5.1. ERMUSR 03-09-2010 - Laserfiche WebLink

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Elk River -~ Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 March 5, 2010 To: Elk River Municipal Utilities Commission John Dietz Jerry Gumphrey Daryl Thompson From: Troy Adams Subject: Review and Consider Customer Deposit Policy and Practice Phone: 763.441.2020 Fax: 763.441.8099 At the February 9th Commission meeting, Staff was direct to re~~iew the Customer Gep~sit P~li,;y and related practices. Also, staff was to bring back to the commission an analysis cif th:.~t pulic~- and practices for Commission review. In July 2007, ERMU adopted a Customer Deposit Policy (attached for reference). One of the common utlities industry challenges is collecting on services already provided. To heip minimize the risk of non-payment, this policy established criteria for determining •wh~tl~~er car not a customer would be required to make a deposit prior to providing services. Also, the policy established the amount and timeline for that deposit. In recent months, there has been question of this practice. Specifically-, the commercial a~.p_ct of this policy has been questioned. In addition to the policy, the practice has been to collect ou past due commercial accounts when within ERMU's legal right. For commercial and industrial customers, the policy requires that a signed service agreement identifying a guarantor and that guarantor's social security number be required. Also, a deposit of 2 times the estimated monthly bill is required. There are three options for this deposit: cash deposit, personal guarantee, o=• irrevocable letter of credit. In addition to the requirements of this policy, ERMU has also utilized legal counsel to minimize the risk of collecting payments from commercial and industrial customers. Based on this, ERMU has required a copy of a lease when a new commercial customer calls to set up a new account at an existing service where the existing account is delinquent. Also, ERMU has required court documentation in the case of a court ordered receiver. These examples reflect ERMU's efforts to minimize preventable write-offs.