGES THAT WERE CHARGED TO THE TENANT FOR UTILITY SERVICE;

(b) ADDITIONAL DAMAGES IN AN AMOUNT NOT TO EXCEED TWENTY-FIVE PERCENT OF THE TOTAL OVERAGE AMOUNT CHARGED TO THE TENANT; AND

(c) ATTORNEY FEES AND COURT COSTS.

NOTHING IN THIS PART 16 SHALL BE CONSTRUED AS CLASSIFYING A LANDLORD OR THIRD-PARTY BILLING AGENT AS A PUBLIC UTILITY OR COLLECTION AGENCY.

38-12-1607. Prohibition on waiving tenant's rights.

A DECLARATION, RULE, OR PROVISION OF A RENTAL AGREEMENT MAY NOT WAIVE OR DIMINISH THE PROTECTIONS OR REMEDIES AVAILABLE TO A TENANT UNDER THIS PART 16.

A DECLARATION, RULE, OR PROVISION OF A RENTAL AGREEMENT THAT CONFLICTS WITH THIS PART UNENFORCEABLE.

SECTION 3.

16 IS VOID AND Act subject to petition - effective date - applicability. (1) This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 12, 2026, if adjournment sine die is on May 13, 2026); except that, if a referendum petition is filed pursuant to section 1

(3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.

(2) This act applies to conduct occurring and rental agreements entered into or renewed on or after January 1, 2027.