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UTILITIES COMMISSION MEETING <br />TO:FROM: <br />ERMU CommissionJennie Nelson – Customer Service Manager <br />MEETING DATE: AGENDA ITEM NUMBER: <br />August 11, 2020 4.1 <br />SUBJECT: <br />Deposit Policy <br />ACTION REQUESTED: <br />None <br />BACKGROUND: <br />At the April commission meeting Chair Dietz requested a review of our Customer Deposits <br />Policy, specifically on how deposit refunds are processed. ERMU refunds deposits for residential <br />and commercial accounts after the account is closed. This policy was commission directed and <br />has been in place for many years. Staff was directed to survey neighboring utilities as well as <br />other Minnesota municipal utilities to analyze different policies. <br />DISCUSSION: <br />The Minnesota Municipal Utilities Association sent a survey to all their members on ERMU’s <br />behalf with questions about the utilities’ respective deposit policies and received 31 responses. <br />Staff also surveyed two neighboring utilities. <br /> <br />Among the utilities that responded to the survey about a third refund the deposit when the <br />account is closed. Some utilities refund the deposit after 12 months of consecutive timely <br />payments, some do not charge deposits, and others have waivers for signing up for automatic <br />payments, etc. <br /> <br />For an ERMU residential customer, their potential risk is assessed at the account origination <br />(brand new account, account change, etc.). If there is no deposit required at account <br />origination, and the account falls into arears resulting in disconnection, the risk is assessed <br />again at that time. For commercial customers, a deposit is required at account origination and <br />the amount is determined by risk assessment as well. Given the potential changes in economic <br />circumstances for a customer throughout the span of their account with us, this is the most <br />secure way to ensure a lower write off percentage, which protects all customers from steep <br />rate increases due to bad debt. Staff is recommending that the policy remain the same. <br /> <br />ATTACHMENTS: <br /> ERMU Policy – G.4j3 – Customer Deposits Policy – For Reference Only <br /> <br /> <br />______________________________________________________________________________ <br />Page 1 of 1 <br />45 <br /> <br />