Submetering for Multi-Tenant Cannabis Cultivation Buildings

Master meter versus submeter

A master-metered building has one utility service, one meter, one account, and one bill, addressed to the landlord. The utility knows nothing about the tenants. Whatever the tenants pay for electricity, they pay to the landlord under the lease.

A submeter is a second meter installed behind the utility's meter, on the feeder that serves one tenant, one room, or one piece of equipment. It measures the same things a utility meter measures, kilowatt-hours and, if it is an interval meter, kilowatts by 15-minute window. The utility does not read it, bill from it, or care that it exists. Its only job is to make the landlord's division of the single bill follow actual use.

Cannabis buildings end up master-metered for ordinary reasons. A warehouse was built with one 2,000 A service and later carved into four licensed suites. A cultivator sublets a flower room to a craft grower. A landlord converts a building for several tenants and does not want four utility deposits, four transformers, and four sets of utility easements. None of that is a problem until the bill arrives, because a cultivation bill is large and lumpy. In the Northwest Power and Conservation Council's producer survey, lighting alone was 66 percent of facility electricity and flowering rooms 49 percent [nwpcc-cannabis]. A tenant running a flower room and a tenant running a trim and packaging suite on the same square footage use electricity at very different rates, and a square-footage split will get one of them badly wrong.

Three ways to divide a shared bill

Square footage. Simple, common, and almost always unfair in a cultivation building. It assumes every square foot uses the same electricity. A 5,000 square foot flower room at 35 W per square foot draws 175 kW when lit; a 5,000 square foot dry and cure space draws a tiny fraction of that. The flower tenant is subsidized; the dry-room tenant pays for lights they do not own.

Connected load. The landlord adds up each tenant's nameplate kW and splits the bill in proportion. Better, because it tracks lights and HVAC, but nameplate is not use. A tenant with two rooms on opposite photoperiods never runs all of its connected load at once, while a tenant with one big room on a single timer does.

Submetered use. Each tenant's kWh is measured. The energy portion of the bill is split by measured kWh. The demand portion is split by measured kW, ideally by each tenant's contribution to the building's single billed interval. Taxes, fixed customer charges, and common-area loads are split by an agreed formula. This is the only method under which a tenant who cuts its own use sees its own bill fall.

A worked comparison, with every number chosen for illustration:

Inputs (assumed): a building with two tenants of equal square footage. Tenant A runs a lit flower room, 175 kW peak, 63,000 kWh a month. Tenant B runs processing and packaging, 40 kW peak, 20,000 kWh a month. The utility bills 83,000 kWh at 13.77 cents, Ohio's June 2026 average commercial price [eia-epm-5-6-a], plus a delivery demand charge we set at 12 dollars per kW on a coincident peak of 205 kW (assume 10 kW of B's load happens to be off at A's peak). Energy: 11,429 dollars. Demand: 2,460 dollars. Total 13,889 dollars.

The submetered result differs from the connected-load result by only a few hundred dollars here because we chose simple loads. In a real building with staggered photoperiods, a tenant whose lights are off during the building's peak interval can be paying thousands in demand it did not cause.

What revenue-grade means, and why it matters when money changes hands

The meters utilities bill from are built and tested to ANSI C12.1, the American National Standard code for electricity metering, which establishes acceptable performance criteria for watthour meters, demand meters, and related devices and describes acceptable in-service performance levels for meters used in revenue metering [ansi-c12-1-2022]. "Revenue-grade" in a product sheet means the manufacturer claims the meter meets that code's accuracy class. It does not mean the installation does. A revenue-grade meter fed by the wrong current transformer ratio, or wired to a feeder that also carries a neighbor's dehumidifiers, will produce a confident, precise, wrong number.

Three practical points for landlords and tenants:

1. Match the CT ratio and the feeder. Most disputes we hear about trace to a current transformer programmed for the wrong ratio or clamped on a feeder that serves more than one tenant. Get a single-line diagram and confirm which breaker feeds which meter.
2. Get interval capability. A kWh-only submeter can split energy. Only an interval meter can split demand fairly, and demand can be 30 to 70 percent of a commercial bill depending on the tariff; see demand charges explained.
3. Put testing in the lease. Who owns the submeter, who calibrates it, how often, and what happens when it is found out of tolerance. New York's submetering rules, written for residential buildings, require the submeterer to credit overcharges with interest [ny-16-nycrr-96-6]; a commercial lease should say the same thing on purpose.

