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2. Calculating the Security Deposit <br /> a. Credit Report <br /> i. Corporate if registered as an LLC <br /> ii. Individual if sole proprietor <br /> b. Past Utility Bills(Minimum of 12 months with current electric provider) <br /> c. Estimating deposit based on connected load(New or expanding business) <br /> d. New Application Fee(Cover cost of credit report and administrative costs) <br /> e. Process for ERMU staff <br /> i. Receive completed application <br /> ii. Review completed application <br /> 1. Credit check <br /> 2. Determine security deposit based on utility bills or connected load <br /> calculations furnished by company representative. <br /> 3. Security deposit is subject to re-evaluation over time if the deposit is too <br /> low or too high depending on past 12 months of use on ERMU system. <br /> 4. Customer will be required to come to the office to sign the service <br /> agreement and pay the security deposit as well as the application fee <br /> prior to establishing the account in the business" name. <br /> 3. Determining the credit risk of commercial customers <br /> a. Credit score of less than or no established credit will require a deposit of 3 times <br /> their highest bill in the past 12 months or that monthly estimated cost based on the <br /> connected load submitted on the application. <br /> b. Based on the credit score and a risk matrix that is being developed,the customer will <br /> have a security deposit that ranges from one to three times their highest monthly bill in <br /> the past 12 months or the estimated monthly cost determined by ERMU staff. <br /> c. Commercial customers can also submit a letter of credit for the security deposit instead of <br /> cash. <br /> d. ERMU may,in its discretion,waive or reduce the required deposit for commercial or <br /> industrial customers based on credit risk. <br /> Even with recent events resulting in larger losses due to non-payment,it is important to remember that <br /> ERMU is currently doing a good job protecting our customer's interests.These are few and far between. <br /> The Average National Write-Off percentage is between.10%and .41%. ERMU's write off percentage is <br /> well below this average at.01%currently.Also,our current policy and procedures are very similar to <br /> other utilities.This said,there is an opportunity to strengthen both. This is not a problem you solve,but <br /> rather an issue you manage; this requires periodic review as our world changes. Staff is looking for the <br /> commission's approval to continue working in the direction identified above and determine final policy <br /> revision language. Staff will also create the new service application form and revise the commercial <br /> service agreement that will be brought back to the commission for an approval at a later date. <br /> After revision and commission approval of any changes to the commercial customer portion of the <br /> security deposit,staff will review the residential security deposit policy and process. Staff will also <br /> review risk associated with credit card payments for residential and commercial accounts. These will be <br /> brought back to the commission for discussion throughout this process over the coming months. <br /> ACTION REQUESTED: <br /> Provide staff with guidance on the measures outlined for further research and policy development. <br /> ATTACHMENTS: <br /> • ERMU Policy A.6—Customer Deposit Policy <br /> P�0W 0E0 0V <br /> Page 2 of 2 NATURE <br /> Reliable Public <br /> Power Provider P O W E R E D T O S ERV E <br /> 59 <br />