Under the provisions of the U.S. Housing Act of 1937, as amended, HUD provides housing assistance to approximately 1.3 million households living in public housing across the country. This assistance is provided through approximately 3,100 Public Housing Agencies. HUD has responsibility for the oversight of federally assisted public housing and establishes regulations to guide these PHAs in how they implement the federal housing assistance.

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To keep assisted housing affordable for lower-income households, federal housing law directs that the resident's share of rent in federally assisted public housing should equal 30 percent of the household's adjusted monthly income. In interpreting the federal housing law, HUD has defined the Total Resident Payment for "rent" to include both shelter and the costs for reasonable amounts of utilities. The amount that a PHA determines is necessary to cover the resident's reasonable utility costs is the utility allowance.

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Such allowances are estimates of the expenses associated with different types of utilities and their uses. The utilities for which allowances may be provided include electricity, natural gas, propane, fuel oil, wood or coal, and water and sewage service, as well as garbage collection. The functions, or end-uses, covered by an allowance may include space heating, water heating, cooling, refrigeration, lighting, or appliances. Allowances are not provided for telephone service.

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Utility allowances can be small or large, ranging from less than $10 to over $200 for a resident household per month, depending on the PHA, the number of utilities and uses covered, and the dwelling unit and/or household size.

Whether a household receives an allowance for a given utility service generally depends on the way the utilities are metered. Utilities can be metered in one of three ways: master-metered, checkmetered, and individually metered. Allowances are provided for checkmetered or individually metered utilities, but not for master-metered utilities