How to Charge Electricity in a PG: Fixed Charge, Per-Room Sub-Meters and Fair Per-Unit Rates

Short answer: the fairest way to charge electricity in a PG is a sub-meter for each room, read on the same date every month, billed at a per-unit rate that does not exceed what your DISCOM actually charges you, and split among the people sharing that room. A fixed EB charge in the rent is simpler, but it breaks down the moment one room runs an AC all night.

This guide compares the three common methods, walks through a worked example, and covers the questions owners actually get stuck on: what rate is reasonable, whether your PG is on domestic or commercial tariff, prepaid meters, AC rooms, and how to avoid month-end arguments. It is general information — tariff rules differ by state, so check the details with your DISCOM.

Three ways to charge electricity in a PG

Many owners use a hybrid: a fixed charge (or nothing extra) for non-AC rooms, and sub-meter billing for AC rooms. Whatever you choose, write it into the rent agreement and the house rules before the tenant moves in. Changing the method mid-stay is what usually causes trouble.

How to read sub-meters and calculate the bill

The maths is simple; the discipline is in doing it the same way every month.

1. Fix a reading date — for example, the 1st of every month, or the day your DISCOM reads the main meter.
2. Note the previous and current reading for each room in kWh (units). Ignore decimals or round consistently.
3. Units used = current reading − previous reading.
4. Room charge = units used × your per-unit rate.
5. Per-tenant share = room charge ÷ number of tenants in the room.
6. Add each person’s share to their rent for the month and keep the readings on record.

Worked example (hypothetical numbers)

Suppose a PG charges ₹8 per unit. These figures are made up purely to show the calculation:

Notice how different the AC rooms are. Under a flat ₹600-per-bed EB charge, room 204 would have paid ₹1,200 for usage that costs ₹2,880 — and the non-AC tenants would effectively have covered the gap. You can try your own numbers in our free Electricity Bill Split Calculator.

When someone joins or leaves mid-month

An equal split is the default and is easy to explain. If a tenant joins on the 20th, either take a fresh reading that day and bill the two periods separately, or agree up front that a part-month resident pays a proportionate share by days. The important thing is that the rule is written down before it is needed.

What per-unit rate can a PG owner charge?

This is where owners get into trouble. The safe position is to recover your actual cost, not to make a profit on electricity.

• Electricity resale needs a licence. Section 12 of the Electricity Act, 2003 says no person may distribute or trade in electricity unless authorised by a licence (or exempted). Passing on what your DISCOM charged you is generally treated as sharing a bill; a deliberate mark-up can start to look like selling electricity.
• At least one regulator has said so directly. In a 2010 press note, the Tamil Nadu Electricity Regulatory Commission said landlords had no right to collect more from tenants than the highest domestic tariff then in force, and treated overcharging as an offence under Sections 142 and 146 of the Act. The rates quoted in that note are long out of date, but the principle — tenants should not pay more than the DISCOM tariff — is a sensible benchmark everywhere.
• Other states. We could not find an equivalent published rule from the Delhi, Maharashtra or Karnataka regulators that sets a cap for landlords. Do not assume that means anything goes: tenants can still complain to the DISCOM, the regulator’s consumer forum or a consumer court, and an inflated rate is hard to defend. Check with your DISCOM if you are unsure.

Working out your real cost per unit

Your DISCOM bill is not just units × one rate. It usually has slab rates, a fixed or demand charge, electricity duty and fuel or power-purchase adjustments. A fair way to find your effective rate is:

Effective rate = total amount on the main bill ÷ total units billed.

For example (hypothetical), if the building bill is ₹18,600 for 2,400 units, the effective rate is ₹7.75 per unit. Charging around that figure — and showing the tenant the main bill if asked — is easy to justify. Charging ₹12 when your effective rate is ₹7.75 is not.

Common areas (corridor lights, water pump, lift, CCTV, Wi-Fi router) appear on the main bill but on no room meter. Either absorb them in the rent — the cleanest option — or state clearly in the agreement that they are shared equally across all beds. Do not quietly load them into the per-unit rate.

On GST: electricity passed on at cost is usually treated as a reimbursement; see our guide to GST on PG rent and check with your CA if you bundle or mark it up.

Is a PG on domestic or commercial tariff?

It depends on your state, the size of the PG and sometimes the sanctioned load. Commercial (non-domestic) rates are usually higher, so this directly affects your effective rate. Three examples:

In Delhi, a 2025 Delhi High Court case (W.P.(C) 2271/2025) arose from a discom re-billing a girls’ PG at non-domestic rates — a reminder that DISCOMs do check. If your PG is on a domestic connection but should be commercial, you risk back-billing and penalties. If you are unsure which category applies, ask your DISCOM in writing before you price your rooms. For how electricity fits into your overall margins, see is a PG business profitable? and the PG profit calculator.

