UA guidance outlined in HUD Notice 2015-04 instructs owner/agents to establish a baseline for each bedroom size once every three years. For two years after the baseline submission, utility allowances for each bedroom size and each utility type at the property will be adjusted by a state-specific increase factor called a Utility Adjustment Factor (UAF). These factors will be published annually by HUD.

Baseline Submission Requirements

1. Request utility data from either the utility company or the tenant household for at least the number of units determined by the sample size methodology detailed below.

   1. This must be done for each unit type at the property;

   2. If the property consists of multiple identical buildings (or buildings that are substantially similar, then the sampling may be performed at the property level, encompassing all buildings on a site. If buildings are not identical, the sampling must be done for each bedroom size);

   3. If the analysis is performed by a third party or the utility provider, the sample size data/bills must be submitted;

   4. The data collected must be for the same time frame;

   5. The data used must not be more than eighteen (18) months from the contract anniversary date;

   6. Samples submitted must be from units receiving Section 8 assistance;

   7. A unit should be excluded from the sample if it:

      1. Is receiving an increased UA as a reasonable accommodation;

      2. Has been vacant for 2 or more months. Units included in the sample should have at least 10 months of occupancy; or

      3. Is receiving a flat utility rate as part of a low-income rate assistance utility program.

NOTE: RHS/USDA Properties must comply with the requirements outlined in HUD Notice 2015-04.

2. Determine the average utility cost for each bedroom size without removing any units from the sample size beyond those excluded as indicated in (G.) above. Do not remove the highest and/or lowest utility cost household when determining the average. The monthly cost of consumption is the NET COST after the application of discounts (e.g. Solar Discount, surcharges, transmission fees, etc..) HUD has provided instruction that the California Climate credit should not be considered as a discount.  Do not reduce the amount of the Utility Bill by the amount of this credit.  Do not include late fees in the monthly cost of consumption.

   1. A sample format for utility allowance submissions, which includes built-in formulas to average utility costs for each unit size, can be found here.

   2. A sample tenant release form can be found here

3. Provide an explanation for any sample sizes that do not meet the required criteria established in Notice 2015-04.

4. Recommend the UA amount to the contract administrator for approval.

5. Follow the requirements in 24 CFR Part 245.405(a) and 245.410 to notify tenants of a utility allowance decrease.

For the two years after a baseline utility analysis is completed, the UA amounts for each bedroom size and each utility type can be adjusted by the established Utility Allowance Factor (UAF) in lieu of a baseline utility allowance.

After completing the property’s utility analysis under the factor-based utility analysis method, O/As should compare the adjusted utility analysis to their paid utilities over the previous twelve months. If the results indicate a significant disparity between the two, the O/A should complete a baseline analysis to help ensure the allowance(s) provided are accurate.

When the factor-based method is used to determine UAs, the O/A should submit their recommendation for the UA amount to the contract administrator for approval.

Refer to HUD Notice 2015-04 for more information about:

• Utility Allowance Changes Outside of the Contract Rent Adjustment Schedule

• Allowances for New Construction or Substantial Rehabilitation

• Administrative Procedures

• Requirements for Tenant Households

• Penalties for Tenant Noncompliance

• Voluntary Use of EPAs Energy Star Portfolio Manager

• Information Collection