ERMUSR FINIANCIALS 04-17-2008 - Laserfiche WebLink

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Management's Discussion and Analysis -Continued April 7, 2008 Water and Electric Rates -Continued Water -The Utilities' latest increase in residential and commercial rates was effective January 2008. This year a third tier was added to the rate structure. The monthly base charge for residential is $6.50 per month. In addition to the base charge, the Utilities currently charges its residential customers $1.40 per 1,000 gallons up to 9,000 gallons, $3.50 between 9,000 gallons and 15,000 gallons, and $4.00 for usage above 15,000 gallons. Commercial customer's base charges are based upon meter size, from $9.00 to $95.00 and an irrigation meter is $17.00. There is also a charge per thousand gallons, the same as the residential rate, except the change from the lower rate to the higher rate is calculated based on previous consumption. Certain other rates may be offered for conservation incentive purposes. The Utilities' offer a Senior Citizen rate as well. The Utilities requires payment of all utility bills to be paid by the due date stated on the monthly bill. A ten percent penalty is assessed for payments not received by the due date. The Utility may discontinue service of a customer not complying with the disconnect policy of the Utility after receiving a written disconnect notice. Customers that have their service discontinued will be charged a minimum of $50.00 to have their service reconnected. Commercial customers that have their service discontinued will be charged a minimum of $100.00 to have their service reconnected. The Utilities abides by the Cold Weather Rules. Deposit Policy In 2007 the Utilities started collecting social security numbers from new accounts and also implemented a new deposit policy as a proactive measure to try and reduce uncollectable accounts. A number of years ago deposits were collected from all new accounts but it became very difficult to manage and so was discontinued. In implementing the new policy it was decided to collect deposits from new accounts that did not supply a social security number or were identified as a credit risk. To determine potential credit risk an assessment tool called "Online Utility Exchange" was implemented. This tool was recommended by the APPA (American Public Power Association.) The amount of the deposit required will depend on the risk identified with the customer. For residential customers, if there is a 68 percent or higher probability of non default and no negative history (no disconnection for non-payment or late payments two or more times within 12 months) there is no deposit required. If there is a lower than 68 percent probability of non default, a deposit of 2 times the estimated average monthly bill will be required before utility service will be extended. For commercial and industrial customers, a service agreement would need to be signed that identifies the guarantor of their business and the guarantor's social security number. A deposit of 2 times the estimated monthly bill will be required. The deposit shall be in the form of a cash deposit, personal. payment guarantee, or an irrevocable letter of credit. The irrevocable letter of credit will be renewed as required and failure to do so will result in a charge equal to the amount of the letter of credit applied to the monthly utility bill. With good credit history for a period of three years, the deposit will be credited to the customer's utility account or the personal guarantee/letter of credit returned to the customer. The appropriate interest will be applied to the account per state statutes. -III-