Prepaid and smart sub-meters

Prepaid sub-meters let each room recharge in advance; when the balance runs out, that room’s supply stops. Smart sub-meters send readings to an app so nobody has to climb a ladder with a torch. Both reduce disputes because the reading is not taken by the owner alone.

• Pros: no recovery problem, readings are automatic, tenants watch their own usage.
• Cons: upfront cost per room, installation by a licensed electrician, and a room going dark at night if a tenant forgets to recharge — decide whether that fits your PG.
• Your rate still matters: a prepaid meter set at an inflated per-unit rate is the same problem in a new box.

Can a PG tenant just get their own DISCOM meter? Usually not. In Delhi, for example, Tata Power-DDL offers prepaid tenant connections under the DERC Supply Code 2017 without a landlord NOC, but only for a separate dwelling unit — a room with a kitchen and separate entry — and one dwelling unit can have only one meter. A typical PG room does not qualify, so sub-meters remain the practical route.

AC rooms

• Always meter AC rooms separately. An AC can use several times what a fan-and-light room uses, so flat charges rarely work.
• Price the room, not the units. Some owners charge a higher AC rent plus metered electricity; others include a fixed allowance of units and bill the excess. Both are fine if written down.
• Check your sanctioned load before adding ACs. Running above it can attract excess-demand charges, and a higher load can also change your tariff category.

How to avoid electricity disputes

1. Photograph every meter on reading day, with the room number visible. Share the photo in the room’s group or with the bill.
2. Send a monthly statement: previous reading, current reading, units, rate, room total and each person’s share.
3. Keep the rate fixed unless the DISCOM tariff changes, and tell tenants in advance when it does.
4. Read meters at move-in and move-out and settle the last bill from the final reading before returning the deposit.
5. Keep the main bill so you can show how your rate was worked out.
6. Check meters for faults — a stuck or fast meter undermines the whole system.

Doing it in My PG Manager

In My PG Manager, you set a price per unit for each property and enter each room’s previous and current reading every month. The app calculates units × price, splits it equally among the tenants in that room, and adds each share to their rent. Tenants see the electricity charge in the tenant app and on their invoice PDF, which cuts down the “how did you get this number?” questions. There is a 14-day free trial, then it is ₹159 per month. The video tutorials show the meter-reading screen step by step.

Frequently asked questions

Can a PG owner charge more than the DISCOM per-unit rate?

It is not advisable. Supplying electricity for profit without a licence conflicts with Section 12 of the Electricity Act, 2003, and the Tamil Nadu regulator has said landlords cannot collect more than the applicable tariff. Recover your actual cost and keep the main bill as proof.

How do I split the electricity bill among room-mates?

Take the room’s units (current minus previous reading), multiply by your per-unit rate, and divide equally among the tenants in the room. For part-month stays, take an extra reading or split by days as agreed in advance.

Is a PG charged domestic or commercial electricity tariff?

It varies by state. In Karnataka, PG rooms in the owner’s own house can be domestic (LT-1) while a PG in an exclusive building is commercial (LT-3(a)). Telangana lists hostels under LT-II commercial. Delhi’s tariff has allowed domestic tariff for a PG run from a household on a small load. Check with your DISCOM.

Should I include electricity in the rent?

For non-AC rooms with similar usage, a fixed charge is simple and acceptable. For AC rooms, or if usage varies widely, per-room sub-meter billing is fairer and protects your margin.

How do I handle common-area electricity?

Either absorb it in the rent or split it equally across all beds as a separate, disclosed line. Avoid hiding it inside a higher per-unit rate.

Sources

• Electricity Act, 2003 (Sections 12, 142, 146) (text on India Code, indiacode.nic.in).
• Tamil Nadu Electricity Regulatory Commission, Press Note No. 14 of 2010 (4 August 2010) on landlords overcharging tenants — Government of Tamil Nadu.
• KERC Tariff Order 2025, Annexure 2 tariff schedules LT-1 and LT-3(a) — KERC tariff orders; schedule copy published by HRECS.
• TGERC Retail Supply Tariff Order FY 2025-26, Chapter 4 (LT-II applicability) — TGERC.
• Delhi electricity tariff schedule FY 2019-20, categories and terms — reproduced in NDMC Budget 2019-20 (non-domestic) and terms and conditions.
• Delhi High Court, W.P.(C) 2271/2025 (PG billed at non-domestic tariff) — Delhi High Court.
• Prepaid tenant connection FAQ under the DERC Supply Code 2017 — Tata Power-DDL.

Last reviewed: October 2026. This article is general information, not legal advice. Tariff categories and rates change with each tariff order — confirm with your DISCOM.