Paying utilities for tenants?

[Mattie Covatch]

For a roommate situation with a tenant...

How would you handle utilities?

Set a "flat bills paid rate" rent that includes all utilities?

Have a lower rate of rent, then split the utilities by number of occupants?

Do you say "bills paid, up to..." with a cap on utilities that will be paid?

Utility bills for the house in question are pricey.
Electricity can top $500/600 per month during peak months
Turning the thermostat up to 80 during the summer is still $350/month
Natural gas used only to heat showers is $50-80 a month
Water is at least $100 a month winter, $300 summer (sprinklers)
Internet is $50 a month

I know "bills paid" is never a good idea, as tenants won't be efficient.
But, "all bills paid" is the norm in this area for roommates.