Air Force changes utility allowance for privatized housing residents

WASHINGTON (AFNS) -- The Air Force revised its utility allowance policy May 18 to ensure quality on-base housing for military families and continue to cover utility costs for the average energy consumer.

For new tenants, the revised policy for the majority of residents will now be calculated using monthly meter readings instead of a five-year average with a 10-percent buffer the previous policy used. Current occupants will remain grandfathered in the old system for one year.

Under the former policy, military privatized housing projects spent hundreds of thousands of dollars annually on rebates that went to residents whose actual energy consumption rates were above average, said Jennifer Miller, the deputy assistant secretary of the Air Force for installations.

This meant, Air Force-wide, privatized housing income went toward above-average rebates each year diverting funds from key program features, like maintenance support, housing modernization and community amenities.

Under the new policy, the utility allowance will still be determined by the average consumption rates of homes assembled in “like-type” groups at every installation, and will still be carved out of basic allowance for housing (BAH). The new policy still supports the rebate system. However, the rebates will only go to those users who fall below the average user rate and a bill will be generated for users who exceed the average user rate.

The Air Force estimates 75 percent of residents will be within $8 of the allowance.

“The new policy empowers residents in privatized housing to manage their energy consumption, much like their off-base counterparts, and rewards those who are more energy conscious,” Miller said. “The intent has always been to promote energy conservation by rewarding residents with less-than-average energy consumption through rebates. The new policy allows the Air Force to better meet that intent.”

Live billing is when a resident has an identified utility allowance and pays for their utilities to either the project owner or directly to a third-party utility company, depending on the project. Mock billing is when the resident has a proposed utility allowance and has a set period of time to acclimate to the new process of paying directly for the utilities, but does not yet actually pay for their utilities until live billing starts.

Implementation of the new policy will occur in stages with bases already in live-billing status starting first. Bases not yet in live billing will first enter into a mock-billing cycle, allowing residents the opportunity to assess their energy consumption, understand the billing system, and alter routines if they choose.

The housing privatization program uses private sector financing and expertise to provide necessary housing faster and more efficiently than traditional military construction processes. With more than $8 billion invested by both the private sector and government contributions, project owners rely solely on BAH income to support all construction, renovation, and maintenance and operation costs for the duration of each 50-year development agreement.

“Everything we do has a ripple effect,” said Robert Moriarty, the director of Air Force Civil Engineer Center’s Installations Directorate. “The old policy rewarded higher-than-average utility use and that wasn’t sustainable because it diverted funds from long-term maintenance and repair or replacement of the homes.”

The multi-decade housing deals must remain financially stable for the Air Force to continue providing quality housing for present and future generations of Airmen, Moriarty said.

For more information on the Air Force’s Housing Privatization Program, click here.