Landlord and Tenant Energy Responsibilities in Illinois Commercial Leases

In a leased commercial building, energy responsibility rarely falls neatly on one party. Who holds the meter, who pays the bill, who can choose a supplier, and how shared systems are allocated all depend on how the building is metered and what the lease says. Getting these questions answered up front prevents disputes later and clarifies who actually controls energy cost decisions.

This guide walks through how those responsibilities typically split in Illinois commercial leases and what both landlords and tenants should confirm.

Start With the Meter and the Account

The foundational question is: who holds the utility account for a given meter? That answer drives most of the others.

• The account holder is the utility's customer of record for that meter. They receive the bill and, for eligible commercial accounts, hold the right to procure supply from a licensed Alternative Retail Electric Supplier or alternative gas supplier — or to stay on the utility's default supply.
• The delivery utility delivers the energy, maintains the wires or pipes, and handles outages regardless of who holds the account or who supplies the energy. In electricity, that is ComEd in northern Illinois or Ameren Illinois in central and southern Illinois. In gas, it is the local distribution utility: Peoples Gas in Chicago, Nicor across most of northern Illinois outside the city, North Shore in Lake County and the far north, or Ameren downstate.

Because the account holder controls the supply decision, metering structure effectively decides who can procure. A separately metered tenant on its own account can usually choose a supplier for that space; a tenant whose usage is bundled into the landlord's meter cannot.

Common Metering Arrangements

Illinois commercial buildings use several configurations, and a single property can mix them.

Directly Metered Tenant Spaces

Each tenant space has its own utility meter and the tenant holds the account. The tenant receives the bill, controls supplier choice, and bears its own usage directly. This is the cleanest arrangement for aligning who pays with who controls consumption, and it gives an eligible tenant the ability to procure its own supply.

Landlord-Held Master Meter

The building sits behind a master meter on the landlord's account, and tenant usage is allocated back through the lease. Here the landlord holds the supply decision for the whole building, and tenants pay through their lease rather than to the utility directly. Allocation may be based on square footage, a fixed schedule, or another method defined in the lease.

Submetering

The landlord holds the utility account but installs submeters to measure individual tenant usage, then bills each tenant for its measured consumption. Submetering allocates cost by actual usage while keeping the supply decision with the landlord. Where and how submetering and any associated charges are permitted depends on applicable rules and the lease, so both parties should confirm the arrangement is properly documented.

Common-Area Metering

Shared systems — lobbies, corridors, elevators, shared HVAC, exterior and parking lighting — are typically on the landlord's account. These common-area energy costs are usually recovered from tenants through the lease, most often as part of common area maintenance (CAM) or operating expenses.

Who Can Procure Supply

Procurement rights follow the account. For an eligible commercial account:

• A directly metered tenant generally controls supplier choice for its space and can evaluate a licensed supplier or stay on default supply.
• A landlord holding the master meter controls supplier choice for the building, including common areas, and the outcome flows to tenants through the lease.
• Under submetering, the landlord usually holds the underlying supply decision even though tenants are billed by measured usage.

Neither party's supplier choice changes who delivers the energy or handles outages — that remains the delivery utility in every case. A supplier decision affects only the supply portion of the bill. For how those decisions work, see /commercial-energy-procurement/ and, for the underlying products, /commercial-electricity/ and /commercial-natural-gas/.

Pass-Throughs and the Lease

The lease is where energy cost allocation actually lives, and vague language is where disputes start. Both parties should confirm:

• What is recovered and how. Are common-area energy costs folded into CAM or operating expenses? Is tenant usage direct, submetered, or allocated by a formula?
• Which clauses govern. Operating-expense, CAM, and utility clauses each may touch energy. They should be consistent with each other and with the actual metering.
• How increases are handled. Delivery rates and supply prices change over time. The lease should be clear on how those changes flow to tenants, particularly for landlord-held meters.
• Who controls procurement. If a tenant wants the ability to choose its own supplier, that generally requires being the account holder on a separate meter — a point worth settling before signing.

For related landlord-side lease drafting around shared systems, see co-tenancy energy clauses for landlords. For reviewing the supply agreement itself once procurement is settled, see /commercial-energy-contract-review/ and the clause-by-clause contract guide.

Demand Charges in Shared Buildings

For larger accounts, demand charges — billed on peak kW — can be a meaningful part of the bill, and in a shared building they raise their own allocation question. Where a master meter serves multiple tenants, one tenant's peak behavior can influence the building's demand charge that everyone shares. How that cost is allocated should be defined rather than assumed. See /commercial-demand-charges/ for how demand billing works.

A Practical Checklist

For landlords: know which meters you hold, document how common-area and tenant energy is allocated, keep lease clauses consistent with the actual metering, and be clear about who controls procurement for each account.

For tenants: confirm whether your space is directly metered, submetered, or allocated; find out whether you hold the account and therefore the supplier decision; and read the CAM and operating-expense clauses to see how building energy costs reach you.

Settling these points in writing — before signing — keeps energy responsibility clear for the life of the lease.

Sources

• Illinois Commerce Commission
• ComEd
• Nicor Gas

This guide is educational, is not legal advice, and does not promise any specific savings. Lease and metering arrangements vary; confirm your specific situation with the lease, the relevant utility, and the primary sources above.