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i <br /> Elk River <br /> Municipal Utilities UTILITIES COMMISSION MEETING <br /> TO: FROM: <br /> Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager <br /> John Dietz—Chair <br /> Al Nadeau—Vice-Chair <br /> Daryl Thompson- Trustee <br /> MEETING DATE: AGENDA ITEM NUMBER: <br /> January 13, 2015 5.2 <br /> SUBJECT: <br /> Customer Deposit Policy Review <br /> BACKGROUND: <br /> In 2008 and 2009 the downturn in the economy resulted in significant increase in utility <br /> customer delinquencies, customer disconnections due to those delinquencies, and then ultimately <br /> bad debt being written off by those utilities. ERMU, along with many utilities,began addressing <br /> this issue through procedural and policy changes in an effort to minimize risk and limit <br /> subsidization of the bad debt by the customer base. <br /> In March 2010 the Utilities Commission adopted a Customer Deposit Policy. This policy <br /> established the deposit levels and guidelines for customer deposits. The policy specifies that the <br /> form of the deposit shall be a cash deposit or an irrevocable letter of credit. Deposit exceptions <br /> were made for customers that signed up for automatic bank pay. <br /> The deposits were collected on new accounts only; those already established as customers were <br /> not required to pay a deposit in most cases. If an existing customer were to be disconnected for <br /> delinquency, they would be required to pay a deposit prior to being reconnected. <br /> The policy originally was written to return the deposit after the new customer had established <br /> three years of good payment history with ERMU. This has since been revised by the <br /> Commission to hold the deposits until service is terminated. <br /> DISCUSSION: <br /> Since this policy was adopted in 2010, the economy has begun to recover. However,the risk <br /> remains even if bad debt write off has decrease. The utility industry has learned a lot through <br /> this recent recession. It makes good business sense to review this policy from time to time to <br /> ensure it adequately protects our customers, is not too burdensome to administer, and that it is <br /> not too restrictive that it stifles growth and economic development. <br /> EN <br /> IPOWEHED it <br /> Page 1 of 2 NATURE <br /> Reliable Public <br /> Power Provider P O W E R E D T O S E R V E <br /> 118 <br />