Energy Effiicent Utility Allowances

In California our energy efficiency design standards combined with great incentives for affordable housing developers have resulted in a lot of really energy efficient buildings. We even have a LEED Platinum building that came on line 3 months ago that is amazing.

Included in these buildings are submetering of water and electricity with tenants paying their bills, which can be zero for the solar powered systems. The problem we are running into is that the Standard Utiility Allowances are not recognizing the energy efficiency measures that result in actual bills 50% less than the UA.

We believe that we need a model for buidlling specific UAs. Our state tax credit agency has approved a model for projects with solar power, but the HAs are reluctant to accept.

Has anyone found an innovative HA that has made the leap to this new era and is satisified with the outcome?

Replies to This Discussion

Permalink Reply by James R. Grow on October 30, 2009 at 1:09pm

Hi Tom:

We are very interested in this concept as well, but unfortunately, haven't yet heard of the concrete successes, as judged by both housing providers and tenants. I hope our colleagues can fill us in. Below is our current working view of EEUAs, on which I'd welcome comments by others.

Properly designed and implemented EEUAs in properties with tenant-paid utilities could significantly advance energy conservation objectives by creating a possible financing mechanism for improvements, while enlisting widespread tenant support. In properties with rental assistance, where the subsidy provider agrees, EEUAs offer the potential for sharing the savings from reduced energy costs between the subsidy provider and the housing provider that would otherwise be captured solely by the subsidy provider, creating a possible means for financing energy-related improvements by the PHA or owner. In LIHTC properties, because of the different structure of formula rents with allowances, EEUAs could promote shared savings between the owner and the tenant, permitting financing of the improvements, rather than having the owner capture all of the savings from reduced allowances. The novel feature of EEUAs also seeks to establish new (reduced) allowance levels that effectively share some of the economic benefits with tenants by reducing allowances (and therefore increasing tenant rents) less than the reduced consumption data might otherwise dictate.

However, we believe that energy retrofits and the EEUA tool can achieve more accuracy and equity if implementation ensures that both the baseline and post-retrofit utility allowances are in fact accurate, reflecting actual consumption at the property, rather than being based upon the abstract and sometimes illegal assumptions underlying some existing allowances in affordable housing programs. Both HUD’s Mark to Market Green Pilot and the ARRA-funded Green Retrofit Programs require collection of actual baseline consumption data -- this kind of approach obviously provides a useful starting point for establishing fair and reasonable allowances. With actual data in hand, there is little justification for basing allowances on abstract assumptions about consumption or savings in an affordable housing program.

Finally, since tenant behavior is a key part of an overall energy conservation strategy, especially in light of the programs’ housing affordability goals, responsible conservation policy should also include tenant education and informed participation in the retrofit planning and execution process, and pre- and post-retrofit allowance-setting and adjustment procedures. Additional education involving property managers, tenant leaders and community partners will also be necessary to ensure that tenants and managers maximize energy conservation practices. It does little good to install energy-saving appliances, systems and fixtures if tenants and managers do not know how to use them.

Jim