Notice on Rate Reduction Incentives Released

On September 3, HUD published Notice PIH-2019-24. The notice provides PHAs with guidance on the use and eligibility of the Rate Reduction Incentive (RRI). The RRI is a financial incentive for PHAs that take special steps and efforts beyond what is required by statute and/or regulation to reduce their utility rate. The Notice replaces Notice PIH-2014-18 (HA) and supplements information included within the current Energy Performing Contracting (EPC), Utility Partnership Program (UPP), and the Operating Fund Grant processing grant notices. The notice covers the RRI application process, activities that may be eligible for an RRI, actions that are not eligible to receive RRI, and RRI interaction with an EPC.

PHAs must submit a request to HUD for review and approval for an RRI. This must approval must occur before the PHA is eligible to include their RRI savings in their HUD Form 52722. The approval process includes PHA submittal, HUD review, HUD approval, and annual savings reporting.

The notice includes a non-exhaustive list of situations when HUD may approve an RRI. The list includes special rates negotiated by the PHA with the energy company, wellhead purchase of natural gas, power purchase agreements (PPA) using a third-party energy supplier, energy efficiency investments that lead to lower utility rates, investments to allow for fuel switching capability in order to participate in an interruptible utility rate, commodity purchases of regulated utilities in a deregulated market that results in a lower utility rate, active commodity trading, on-site renewable energy, and other.  The notice also discusses actions that are not-eligible for RRI.

RRIs executed at the same time EPCs are eligible to retain up to 100 percent of the savings (rather than 50 percent of the savings with the RRI alone) during the EPC repayment period when the EPC and RRI impact the same AMP-utility. According to the notice, for a PHA to be eligible to retain 100 percent of the RRI savings, the PHA must be eligible for both EPC incentives and RRI incentives (1) at the same AMP, (2) for the same utility, and (3) in the same funding period.

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