When you build an ADU, you have a choice to make on utilities: run them shared from the primary residence, or install separate metering so the ADU operates as an independent account. Neither is universally right. The decision affects how you price rent, how you handle billing, and what happens when you sell.
Electric: MGE and Separate Metering
Madison Gas and Electric (MGE) allows separate electric service for ADUs. This requires a separate meter socket, service entrance, and panel in the ADU. MGE will run a second service drop from the transformer. There’s an installation fee and ongoing monthly service charges.
Separate electric metering is strongly recommended for rental ADUs. A tenant paying their own electric bill has an incentive to manage usage. A tenant on rent-includes-utilities has no such incentive — and you absorb whatever they use. For a well-insulated ADU with a mini-split, electric costs are manageable, but over a Wisconsin winter the difference between a conservative and a careless tenant can run hundreds of dollars.
Water and Sewer: MMSD and Madison Water
Water separation is more complex and expensive than electric. A separate water service requires a new tap from the main, a separate meter pit, and additional plumbing. The infrastructure cost — tap fee, meter, installation — typically runs $5,000–$10,000 or more. Most ADU owners in Madison run water as a shared service from the primary residence, with a utility contribution built into the rent. This is the practical default for the majority of projects.
Gas
Most ADUs in Madison are built without gas service — mini-splits for HVAC and electric ranges are standard. This eliminates the gas separation question entirely. The stronger argument against gas in a new ADU: it adds a combustion appliance, a gas line, and ongoing costs to a structure where all-electric is simpler and carries no combustion risk.
The Rental Income Implication
If you’re renting the ADU, utility structure affects how you price it. Tenant pays own utilities: requires separate metering, rent is lower, operating costs are cleaner. Utilities included in rent: simpler setup, higher rent, but you absorb usage spikes. In either case, the conversation happens during design — after you’re built, changing utility configuration is expensive. Decide before construction starts.
If you’re planning an ADU in Madison or Dane County and want to think through the utility setup for your situation, start with a free feasibility check.