4.1 ERMU 01-12-2016 - Laserfiche WebLink

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Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Tom Sagstetter—Conservation and Key Accounts John Dietz—Chair Manager Al Nadeau—Vice Chair Jennie Nelson—Customer Service Manager Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: January 12th, 2016 4.1 SUBJECT: Security Deposit Policy BACKGROUND: Based on recent commercial customer experiences and direction from the Utility Commission,staff has been reviewing the Security Deposit Policy. The goal of the policy review is to have measures in place that are consistent with industry standards and minimize the financial risk to the Utility and all customers. At this time,the focus of the policy review is for the commercial customer class only because of the magnitude of financial risk with the largest customers. A number of items regarding the policy were discussed at the November and December commission meetings.Per Commission direction,staff has identified several options to strengthen procedures and minimize risk.Below is a list of information staff has assembled to determine next steps in the policy review. Attached is the current Security Deposit Policy for reference. DISCUSSION: The goal of the security deposit policy revision is to minimize the risk to all ratepayers,yet still provide an environment that encourages business to locate within the ERMU service territory. The policy also has to be executable and administratively manageable for staff in order for this to be successful. Also,the administrative costs need to be reasonable in comparison to the risk mitigation. Staff understands that risks will always be a part of this business,but staff realizes there needs to be a balance between policy/procedure and customer satisfaction. It is important to remember that ERMU is currently doing a good job protecting our customer's interests. The Average National Write-Off percentage is between.10%and.41%. ERMU's write off percentage is well below this average at.01%currently. Also,our current policy and procedures are very similar to other utilities. The goal of these procedure changes and the upcoming security policy changes is to increase the ability to calculate and collect a more appropriate security deposit from all commercial customers to protect all rate payers. These changes will also allow ERMU to collect more detailed information on each commercial customer. Based on the previous commission meetings,and research on other local utilities in the area,staff is providing a revised service agreement to be used with all commercial customers and a new commercial application form. The use of these two documents will allow ERMU staff to better assess credit risk, P 0 11 E A E 8 II MI Page l of 2 NATURE FebabkPubbe Paw; so To Sri Power P'ovrier 84