It may be too late, but I agree with you that the tenant utility money is not your money,
Yes it is your money.
All income received for rental property from any source for any reason is included in the total amount of rental income received in the tax year. Period. (That includes a rental property insurance payout too!)
All rental expenses, including utilities paid for a rental property by the owner of that property are deductible rental expenses. In fact, the rental expenses section has a box in it specifically for utilities cost.
So while it may be a wash, you are still required to include it in the rental income.
