Laserfiche WebLink
4.2 Security Deposit Policy <br /> Based on recent commercial customer experiences and direction from the Utility Commission, <br /> staff has been reviewing the Security Deposit Policy. At this time,the focus of the policy <br /> review is for the commercial customer class only because of the magnitude of risk with the <br /> largest customers.Tom Sagstetter shared that the goal of the policy revision is to minimize the <br /> risk to all ratepayers,yet still provide an environment that encourages businesses to locate <br /> within the ERMU service territory.The policy also has to be executable and administratively <br /> manageable for staff. <br /> Staff surveyed several other utilities in the area and found that our current policy is very similar <br /> to others,and based on the information gathered came up with a potential new procedure for <br /> commercial account move-ins. The new procedure covers: account application,calculating the <br /> security deposit,and a process for determining the credit risk for commercial customers. Tom <br /> Sagstetter presented and went over details on the following points: <br /> Account Application—The new commercial account application would require that a local <br /> customer authorized representative come in to the office in person to sign off on the application. <br /> The application would also require current property owner or property management contact <br /> information to assist with potential disconnects. There was further discussion on being able to <br /> access and disconnect multi-tenant buildings. <br /> Calculating the Security Deposits—The new process would include running a commercial credit <br /> check on the applicant,looking at the past 12 months of utility bills from their electric provider, <br /> and requiring the customer to come into the office to sign the service agreement and pay for the <br /> security deposit as well as the application fee prior to establishing the account in the business' <br /> name. Staff is also looking at a way to re-evaluate the security deposit once we have a history of <br /> their usage to determine if the deposit was set too high or too low. <br /> Determining the Credit Risk of Commercial Customers—Based on the credit score and a risk <br /> matrix that is being developed,commercial customers will have a security deposit that ranges <br /> from one to three times their highest monthly bill in the past 12 months,or the estimated <br /> monthly cost determined by ERMU staff. The new policy would also allow commercial <br /> customers the option to submit a letter of credit for the security deposit versus paying for it <br /> outright. ERMU would also have the option to,in their discretion,waive or reduce the required <br /> deposit for commercial or industrial customers based on credit risk.There was further discussion <br /> on determining risk and letters of credit. <br /> Economic Development Director Amanda Othoudt was present,and shared her concerns about <br /> the added burden on new commercial customers of having to pay a large security deposit. In <br /> addition to the option of providing a letter of credit from a financial institute,and the option of <br /> waving the deposit based on credit worthiness, she suggested accepting a letter of reference <br /> from their previous utility provider to assist in determining or waiving a deposit. There was <br /> further discussion. As staff continues to work on the changes to the commercial deposit policy <br /> Page 3 <br /> Regular meeting of the Elk River Municipal Utilities Commission <br /> December 8,2015 <br /> 29 <br />