5.3. ERMUSR 02-14-2012Elk River~~
Municipal Utilities
13069 Orono Parkway • P.O. Box 430
Elk River, MN 55330-0430
UTILITIES COMMISSION MEETING
Phone: 763.441.2020
Fax: 763.441.8099
www.elkriverutilities.com
TO: FROM:
Elk River Municipal Utilities Commission Troy Adams, P.E. - Director of Operations
John Dietz, Chair
Daryl Thompson, Trustee
Al Nadeau, Trustee
MEETING DATE: AGENDA ITEM NUMBER:
Februa 14, 2012 5.3
SUBJECT:
Review De osit Polic Revision
BACKGROUND:
At last month's commission meeting with the review of fourth quarter write-offs, there was some
discussion on the deposit amounts for apartments. This was taken back to staff and a proposed
increase was discussed.
DISCUSSION:
When the policy was first written, it was determined two times the average month's usage was
an appropriate deposit amount, and this was stated in the policy. Rather than calculate that
amount for every individual signing up for service, averages were determined that could be
applied across the board to all residential customer classes: $80 apartments, $100 water and
sewer services, $150 all-electric heat services, and $250 for all three services (electric, water, and
sewer.) These amounts are now listed out in the revised policy for better communication with
our customers.
Given the history that we now have for apartments since the adoption of the policy, an increase
seems appropriate to better cover our risk. A $20 increase to $100 for apartments (that are not
all-electric heat) is more reflective of a two month average apartment usage and would help to
mitigate our risk for nonpayment.
ACTION REQUESTED:
Staff requests approval of the attached revised Deposit Policy.
PRNEREO BI
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Elk River Municipal Utilities
Customer Deposit Policy
In order to protect its ratepayers from customers who default on their accounts, the Elk
River Municipal Utilities (ERMU) has adopted this Customer Deposit Policy.
Deposit Required: All residential, commercial and industrial customers of ERMU will
be required to submit a deposit in the form set forth below subject to the exceptions set
forth below. In addition, customers who have been disconnected by ERMU for non-
payment of amounts due shall be required to submit a deposit before service will be
reconnected. Failure to submit the required deposit when due shall be cause for ERMU
to immediately terminate service.
Amount of Deposit: The amount required to be deposited for residential services shall
be:
$100 for apartments
$100 for water and sewer service
$150 all electric service
$250 for all services
The amount required to be deposited for commercial services shall be equal to two times
ERMU's estimate of the customer's highest monthly utility bill.
Form of Deposit: The deposit shall be in the form of a cash deposit or an irrevocable
letter of credit. If in the form of an irrevocable letter of credit, the letter of credit shall be
renewed at least 30 days prior to its expiration. Failure to renew a letter of credit will
result in the letter of credit being drawn on and the cash recovered from the letter of
credit being held by ERMU as a cash deposit. If ERMU is not able to draw on the letter
of credit, the customer shall submit a cash deposit prior to expiration of the letter of
credit. Failure to submit the required deposit shall be cause for immediate termination of
service by ERMU.
Receipt for Deposit: ERMU shall furnish the customer with a written receipt at the time
a deposit is made. The receipt shall specify the conditions pursuant to which the amount
of the deposit will be diminished upon return of the deposit to the customer.
Return of Deposit: Any deposit received by ERMU shall be returned to the customer
within 45 days of termination of service, provided that the customer has paid in full all
amounts due on the account. If the customer has not paid in full within 30 days of the
termination of service, the deposit will be applied to any outstanding amounts owed by
the customer to ERMU. If the deposit exceeds the amount due, the balance will be
returned to the customer. If the deposit is not sufficient to cover the amount due, the
customer shall remain liable to ERMU for the balance and shall pay the balance due
within 15 days of notice from ERMU. ERMU reserves the right to use reasonable legal
means to collect amounts due.
Interest on Deposits: Interest shall be paid on all deposits in excess of $20 at the rate
established by Minnesota Statutes. ERMU may, at its option, pay the interest at intervals
it chooses, but at least annually, by direct payment or as a credit on the customer's
account.
Submission of and Exceptions to Deposit Requirement:
A. Residential Customers.
Residential customers may submit the required deposit at the time service is
requested, or have the deposit billed with the customer's first bill for services provided.
Failure to pay a deposit when billed shall be cause for ERMU to immediately terminate
service. ERMU may, in its discretion, waive the required deposit for residential
customers if the customer consents to ERMU's collection of credit history data on the
customer, the customer's credit score falls above 68 percent probability of non default,
and the customer has no history of disconnection for non payment to ERMU, and no
history of late payments to ERMU two times in 12 months.
B. Commercial and Industrial Customers.
All commercial and industrial customers shall submit the required deposit and
enter into a service agreement with ERMU at the time service is requested. The
customer's application for service shall identify the individual or business entity entering
into the service agreement. The service agreement shall be an agreement on the part of
this individual or business entity to make payment of all amounts billed by ERMU for
electric, water and sewer services, and to be liable for any default or non-payment of
amounts billed by ERMU. ERMU may, in its discretion, waive or reduce the required
deposit for commercial and industrial customers if a service agreement is executed by the
customer, the customer has provided ERMU with sufficient information to allow ERMU
to analyze the credit risk of the individual or business entity executing the service
agreement, and ERMU, in its sole discretion, determines to waive or reduce the deposit
required based on its analysis of credit risk. Waivers and/or reductions in the deposit
requirement shall be reserved for raze exceptions when the risk of default is minimal.
Adopted 3/9/2010
Revised
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