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Army’s privatized housing will absorb utility rate hikes

Troops living in privatized military housing will get some built-in relief if utility rates jump in their area — at least, if they are living on Army installations.

The Energy Information Administration, an arm of the Energy Department, projects that residential heating oil and natural gas prices will increase this winter by about 25 percent and 17 percent, respectively, compared with last winter.

But in Army privatized family housing, “the project takes the risk on price increases, not the soldier,” said Ivan Bolden, the Army’s chief of public-private initiatives.

Information was not available at press time about how rising costs will be handled in privatized Air Force housing. The Navy and Marine Corps have decided not to bill for utilities until all initial development of privatized family housing is completed — 2013 at the earliest.

Army project owners make monthly or immediate changes to residents’ baseline utilities costs when utility rates fluctuate, Bolden said.

Project owners set a utilities baseline for each unit based on historical data on the amount of energy used for that type of housing unit. Residents who use more energy than their baseline must pay the difference; those who use less get a rebate.

For example, if electricity is $1 per kilowatt hour and a resident’s monthly utilities baseline is 100 kilowatt hours, then the resident’s baseline cost is $100. If electricity goes to $2 per kilowatt hour, then the soldier’s baseline becomes $200 for the next month.

Rents for privatized housing are set at basic allowance for housing rates and usually are paid by allotment. The allowance is designed to cover rent, utilities and insurance.

The roughly two-thirds of military families living in civilian housing — not government-owned or privatized — pay for their own utilities. Although utilities are factored into BAH calculations, the allowance is normally adjusted only once a year on Jan. 1, so those families have no short-term buffer against sudden changes in utilities rates.

While anticipated increases in utility costs will be borne by the owners of Army privatization projects, “the assumption is that BAH rates will adjust based on the new utility rates, and the project will catch up in the future,” Bolden said.

Army residents are being billed for utilities at 12 posts, about 16 percent of the privatized housing that eventually will be billed. For those whose homes are not yet being billed, utilities are included in their rent payments. For those living in military-owned housing, utilities are included in the BAH that they forfeit by living in government housing.

The overall rate of utilities use in Army privatized housing has dropped by about 10 percent since billing began. About 30 percent of soldiers receive refunds, but about one-third are exceeding the energy baseline for their housing and must pay the difference each month. The rest are within their baseline, so they get neither a bill nor a rebate.

“If they can show me they set this fairly, and are not penalizing people for living in housing that is not yet renovated, and have an appeals process, this is probably a good thing to do,” said Joyce Raezer, executive director of the National Military Family Association.

“Military people should be monitoring their energy use anyway,” she said. “If they were living off base, they would be turning off lights when they leave the room. Why shouldn’t families living on the installation be doing the same thing?”