One Meter, Two Tenancies: All-Inclusive, Separate Accounts, or a Percentage Split for Hydro and Gas in Ontario

A house with one hydro meter and one gas meter leaves three realistic ways to handle the bills. Each one puts price risk, non-payment risk and the wording of the lease in a different place.

I’m Arthur Zhao, a real estate broker in Toronto. The question usually surfaces at the lease table, not on the first bill. The landlord and the basement tenant are going through Ontario’s standard lease, and they reach Section 6. For electricity, heat and water the form offers two boxes each: Landlord or Tenant.

In a house where the upstairs and the downstairs run off one hydro meter and one gas meter, neither box quite describes what many owners have in mind, which is “you pay part of it.” That gap is where most utility disputes in small house rentals start. Before choosing a box, it helps to see that there are really three arrangements on the table, and that the law treats each one very differently.

What the law counts as a “utility”

The Residential Tenancies Act defines utilities narrowly: heat, electricity and water (s.2(1)). The same section lists “utilities and related services” among the services and facilities a landlord can provide, and rent is defined to include whatever a tenant pays for those services and facilities.

That definition matters for a gas meter. Gas that runs the furnace produces heat, so it sits inside the definition. Gas that only feeds a stove or a water heater is not named in the definition itself, and the standard lease reflects the split: Section 6 lists gas in a separate table of services that are or are not included in the lawful rent, apart from the electricity, heat and water rows.

One threshold point before anything else: if the owner (or the owner’s spouse, child or parent) lives in the same building and the tenant shares a kitchen or bathroom with them, the Act does not apply at all (s.5(i)). Everything below assumes a self-contained unit.

Arrangement 1: rent includes the utilities

Who carries price increases. The landlord, entirely. Utilities provided by the landlord are part of the rent, so a colder winter or a rate change is the landlord’s cost. Rent can move only under the ordinary increase rules, which require at least 90 days’ written notice (s.116(1)) and at least 12 months between increases (s.119(1)). The application for an increase above the guideline lists three grounds in s.126(1): municipal taxes and charges, eligible capital expenditures, and outside security services. Utility costs are not among them.

If the tenant stops paying. Because the utilities are inside the rent, unpaid money is unpaid rent. The landlord uses the normal rent-arrears tools under the Act, including a notice of termination for non-payment and an application to the Landlord and Tenant Board.

How Section 6 reads. Tick Landlord for electricity, heat and water, and mark gas as included in the lawful rent if the tenant uses gas appliances. Nothing needs to go in the details line about portions.

The trade-off is plain: the tenant has no direct reason to conserve, and the landlord prices that into the rent at the start.

Arrangement 2: the tenant holds the account

Who carries price increases. The tenant, for the tenant’s own consumption. The bill is in the tenant’s name and the provider charges the tenant directly.

If the tenant stops paying. The debt sits between the tenant and the provider, not between tenant and landlord. That is the cleanest position a landlord can be in.

Why a one-meter house usually cannot do this. An account needs a meter that measures only that unit. Where the landlord currently supplies electricity and a meter or suite meter is later installed for the unit, s.137(3) of the Act sets out how the landlord can end that obligation: the tenant’s written consent on a form approved by the Board, adequate notice under the prescribed rules, and a rent reduction in the prescribed circumstances. Section 137 is built around metering; a house with one meter for everyone is outside it until the metering changes.

How Section 6 reads. Tick Tenant, and use the details line for the form’s own first example: the tenant “sets up account with and pays the utility provider.”

Arrangement 3: the landlord keeps the account and bills a share

This is the arrangement people mean when they say “split by percentage,” and it is the only one that runs through s.138 of the Act and its regulation, O. Reg. 394/10. Section 138 has been in force since January 1, 2011.

Who it covers. A landlord of a building containing not more than six rental units who supplies a utility to each of the rental units (s.138(1)).

The conditions on the charge. The tenant’s written consent; adequate notice under the prescribed rules; and a reduction in rent under the prescribed rules. According to O. Reg. 394/10 (s.14), the notice must be in writing, given at least 30 days before the charge begins, and must state the amount and effective date of the rent reduction, the method used to work out the tenant’s share, and how the reduction is calculated.

The method. Section 13 of the regulation describes two methods: the total cost for all residential units and related common areas divided by the number of residential units in the building, or divided by the total square footage of all residential units and multiplied by the tenant’s square footage. Where several units are being charged, all of them must be on the same method. Late-payment charges are excluded from the total. The minimum rent reduction (s.15) is built from the building’s total cost for the most recent 12 months for which information is available, spread over the rental periods in a year.

Before a new tenant signs. A landlord who charges tenants a portion must give a prospective tenant, before the tenancy agreement is made, the unit’s share as a percentage of the total, the building’s total cost for the 12 most recent months available, and a statement of any part of the building that was vacant during that period (s.138(4); O. Reg. 394/10, s.16(2)).

If electricity is shared. The landlord’s refrigerators must have been manufactured on or after January 1, 1994, and any replacement refrigerator on or after December 31, 2002 (O. Reg. 394/10, s.17).

Arrangement 3, continued: price risk, non-payment, and the lease

Who carries price increases. Shared. The share is calculated per billing period, so when the bill rises, the tenant’s portion rises with it. On a plain reading of the per-unit formula, the divisor is the number of residential units, not the number of occupied ones, which suggests a vacant unit’s share stays with the landlord. That is my reading of the arithmetic, not a Board ruling.

If the tenant stops paying the share. Here is the part that surprises landlords. Where the charge is made under s.138(1), the utility is not treated as part of rent (s.138(2)), and the landlord may not serve a termination notice under s.59, or apply under s.69 or s.87, on the basis that the tenant failed to pay the utility charge (s.138(3)). Meanwhile the account is still in the landlord’s name. Under s.21(2), if a landlord obliged to pay a provider for a vital service fails to pay and the provider cuts the supply, the landlord is deemed to have withheld that service. Whether another route exists to recover an unpaid share is a question for a lawyer or paralegal; the Act does not offer one in this section.

How Section 6 reads. The form’s second example in the details line is exactly this arrangement: the tenant “pays a portion of the utility costs.” There is no third box for “shared,” so the details line has to carry the substance: which utility, the method, the percentage, how often the tenant will be billed and what supporting bill copies they will see.

Three questions the text leaves open

I want to be clear about where the written law stops, because these are the exact points owners tend to ask about.

An agreed percentage from day one. Section 138(1) says a landlord “may” charge a portion “in accordance with the prescribed rules,” and the regulation describes two methods. Whether a lease that simply states a fixed percentage from the first day, rather than converting an all-inclusive tenancy, is inside or outside those rules is not answered directly in the text. If it is ever disputed, the Landlord and Tenant Board decides.

The owner living in another part of the house. The per-unit method divides by “residential units,” which is not the same term as “rental units.” How an owner-occupied floor is counted is not spelled out.

Gas that is not heat. Heat is a utility under the Act; cooking or water-heater gas is not named. Whether that portion of a gas bill can be shared under s.138 is not answered directly by the section.

None of these is a reason to guess. It is a reason to write the arrangement out precisely and, where the stakes are real, get legal advice on the specific lease.

What to settle, in the order it comes up

Ordered by the stage of the tenancy, for both sides of the lease.