Utility Allowances, Energy-Efficiency, and Renewables in Affordable Housing

Affordable housing programs usually establish restrictions on tenant rent contributions – either income-based rents or formula rents. In either case, tenant contributions must cover both rent and a reasonable amount of basic utilities. Where utilities are tenant-paid, tenants must receive a credit toward their total rent contribution known as a “utility allowance” to ensure compliance with the program’s rent limitations. Although details vary among specific programs, the basic standard for utility allowances is to approximate “reasonable consumption,” using current utility rates. Therefore, an allowance may not cover each tenant’s actual utility costs. Allowances must usually be reviewed annually, and adjusted for significant changes. Inadequate allowances can impose hardship on tenant’s capacity to pay for other necessities, such as food, medical care, and rent, and ultimately result in unnecessary evictions and terminations.

Where utilities are tenant-metered, tenants pay every dollar of their energy bills, regardless of allowance levels. Inefficient units, systems or appliances cost tenants more to operate, and often fail to deliver health, safety and comfort. Tenants have important interests in what energy-related efficiency measures or renewables are provided and their actual impact on utility allowances and total rent and utility expenses. NHLP is working to ensure that state and federal policies governing energy improvements in affordable multifamily properties reflect tenants’ needs.

Manuals, Guidebooks, and Reports

NHLP’s 2023 statement of principles on how the Inflation Reduction Act and other energy initiatives should be implemented.
NHLP 2018 Survey of State Tenant Protection Policies for the Weatherization Assistance Program
California Housing Partnership Corporation and NHLP, An Affordable Housing Owner’s Guide to Utility Allowances (Apr. 2016). A guide to assist owners and advocates of affordable housing in understanding the rules governing affordable housing utility allowances, and to provide tips for assessing whether utility allowance adjustments can be used as a resource to support energy improvements.
Energy Efficiency for All, Program Design Guide: Energy Efficiency Programs in Multifamily Affordable housing (2015). This guide explains specific best practices to efficiency program professionals and provides 12 strategies for utilities to help owners invest to improve multifamily affordable housing.
National Housing Trust, Partnering for Success: An Action Guide for Advancing Utility Energy Efficiency Funding for Multifamily Rental Housing (Mar. 2013).
National Consumer Law Center, Up the Chimney: How HUD’s Inaction Costs Taxpayers Millions and Drives Up Utility Fills for Low Income Families (Aug. 2010).

Toolkits and Resources

To help states create programs that provide the most meaningful assistance to low-income households, the National Consumer Law Center (NCLC) and the National Housing Law Project (NHLP) have created a special Resource for Advocates, IRA Home Energy Rebates State Program Design Recommendations. The Resource is intended to help advocates promote state plans that prioritize low-income homeowners and tenants and work intentionally with existing state and federal programs to reduce consumers’ costs and increase consumer protections. This IRA Home Energy Rebates Resource for Advocates outlines issue areas that advocates for low-income consumers and tenants should prioritize when providing stakeholder input into the state rebate plans. We provide citations to the IRA law creating the rebate programs where applicable, as well as to the DOE guidance. Some parts of this resource cover aspects of the state plan that are mandatory, but will need attention to detail in the implementation. Other portions of this resource focus on areas where the state has the flexibility to go beyond the IRA guidance and direct more funds to low-income consumers or be more protective of consumers.
DOE’s Consumer Protection Best Practices for the IRA (2024). The recommendations in this memo were mostly sourced from NHLP and NCLC. NHLP and NCLC will continue to work with the
Department of Energy to further develop and refine essential consumer protections.
Advocating for Higher Utility Allowances in Federally Subsidized Housing: A Practical Guide (2007). This guide, written for tenant advocates by NHLP and the Legal Aid Society of Hawaii, helps advocates identify, develop and litigate basic cases where allowances have not been updated to account for recent significant rate increases. The Guide’s appendices include spreadsheets to simplify required calculations, as well as sample information and demand requests, and pleadings. Appendices are no longer linked on the guidebook. Please reach out to nhlp@nhlp.org if you would like access.
Sample Records Act Request. A first step in determining whether utility allowances are adequate.

Fact Sheets and Brochures

Protect Subsidized Tenants from Rising Utility Costs (2022) Read how advocates can help subsidized tenants facing rising utility costs. This bulletin includes a chart showing the utility allowance adjustment rules for various programs and links to other resources.
Tenant Pamphlet on Utility Allowances (2013). For reproduction and distribution.
Empire Justice Center, The Section 8 Voucher Utility Allowance Dilemma (2010). This handout explains why, because of the unique structure of the Section 8 Voucher program, an increase in the utility allowance to offset tenant-paid utility costs when rates go up may not provide immediate financial benefit to all tenants, unless local voucher payment standards are also raised.

Articles

NHLP, Bulletin Article on Basic Advocacy Steps to Ensure Properly Adjusted Utility Allowances (2005). Basic advocacy steps needed to ensure that federally assisted residents receive proper adjustments for higher utility costs.
NHLP, Bulletin Article re: Galindo v. HACoLA. Describing $3.3 million settlement in 2015 to compensate over 4,000 Los Angeles public housing tenants the tenants for garbage pick up fees that were supossed to have been paid for by housing.
NHLP, Bulletin Article re McDowell v. Phila Hous. Auth. Describing 2006 U.S. Court of Appeals decision to enforce an earlier consent decree obtained by the tenants in a lawsuit seeking to enforce the PHA’s duty to follow federal regulations on allowance adjustments.
NHLP Bulletin Article re Johnson v. Hous. Auth. of Jefferson Parish. Describing the 2006 decision by the United States Court of Appeals for the Fifth Circuit finding the Section 8 voucher tenants could enforce their federal rights to properly adjusted utility allowances in federal court through a claim under 42 U.S.C. Section 1983.

HUD Notices and Guidance

Trainings and Webinars

Recent Cases

McCullumn v. Vancouver Housing Authority (2015). Settlement of $488,824 and prospective relief against PHA for failing to adjust public housing utility allowances to keep pace with utility rates.
Lewis v. Charlottesville Redevelopment & Housing Authority (2014). Monetary settlement and prospective relief against PHA for failing to properly calculate utility allowances.
California Public Utility Commission, Energy-Efficiency Improvements for Affordable Rental Housing (2014). Adopting key recommendations to facilitate energy improvements including: (1) streamlining of property and tenant income-eligibility and expedited enrollment, (2) excluding housing subsidies as income, (3) requiring identification of cost-effective measures in multifamily buildings (including central systems, and (4) other steps to facilitate owners’ use of low-income energy assistance programs.
Nonprofit Solar Stakeholders Coalition, position filings on implementation on California’s AB 693 Multifamily Affordable Solar Roofs program (Aug. 2016, proposed decision pending). NHLP and partners seek to ensure that solar installations supported by state’s Greenhouse Gas Reduction Fund provide actual net financial benefits to low-income tenants.