A study published in Housing Policy Debate, “Household Energy Costs and the Housing Choice Voucher Program: Do Utility Allowances Pay the Bills?,” examined the gap between utility allowances in the Housing Choice Voucher (HCV) program and actual utility bills for electricity. Utility bills exceeded utility allowances by more than $25 for nearly half of HCV households in four Florida cities.
Low-income families who receive HCVs are expected to contribute 30% of their income toward rent and utility costs. For tenants who pay energy bills directly to utility companies, public housing authorities (PHAs) provide a utility allowance based on the presumed amount of the tenant’s bill. The estimated electric utility allowance (EEUA) may be above or below what the tenant actually spends on utilities.
Landlords are typically not incentivized to invest in energy-efficient home improvements because they can pass utility costs on to tenants in rent-pricing and tenants often pay for utilities directly to utility companies. Low-income renter households are more likely to live in energy-inefficient units and face higher energy cost burdens than higher-income households.
The study included HCV tenants in Jacksonville, Gainesville, Tallahassee, and Orlando from 2010 to 2013. All HCV households in the study paid their electricity bills directly to their utility companies. Matching consumer utility bill records with voucher holder records, the researchers found that 47% of HCV households paid utility bills that exceeded their EEUA by over $25 per month. Thirty-two percent of HCV households had utility bills within $25 (higher or lower) of the EEUA. Twenty-one percent of HCV households had allowances that exceeded the utility bill cost by more than $25. Gaps between utility allowances and bills varied significantly depending on where tenants resided. This variation was partly driven by regional differences in utilities but even more so by differences in the utility allowances provided by housing authorities. Jacksonville had the highest share of tenants paying energy bills exceeding their EEUA. Tallahassee had the lowest.
Household and property characteristics also contribute to differences in energy costs. Households with more members and households in units with more bedrooms were more likely to pay utility bills greater than the EEUA. Sixty percent of single-family units had greater utility bills than allowances, compared to approximately one-third of multifamily units. Families with children were more likely to experience a major gap between their EEUA and utility bill, with 54% paying more for energy than their allowance. Just over half of deeply low-income households with incomes at 0-15% of the area median income paid utility bills exceeding their utility allowance.
High energy costs can lead to negative financial consequences, such as greater debt, utility service shut-offs, and detrimental health outcomes, including exacerbated illnesses due to poor temperature and humidity control. Achieving parity between utility allowances and real energy costs would alleviate the economic and physical burdens experienced by low-income renters. In addition to improving accuracy in utility allowances, the authors recommend a comprehensive strategy to improve the energy efficiency of HCV holders’ homes.
“Household Energy Costs and the Housing Choice Voucher Program: Do Utility Allowances Pay the Bills?” is available at: https://bit.ly/2Vusk2c