2.5. ERMUSR 01-09-2018 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
ERMU Commission Jennie Nelson—Customer Service Manager
MEETING DATE: AGENDA ITEM NUMBER:
January 9, 2018 2.5
SUBJECT:
Customer Deposit Policy
ACTION REQUESTED:
Approve the revised Customer Deposit Policy
BACKGROUND:
The goal of the Customer Deposit Policy is to have measures in place that are consistent with
industry standards and minimize the financial risk to the Utility and all customers.
DISCUSSION:
Staff has been reviewing the current policy and would like to strengthen the verbiage
surrounding new accounts. Any new account that is established whether it is from a move,
bankruptcy, additional account, etc. is subject to the customer deposit policy and the policy
should reflect that. The changes that are proposed are minor and are only being made to remove
any gray area.
FINANCIAL IMPACT:
N/A
ATTACHMENTS:
• Revised ERMU Policy—A.6—Customer Deposit Policy
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Elk River
Municipal Utilities
A.6—Customer Deposit Policy
1.0 Policy
In order to protect all customers from those customers who default on their accounts,
customer accounts may be subject to this deposit with Elk River Municipal Utilities
(ERMU).
Deposit Required: All residential, commercial and industrial customers of ERMU will
be required to submit a deposit in the acceptable form set forth below subject to the
exceptions set forth below. In addition, existing customers who have been disconnected
by ERMU for non-payment of amounts due shall be required to submit a deposit in
addition to all amounts owed before service will be reconnected. Existing customers
whothat are moving and establishing a new account or adding an additional account are
also subject to the deposit policy. Failure to submit the required deposit at the time of
application for commercial accounts, or when due for residential accounts, shall be cause
for ERMU to immediately terminate service.
Amount of Deposit:
Residential Customers:
The amount required to be deposited for residential services shall be:
$100 for apartments
$100 for water and sewer service
$150 for electric service
$250 for all services
Commercial Customers:
The amount required to be deposited for commercial and industrial services shall
generally be equal to two times ERMU's estimate of the customer's highest monthly
utility bill. For commercial and industrial customers on the non-demand rate, the
minimum deposit will be $250. For customers on the demand electric rate, the minimum
deposit will be $1,000. ERMU may increase or decrease the security deposit based on
assessment of risk.
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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: At the time the deposit is made ERMU will furnish the customer
with a written receipt specifying the conditions, if any, the deposit will be diminished
upon return.
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 is above 90 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 will complete an application for service
that identifies the individual or business entity that will be entering into a service
agreement and will pay an application fee per the fee schedule. All commercial and
industrial customers shall submit the required deposit and enter into a service agreement
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with ERMU prior to the time service is desired. The service agreement shall be an
agreement on the part of the 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, reduce or
increase 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 reduce
or increase the deposit required based on its analysis.
Adopted 3/9/2010
Revised 2/14/2012
Revised 6/16/2015
Revised 2/9/2016
Revised 1/9/2018
GP:2740880 v4
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