HUD will not pay to have the utilities turned on. (Elec, Water, & Gas) You can do inspections, but having the utilities turned on are your expense.
Now, if HUD is telling you, that you cannot have Water on ... this brings up another issue.
This will mean that HUD has found an issue with the plumbing where they will not allow the water to be on so no water damage is done to the property.
Each home has a Property Condition Report from HUD attached to the property which will tell you any issues found. Your agent should look this up for you on HUDs website. Hopefully you were made aware of any issues on this Property Condition Report ... HUD does it's best to let you know up front of any issues associated with the major components of a house. Of course, sometimes damage does happen after HUDs inspection, but they will work to hep resolve these issues as they surface.
Hope this helps out!
Get a hold of your agent ... they should be able to find this info out for you!
Take care and Good Luck!!
Home Key Realty