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Al Nadeau made a motion to approve the Third Quarter Delinquent Amounts Listing. <br /> Daryl Thompson seconded the motion. Motion carried 3-0. <br /> 5.5 Review of Security Deposit Policy and Credit Card Procedures <br /> Before discussion began, Peter Beck reminded the Commission and staff that due to data <br /> privacy they should refrain from using a customer's name. Jennie Nelson shared that a <br /> recent commercial customer experience has led staff to look into the Security Deposit <br /> Policy and our credit card procedures. Jennie gave some background on our current <br /> security deposit procedure for commercial customers and how we estimate and bill for that <br /> deposit. Jennie elaborated on an experience with a commercial customer from Otsego, and <br /> explained the challenges we have in estimating a deposit for a new business and in <br /> collecting that deposit. In addition,we have no way of increasing deposits after a few <br /> months have billed and a history is established. Another struggle with commercial <br /> buildings is we don't have a lot of leverage to disconnect without shutting off other <br /> businesses in that strip mall if a customer gets behind in payments. There was further <br /> discussion. Peter Beck inquired if we have the option of installing something on the front <br /> end for large commercial users that would allow us to externally disconnect them. Staff <br /> responded and shared the challenges in being able to do something like that. Daryl <br /> Thompson wanted to know if we could require the commercial customers to pre-pay their <br /> deposit. Jennie shared that one of things we're looking into is requiring them to prepay <br /> their deposit or sign a personal guarantee to help limit our bad debt risk. Peter Beck added <br /> that the challenge is in balancing our risk with chasing commercial businesses away;the <br /> pre-paid deposit that would have been required for the commercial customer in question <br /> would have been approximately$16,000. There was further discussion on the option of <br /> requiring a personal guarantee or a letter of credit and also on the duration of time we keep <br /> deposits. <br /> John Dietz was concerned with the timeframe of when a new commercial business gets set <br /> up until we can disconnect them for non-payment,and the amount of bad debt that can <br /> occur during that time period.He recommended we establish some type of criteria for these <br /> new customers;possibly reading their meters weekly and requiring weekly payments <br /> versus monthly. There was further discussion. <br /> Jennie Nelson shared that we've also had some difficult experiences recently with credit <br /> card chargebacks due to several commercial fraud claims. This past month staff disputed a <br /> $10,500 chargeback and eventually the money was returned to the utilities' bank account, <br /> but this doesn't rid ERMU of the risk. Jennie explained the extensive process to dispute <br /> the chargebacks. There was further discussion on taking commercial credit card payments <br /> and how ERMU could help protect themselves from these chargebacks in the future. <br /> The Commission suggested that staff and the attorney come back with some options on <br /> how to strengthen the Security Deposit Policy to help limit our commercial bad debt. Peter <br /> Page 7 <br /> Special meeting of the Elk River Municipal Utilities Commission <br /> November 17,2015 <br />