A Utility Allowance adjustment is required annually in conjunction with the property’s contract renewal or rent adjustment. HUD notice 2015-04 outlines the methodology with which an owner must submit the analysis.

In accordance with the notice, all properties that have a contract anniversary date of December 20, 2015 or later must submit a baseline Utility Analysis. Properties with a contract expiration date prior to December 20, 2015 may choose to implement the new methodology, but are not yet required.

Owners must submit a baseline for each bedroom size once every three years. For two years after the baseline was completed, utility allowances for each bedroom size and each utility at property can be adjusted by a state-specific increase factor, called a Utility Adjustment Factor (UAF).

The baseline submission must include appropriate samples for each unit type based on the number of contract units.

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. This must be done for each bedroom size at the property. 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) for each bedroom size. If the buildings are not identical, the sampling must be done for each bedroom size for each building.

Owners may submit more samples than required, but must not exclude units with the highest and lowest utility average. A unit should be excluded from the sample if it:

• Is receiving an increased U/A as a reasonable accommodation
• Has been vacant for 2 or more months. Units included in the sample should have at least 10 months of occupancy
• Is receiving a flat utility rate as part of a low-income rate assistance utility program

After application of the UAF in years two and three after the baseline has been determined, the owner compares the adjusted Utility analysis to their paid utilities over the previous 12 months. If, in the Owner’s determination, the results indicate a significant disparity between the two numbers, the owner should complete a baseline analysis to determine which number is accurate.

Owners are required to submit request for U/A increase when changes in utility rates result in cumulative increase of 10 % or more from most recently approved U/A.

They must submit either:

• Utility bills from month prior to utility rate change and first month after utility rate change; or
• Verification of increase from utility provider

Note that a 10% or greater increase in any one utility component may not result in a corresponding 10% or greater increase in the utility allowance.

Whenever an adjustment to the utility allowance results in a decrease, the owner must provide notice to tenants in accordance with Part 245. In the first year of implementation of HUD Notice 2015-04, when a utility allowance results in a decrease of 15% and $10 or more, the decrease may be implemented in phases.

Further guidance can be found at the following:
 HUD Notice 2015-04
 Sample Release of Tenant Utility Information
 Sample Utility Analysis Submission Workbook