It is important for landlords to understand their rights and responsibilities regarding electricity, natural gas, and water services. Here are some tips to help avoid costly mistakes.
Before a tenant moves in:
Determine who is responsible for paying utility bills at the rental property – the landlord or the tenant:
The person responsible for utility payments is different depending on the situation. Shared houses, basement suites, and apartments will all have different set-ups and will be agreed upon in the lease agreement. Possible arrangements include:
- Tenant pays all utilities directly to the retailer
- Tenant pays for a portion of the utilities to the landlord, who has the billing in their name
- The landlord pays for all utilities directly to the retailer
Make sure the lease terms between the landlord and tenant clearly state who is responsible for utility payments.
If the amount to cover utility payments is fixed, the lease terms cannot be changed unless both the tenant and landlord agree to it. Alternatively, if the tenant sets up a billing account for utilities in their name per the lease agreement, then no cost for these utilities will be part of the monthly rent.
If the tenant is responsible for paying for water, electricity, and/or natural gas service, remind them to read and understand the terms and conditions of the service with their utility providers, such as cancellation terms, expiration date, charges, and any automatic renewal clauses. Encourage tenants to set up services at least three days before the move-in.
If the building is sub-metered:
If the rental property uses sub-meters that measure the energy used by each rental unit, then advise tenants of the sub-metering company name and contact information the tenants must use to set up utility billing in their names.
This information should be provided to potential tenants before they sign their lease, as some potential renters might consider the lack of choice in retailer as a deal-breaker.
During tenancy:
If the tenant does not pay their electricity or natural gas bills:
If the utility accounts are in the tenant’s name and they default on payments, the landlord will not be held responsible for charges billed to the tenant. The utility companies must collect from the person whose name is on the account.
If the tenant is in arrears, the utility company can disconnect the services to the property for non-payment. Due to privacy law restrictions, the utility company is not required to notify the property owner about this course of action or provide any warning. The company representatives will send a disconnection notice to the account holder on record (the tenant) via an email, phone call, or letter. If the landlord needs to reconnect the utility services at the rental property later, they will have to pay reconnection fees.
If the landlord is the account holder for the utilities and there is a lease agreement in place where the tenant pays the landlord a fixed or variable amount and the tenant has not upheld the agreement, landlords can try to recover these unpaid costs by using the Residential Tenancy Dispute Resolution Service (RTDRS).
To avoid potential damages and subsequent costs due to utility disconnection, the landlord may want to contact the regulated retailer and ask if they can set up a Premise Vacancy Agreement (Landlord Agreement or Automatic Power Install). Although this agreement will not prevent disconnection due to non-payment of bills, it can reduce the risk of disconnection when there is no account holder on record. It will automatically transfer electricity or gas services to the landlord or the property management company.
If the tenant does not pay their water bills:
The municipality owns, operates, and maintains the water utility, including the meters and water infrastructure. Some municipalities issue bills directly to consumers; others contact a private company to provide billing and customer care services for water utility customers.
Typically, the water meter is assigned to the property owner. Some municipalities will not allow water billing in a tenant’s name, so all the payment arrears become the owner’s responsibility. In some cases, municipalities might add these arrears to the owner’s property tax bill.
Landlords can try to recover these unpaid costs by using the Residential Tenancy Dispute Resolution Service (RTDRS).
When a tenant moves out:
Ensure there is still power and water going to the unit:
Landlords can choose to set up services with a competitive retailer each time a tenant leaves. However, this will require signing a contract for services. These contracts are typically for set periods of time and may have an exit fee for leaving the contract early.
Alternatively, landlords may set up a Landlord Agreement or a Premise Vacancy Agreement (PVA) which ensures the utility services will be automatically set-up with the regulated rate provider at the rental property between tenants. To find the default provider in the area, enter your postal code or city name on the Retailers and Distributors page.
Landlords can choose to disconnect services at a property between tenants. There are a few things to remember when it comes to utility disconnection:
- There may be idle billing charges as some electricity sites are subject to idle billing charges whether the service is physically connected or not. These are levied by the distributor to recover the costs to maintain the transmission lines and keep the site connected to the provincial power grid. Confirm with your retailer if there will be idle billing charges.
- During the winter months, retailers may choose not to disconnect services.
- Property owners may need to pay a reconnection fee once they decide to turn the services back on. Ask the utility company about any reconnection fees. The cost to reconnect the service may be more than the monthly charges would have been (depending on how long the service remains off).
- If natural gas service is disconnected for six or more months, an inspection may be required at a cost to the consumer.
What is a Premise Vacancy Agreement (Landlord Agreement)?To avoid surprise bills or disconnections, landlords may set up a Premise Vacancy Agreement (PVA) or Landlord Agreement with the default rate retailer. A PVA allows a landlord to determine what happens at their property when no one is set up for billing. Contact the default rate retailer directly to ask if they offer a PVA or Landlord Agreement and what the options are. It can take up to a week for the PVA to take effect. What can happen if the previous tenants cancel their account, but the new tenants never sign up for utility services?When a new tenant doesn’t enroll for utility services, the property owner becomes responsible for all the utility charges that occur on the property from the date the previous tenants closed their account with their utility retailer. Without an active customer for the property, the default rate provider would pull the land title and enroll the property owner when landlord agreements are not already in place. The default retailer will send bills to the last known address of the property owner, often based on the land title document. After receiving the charges from the distribution meter reading company, the default retailers have up to 12 months to bill out charges to the property owner. Having Landlord or PVA in place at a rental property will ensure the charges are billed quickly and sent to the correct mailing address. Can a landlord apply on behalf of a tenant to register the utilities in the tenant’s name?No. Tenants must contact a retailer to set up billing in their name. Is the utility company obligated to contact the landlord before disconnecting the power or gas to the property?The landlord will receive a notice of pending disconnection for non-payment only if billing for the utilities is in their name. If the tenant has the utilities in their name at the time of a pending disconnection for non-payment, the regulated retailer will contact the tenant and not the property owner. How can a landlord determine if the tenant has set up billing?Default retailers and distribution companies who read the meter will only share site information with the person who has the utilities in their name. When a tenant is showing as the billing customer, for privacy reasons, the landlord cannot receive information about the billing at the rental property. The landlord cannot find out when the tenants ended the services or any other details related to the tenant’s account. There is no centralized organization where a landlord can confirm if someone is set up for billing. Landlord’s may request proof of enrollment in utility services as part of the lease agreement. Having a Landlord Agreement or a Premise Vacancy Agreement (PVA) in place will help prevent utility disconnection due to lack of payment and will result in the landlord being automatically enrolled for billing when a tenant stops billing in their name. Who can landlords contact to enroll in services to avoid a pending disconnection?Only the default retailers can turn off the electricity or gas for non-payment or when no one applies for service at the site. To find the local default retailer, enter the postal code or city name on the Retailers and Distributors page. Having a Landlord Agreement or a Premise Vacancy Agreement (PVA) in place will help prevent utility disconnection due to lack of payment and will result in the landlord being automatically enrolled for billing when a tenant stops billing in their name. |
