This post was co-written by Alisssa Burger and Megan Houston. It has been updated since its original posting to include additional information from HUD.
Yesterday, Opehlia Basgal, a Regional Administrator with the U.S. Department of Housing and Urban Development (HUD) and a nationally recognized expert on housing and community development issues, announced the agency’s full support to improve access to utility data for building owners, with a particular focus on multifamily properties.
Administrator Basgal spoke as part of a panel for the National Association of Regulatory Utility Commissioners (NARUC) Annual Meeting in San Francisco, alongside the Institute for Market Transformation (IMT), the Regulatory Assistance Project (RAP), and Pepco. For those unfamiliar with NARUC, they represent the State Public Service Commissioners across the U.S. who regulate necessary utility services, including energy and water.
The panel, “Empowering Consumers Through Customer Data Aggregation,” explored the benefits of energy benchmarking and the increasing number of utilities providing automated, aggregated whole-building data for building owners of commercial and multifamily properties.
In follow up to Administrator Basgal’s announcement HUD has further elaborated on its stance via a blog post and an open letter to utility companies from HUD Secretary Julian Castro.
The HUD announcement is notable because the Department plays such a large role in managing and preserving affordable housing across the country, which means it has a strong need for accurate utility consumption data. HUD’s public housing and assisted multifamily programs support nearly 5 million units of housing, including 1.1 million public housing units, 1.4 million units of privately-owned assisted housing, and 2.2 million rental units supported with tenant-based Section 8 vouchers.1
Currently, HUD indirectly spends approximately $6.4 billion annually in utility costs through public housing grants or payments to HUD-assisted property owners and renters, accounting for 13 percent of HUD’s annual budget.2 Utility consumption estimates and affordable rental rates are key factors that the Department uses to calculate the amount a person should pay in gross rent, which includes base rent plus essential utilities such as gas and electricity, and how much HUD should subsidize.
For example, with master-metered properties, the owner pays the utility bill and the tenant pays a flat rate based on income, regardless of the potential market rent or the actual utility consumption; HUD pays the owner a subsidy to cover the remaining costs. In contrast, for individually metered, tenant-paid utilities, HUD uses a utility allowance to estimate how much the tenant will have to pay and reduces the base rent accordingly. This utility adjustment theoretically ensures the tenant can afford monthly rent plus utility payments. In 2011, a total of 3.3 million households received utility allowances from HUD, totaling $4.4 billion and representing 72 percent of all HUD-subsidized units.3
If properties subsidized by HUD have better access to whole-building utility data, building owners, managers, and public housing authorities will have more robust information for determining the utility allowance that tenants should pay. Building owners also benefit from whole-building data because utility allowances are adjusted each year and are supported by an owner’s analysis of the property’s utility costs and consumption data. Where utilities are not included in the rent, a building owner may not have any idea what the actual tenant consumption is for the building, and improved access to utility data can help address this knowledge gap.
Improving access to whole-building consumption data and standardizing the process both face some barriers. The barriers to whole-building data for multifamily properties, in comparison to commercial, are substantially more complex, due to the fragmented multifamily sector—these properties span from low-income publicly owned housing to private luxury buildings, and have a variety of metering configurations where a single property can have a mix of master-metered and separately-metered utilities. Other barriers include the owners’ difficulty in obtaining the energy data needed to benchmark a building if units are separately metered, navigating the cumbersome and uncertain procedures for collecting tenant data from a utility provider, and reasonably protecting a tenant’s privacy.
One specific challenge is that building owners with separately-metered units have trouble obtaining whole-building data, especially in jurisdictions without benchmarking and transparency laws and where utility providers are reluctant to share tenant data with the owner. In the broader multifamily sector for five or more units, which includes market-rate rentals, 78 percent of the tenants paid for electricity separate from rent, and 65 percent paid for gas separately.4
Another issue is that incentive and voluntary compliance programs often require whole-building data. With the recent launch of the EPA’s ENERGY STAR Score for multifamily properties, multifamily property owners and managers can now compare their building’s energy consumption with others via a common metric that is designed with their building type in mind. Moreover, the best energy performers (those who score better than 75 percent of similar buildings across the country) can earn ENERGY STAR certification and showcase their accomplishments.
However, owners who are unable to get whole-building data will be unable to generate a true 1 to 100 score and thus be unable to earn ENERGY STAR certification, something we discussed in a previous blog post. Notably, of the first 17 multifamily buildings to get ENERGY STAR certification, 16 are in jurisdictions where whole-building data is more easily accessible.
To improve the energy performance in multifamily housing, decision makers need to better understand how the sector currently performs, which whole-building energy data can help provide. And in order to overcome the barriers to whole-building data access, it is crucial that utilities, utility regulators, property owners, and key stakeholders, such as HUD, work together to facilitate and streamline better processes for accessing this vital energy performance information. IMT applauds HUD and NARUC on their support of this vital issue.
1. Source: U.S. HUD Progress Report and Energy Action Plan Report to Congress, Affordable Green: Renewing the Federal Commitment to Energy-Efficient, Healthy Housing (Dec. 2012).
2. Source: U.S. HUD Progress Report and Energy Action Plan Report to Congress, Affordable Green: Renewing the Federal Commitment to Energy-Efficient, Healthy Housing (Dec. 2012).
3. Approximately 45 percent of public housing residents, 67 percent of assisted-housing residents, and 90 percent of Housing Choice Voucher recipients receive utility allowances. Source: U.S. HUD Progress Report and Energy Action Plan Report to Congress, Affordable Green: Renewing the Federal Commitment to Energy-Efficient, Healthy Housing (Dec. 2012).
4. Source: 2012 Rental Housing Finance Survey