The utility costs (Nebenkosten) is what you pay every month for hot water, central heating, trash collection, etc. These costs are usually included in your warm rent (Warmmiete). It does not include electricity for your lights and appliances.

The Nebenkosten are adjusted every year during the Nebenkostenabrechnung. Every year, you get a utilities bill. It shows how much water and heating you really used. If you used more than you paid for, you get an invoice. If you used less, you get money back.