State rules on reselling electricity

Here is the part landlords often miss. In most states, selling electricity to the public is what makes a company a utility, and utilities are regulated. A landlord who meters and bills tenants for power is, in the eyes of several commissions, reselling electricity, and the commissions have said so.

New York. The Department of Public Service is explicit that a building owner who submeters becomes the distribution utility to its residents, with the rights and responsibilities that go with it, and must first petition and receive authorization from the Public Service Commission before submetering [ny-dps-submetering]. Residents will never pay more than what the local distribution utility charges [ny-dps-submetering], and the regulation itself states that the submeterer shall not charge more than the applicable rate cap [ny-16-nycrr-96-6]. These rules, in 16 NYCRR Part 96, are written for residential submetering; the Department's page does not address commercial tenants [ny-dps-submetering]. That is the state's position on the principle, and commercial landlords should not assume the principle stops at the residential line without asking.

Texas. The Public Utility Commission's rule on master-metered utilities provides that an apartment house owner may not impose additional charges on a tenant in excess of the actual charges imposed on the owner for utility consumption, and it names the acceptable allocation methods, square footage or individually metered or submetered usage, with any other method requiring commission approval [tx-25-141]. The rule applies to apartment houses [tx-25-141]. Texas is also the state where a large cultivation tenant can bypass the whole question by taking its own service and shopping for a retail electric provider; see what is energy deregulation.

Ohio. In April 2026 the Supreme Court of Ohio held that Nationwide Energy Partners, a company that bought electricity from AEP and resold it to apartment tenants, is a public utility subject to regulation by the Public Utilities Commission of Ohio [ohio-sc-nep-2026]. The court's reasoning was plain: tenants who purchase electricity are consumers of electricity and NEP is in the business of supplying it [ohio-sc-nep-2026]. The opinion noted that NEP's margin came from paying AEP's lower commercial rate and reselling at a higher residential rate, and that NEP had agreed not to charge more than AEP's default residential rate [ohio-sc-nep-2026]. The Ohio Consumers' Counsel, which had argued that submetered consumers lacked rate regulation, complaint procedures, standardized billing, and the ability to shop for supply, reports that PUCO is now implementing oversight in two open cases [ohio-occ-submetering].

The pattern across all three: regulators do not object to submetering as a measurement tool. They object to a middleman making a margin on electricity, and their remedy is a cap at the utility's own price plus, in New York and now Ohio, a requirement to submit to commission oversight. Nearly all of the published rules concern residential tenants. Commercial cannabis tenants are rarely named in them, which cuts both ways: a landlord may have more freedom, and a tenant may have fewer protections. Confirm with your PUC or counsel before the lease is signed, not after the first disputed bill.

How submetering supports your own negotiations

A tenant in a master-metered building has no utility account, so it cannot enroll with a competitive supplier, change rate class, or enroll in demand response on its own. What it can do is use its submeter data.

• Argue the allocation. Twelve months of interval data shows exactly when your load peaks relative to the building's billed peak. If your lights are off during the building's worst interval, you have a documented case that you should not be paying a proportional share of the demand charge.
• Price a separate service. The utility will quote a new service and a rate class based on your measured load, not the building's. A 175 kW tenant may land in a class with a lower per-kW demand rate than the 800 kW building sits in; see utility rate classes explained.
• Give the landlord a reason to shop. In a choice state, the landlord holds the account and can sign a supply contract for the whole building. Tenants with interval data can show the landlord what a fixed or block-and-index product would do to each tenant's cost, which is usually the argument that gets the landlord to make a call; see energy broker vs. direct supplier.
• Benchmark yourself. Your kWh per square foot of canopy, from your own meter, is what lets you compare your operation against published ranges in kWh per square foot benchmarks instead of guessing from a share of someone else's bill.
• Read the whole bill. Ask for the utility's actual bill, not just the landlord's statement. The line items on understanding your commercial utility bill tell you whether a ratchet, a power factor penalty, or a rate class you never chose is inside your "share."

A short checklist before you sign a multi-tenant lease

1. Ask which meter is the utility's and which are submeters, and get the single-line diagram.
2. Ask for the allocation formula in writing, with a sample month worked out.
3. Confirm the per-kWh and per-kW you will pay equals the utility's tariff, with any administrative fee shown separately.
4. Confirm the submeter is interval-capable and who owns the data.
5. Confirm the state's position on resale for your tenant type with the PUC or counsel.
6. Ask the utility, not the landlord, what a separate service for your load would cost and which rate class it would fall in.

Submetering is a measurement decision that turns into a regulatory one the moment a dollar figure follows it. Handle both on purpose.