4.3 ERMUSR 12-13-2022�i
Elk River --�-
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Sara Youngs —Customer Service Manager
MEETING DATE:
AGENDA ITEM NUMBER:
December 13, 2022
4.3
SUBJECT:
Customer Deposits Policy
ACTION REQUESTED:
Approve the revised G.4j3 Customer Deposits Policy
BACKGROUND/DISCUSSION:
The Customer Deposits policy was created to minimize the exposure of bad debt expense for
ERMU and its ratepayers, which helps keep rates from unfairly increasing for those customers
who do pay their bills, customer accounts may be subject to a deposit.
Within the policy it states that, "...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."
The proposed revision to the policy will also require that a previous customer who had their
account sent to collections by ERMU submit a deposit before services will be connected. This is
the current practice, and we are asking for this update to ensure full transparency with our
customers.
ATTACHMENTS:
• Revised Policy — G.4j3 — Customer Deposits
Page 1 of 1
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Elk River
Municipal Utilities
COMMISSION POLICY
Section:
Governance
Category:
Delegation to Management Policies
Policy Reference:
Policy Title:
G.4j3
Customer Deposits
1.0 POLICY
To minimize the exposure of bad debt expense for ERMU and its rate payers, which helps keep
rates from unfairly increasing for those customers who do pay their bills, customer accounts may
be subject to a deposit.
2.0 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 or previous customers who have had
their account sent to collections 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 who are 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.
3.0 AMOUNT OF DEPOSIT
A. Residential Customers
The amount 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.
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ERMU Commission Policy — G.4j3 Customer Deposits
B. 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 customers on the non -demand rate, the minimum deposit will be $250. For
commercial 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.
4.0 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.
5.0 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.
6.0 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.
7.0 INTEREST ON DEPOSITS
Interest shall be paid on all deposits in excess of $20 at the rate established by Minnesota
Statutes, 325E.02 (b). 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.
8.0 SUBMISSION OF AND EXCEPTIONS TO DEPOSIT REQUIREMENT
A. Residential Customers
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ERMU Commission Policy — G.4j3 Customer Deposits
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 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.
POLICY HISTORY:
Adopted March 9, 2010
Revised February 14, 2012
Revised June 16, 2015
Revised February 9, 2016
Revised January 9, 2018
Revised August 10, 2021
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