Rate Reduction Incentive Program Enhancements to Encourage Public Housing Agency Participation
Today, the U.S. Department of Housing and Urban Development (HUD) is announcing updated guidance on the use and eligibility of the Rate Reduction Incentive (RRI). The RRI serves as a climate-friendly incentive program available to Public Housing Agencies (PHA) that encourages them to reduce their utility rates beyond what is already required by statute and/or regulation.
The program directly supports HUD’s Climate Action Plan which sets forth goals to create climate resiliency, reduce greenhouse emissions, and pursue environmental justice in housing. The RRI helps HUD move towards those goals since energy efficiency solutions made possible through the program reduce a PHAs carbon footprint, promote long-term sustainability, and can improve the lives of residents. Not only do the program benefits allow for cost savings for PHAs, but they will also pave the way for the shared benefits of better property quality, additional support to families, and improved property maintenance.
“This updated guidance will help to create more sustainable communities, including by offering increased support for residents,” said HUD Secretary Marcia L. Fudge. “HUD will continue to advance our Climate Action Plan with steps like these – which provide cost savings, benefit hard-working Americans, and looks out for our planet for future generations.”
The updates and changes to the guidance provide clarification on the approval process, additional supplemental direction, and changes to policy. The overarching goal is to provide a more comprehensive understanding of the RRI and serve as a reference guide that offers clear and consistent information. Policy-wise, the changes make it possible for a PHA to retain either 50% or 100% of their savings, depending upon the type of contract entered, and in a multiyear contract the number of documents and the process of administering eligibility requirements is reduced.
Here are a few examples, including some real-world scenarios, of actions PHAs can take that are allowed under the program:
- PHAs can negotiate special rates with a utility company that are specific to the housing agency (this can be for a contract term of up to 5 years).
- PHAs can participate in the purchasing of power through a third-party supplier which can result in savings through invoice credits or a fixed utility rate.
- PHAs can work with utility providers who offer reduced rates for those who make efficiency upgrades to things like boilers, windows, or toilets.
- PHAs can take advantage of renewable energy sources, like on-site or community solar development. Here are a few examples:
- Developers in Rhode Island have developed a solar production facility by aggregating the power needs of nine (9) Housing authorities that are members of the Public Housing Association of Rhode Island (PHARI). The solar arrays will provide over 20 million kWh of electricity to authorities in Providence, North Providence, Newport, Cranston, Smithfield, Warwick, Warren, Bristol, and Lincoln. This renewable solar energy will offset estimated 29 million kWh per year that these housing authorities use annually.
- Albany Housing Authority is able to participate in a Community Solar Project that is producing 3.7M kWh of annual solar production. They will receive solar credits through this program from their utility provider. They also are able to benefit from the RRI program to retain a portion of the savings.
- Ithaca Housing Authority is able to participate in a Community Solar Project and receive a benefit through the RRI program to retain a portion of the savings.
HUD previously released additional guidance regarding the treatment of solar credits in August of 2022. As many states increase their offerings of solar programs, families who live in HUD subsidized properties may find themselves with the opportunity to take advantage of a renewable energy source and the cost-saving benefits that come with it. To learn more on this guidance, read the full memorandum here.
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