Under the provisions
of the U.S. Housing Act of 1937, as amended, HUD provides housing assistance to
approximately 1.3 million households living in public housing across the country.
This assistance is provided through approximately 3,100 Public Housing Agencies.
HUD has responsibility for the oversight of federally assisted public housing
and establishes regulations to guide these PHAs in how they implement the federal
To keep assisted housing affordable for lower-income
households, federal housing law directs that the resident's share of rent in federally
assisted public housing should equal 30 percent of the household's adjusted monthly
income. In interpreting the federal housing law, HUD has defined the Total
Resident Payment for "rent" to include both shelter and the costs
for reasonable amounts of utilities. The amount that a PHA determines is necessary
to cover the resident's reasonable utility costs is the utility allowance.
Such allowances are estimates of the expenses associated with different
types of utilities and their uses. The utilities for which allowances may be provided
include electricity, natural gas, propane, fuel oil, wood or coal, and water and
sewage service, as well as garbage collection. The functions, or end-uses,
covered by an allowance may include space heating, water heating, cooling, refrigeration,
lighting, or appliances. Allowances are not provided for telephone service.
allowances can be small or large, ranging from less than $10 to over $200 for
a resident household per month, depending on the PHA, the number of utilities
and uses covered, and the dwelling unit and/or household size.
a household receives an allowance for a given utility service generally depends
on the way the utilities are metered. Utilities can be metered in one of three
ways: master-metered, checkmetered, and individually metered. Allowances are provided
for checkmetered or individually metered utilities, but not for master-metered
Master-Metered Utilities. A master meter measures consumption
for the building as a whole, rather than for individual dwelling units or households.
Master meters are owned by the local utility company. Where utilities are master-metered,
the PHA pays the local utility company for utilities used. In such instances,
the utility costs are included in the basic rent levels established by the PHA,
and no separate allowance is provided. However, the PHA may establish a "surcharge,"
an extra fee paid by residents for utility consumption for major appliances not
seen as essential, such as a food freezer.
Some PHAs install separate sub-meters (called "checkmeters"), in addition
to the utility-owned master meter, to measure consumption by individual dwelling
units. These checkmeters are owned by the PHA. As with master-metered utilities,
the PHA pays utility company for utilities used. With checkmetered utilities,
however, the PHA provides each household a utility allowance in the form of a
maximum level of consumption that it may consume without a surcharge. A surcharge
is applied when a household exceeds this level.
Utilities. Where utilities are individually metered, each household has a
separate account with the utility company and pays the bill directly to that company.
For this reason, individually metered utilities also are called "resident-paid"
or "resident-purchased" utilities. The PHA provides a utility allowance
to the household through a reduction in the households monthly rent. Many
buildings have different metering systems for different utilities (sometimes referred
to as mixed metering). For example, electricity might be individually
metered, gas master-metered, and water checkmetered. An allowance also could be
provided to residents for some non-metered utilities, such as trash pickup and
sewer services, because the residents pay for these services directly.
meters generally are more common than checkmeters in public housing. However,
metering configurations vary widely by region. For example, individual metering
is more prevalent in the Northwest, whereas checkmetering is very common in the
Allowances Are Calculated for Categories of Units
consumption tends to vary according to certain characteristics of units,
such as building construction type and size. To account for such factors, PHAs
group dwelling units with similar characteristics into categories and calculate
distinct allowances for each category. Each category (group) of dwelling units
is called an allowance category.
Next section: Methodologies
to Establish Utility Allowances