How Does HUD Utility Allowance Work?

What Does Utility Allowance Mean?

The HUD utility allowance is the cost of a reasonable amount of utilities as determined by the Public Housing Agency (PHA). The utility allowance is paid by the housing voucher program in addition to the base rent price. Covered utilities include electric, gas, oil, water, sewer, and garbage. The PHA determines the amount required to cover "reasonable utilities.” The allowance does not include telephone, cable, and internet utilities.

Renters are expected to pay a maximum of 30% of the monthly income on rent. This portion of the contribution is called the Total Tenant Payment. The cost of gross rent (rent + utility allowance) above a family's maximum rent contribution is the amount of housing assistance paid by the HUD. Fair Market Rent (FMR) prices are gross rent meaning they already include the utility allowance.

How to Calculate Utility Allowance

If you want to calculate utility allowance, keep in mind the following things:

Additionally, it's important to verify the following:

Many people wonder if program participants who are unable to pay their rent will still receive a utility allowance reimbursement. The answer is yes. If the program participant is responsible for paying their own utilities, they are entitled to a utility allowance.

If the program participant paid more than their fair share for utilities, the program must reimburse them for the difference. This occurs when the appropriate monthly utility usage deduction from the participant's highest occupancy charge or rent contribution results in a negative amount (less than $0). In such a scenario, the sub-recipient or recipient is required to provide a utility reimbursement to the program participant.

This must be done in accordance with the procedures outlined in Section D of the CPD Notice 17-11.

Will My Household Get a Utility Allowance?

Are you curious whether your household can qualify for a utility service allowance? It all comes down to how the utilities are metered. There are three methods to meter utilities: master-metered, individually-metered, and check-metered. Each method has its own unique characteristics and understanding the differences is essential in determining eligibility for a utility allowance.

The HUD utility allowance will cover check-metered and individually-metered utilities that measure the user's actual individual or family consumption. The HUD allowance will not cover master-metered utilities where a utility is metered for an entire building that includes multiple units. In some cases, the PHA may install a check meter that measures individual consumption in a building with master-metered utilities.

The utility allowance can range from $10 to $200 per month. The allowance can depend on many factors including the size of the rental, the efficiency of appliances, construction type, temperatures in the area, number of utilities, etc. The ultimate decision of utility allowance is determined by your local PHA.

Master-metered utilities

The master meter measures utility usage for an entire building instead of individual households or homes. In these cases, the PHA pays the local utility company for the consumed utilities, and the costs are then included in the basic rent levels set by the PHA. Unfortunately, households whose utilities are master-metered won't receive an individual utility allowance, but being familiar with this metering method can help you better manage your utility costs.

However, it's worth noting that the PHA can still impose a "surcharge" for certain utility usages. This surcharge is an additional fee paid by the inhabitants for the use of large appliances that are not deemed necessary, such as a food freezer.

Separately-metered utilities

When the utilities are separately metered, each home has a unique account with the utility company and it pays the bill directly to it. Therefore, such utilities are also termed “resident-purchased” or “resident-paid” utilities.

The local PHA offers utility allowance to the home via a subtraction in the home’s monthly rent. However, many buildings have different metering systems for different utilities, known as mixed metering. This can make it more complicated to calculate utility allowances and determine the appropriate rent amount.

For instance, water can be individually metered, gas can be master-metered, and electricity can be check-metered.

Residents may also be granted an allowance for certain non-metered utilities, such as trash pickup and sewage services, which are billed directly to them.

In public housing, individual meters are typically preferred over checkmeters, although meter configurations can vary widely depending on the region.

For example, check meters are more commonly used in the southern United States, while individual meters are more prevalent in the northwest.

Check-metered utilities

As we mentioned earlier, some PHAs choose to install additional sub-meters to measure the utility usage of individual units.

Check meters are owned by the PHA itself. For master-metered utilities, the PHA pays the utility company directly for the consumed utilities. However, for check-metered utilities, the PHA provides a utility allowance to each household based on a predetermined maximum level of usage without incurring additional charges. If a household exceeds this level, it may be subject to a surcharge.

In summary, the HUD utility allowance plays a critical role in assisting low-income families with their utility bills. With a grasp of how the program functions, families can make the most out of it to effectively manage their utility expenses and create a more dependable living situation.