4/23/1996 - Laserfiche WebLink

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Boa 7, fta On March 26, 1996, the Economic Development Council reviewed a staff report on the subject of utility deposits and unanimously recommended that the Board of County Commissioners direct staff to establish a program to guarantee payment of utility deposits for new or expanding industrial and -target industry businesses. • Present Situation At the present time, all utility service providers in the county (Indian River County, the City of Vero Beach, and FPL) require some form of a security deposit from new customers to ensure that these new customers will pay their utility bills in a timely manner. The three utility providers in the county apply the same utility deposit standards. For new commercially metered electricity service, Florida Power and Light requires a deposit approximately equal to the estimated electricity charge for two months of service. FPL requires that new service accounts pay this deposit prior to service hook-up. FPL, however, will waive this deposit requirement in lieu of the new customer providing either: 1) A bank letter of credit, -OR- 2) A surety bond of deposit These two options can be utilized as alternatives to paying the required deposits. 1) Bank letter of credit: Florida Power and Light will accept a bank issued irrevocable letter of credit instead of cash required for a utility deposit. A letter of credit generally costs 1% of the total amount covered and is renewed annually. Since commercially metered account deposits are refundable only upon termination of the utility service, the purchaser of the letter must pay the cost of the letter each year that the letter remains in force. Typically, the purchaser must provide the issue of the letter with some form of collateral equal to or greater than the liability amount covered by the letter. Liquid assets such as stocks, bonds and CD's are generally used as collateral to cover the amount of liability. Bank issued letters of credit are usually feasible only if the coverage is greater than $5,000. For less than $5,000, letters of credit are not feasible because of the costs involved and processing time. 2) Surety bond of deposit: A surety bond (or performance bond) of deposit can also be utilized as a waiver of FPL's required service deposits. Generally, a surety bond is used by a new customer who has an electricity intensive operation in which the customer's monthly electric bills are usually in the 1000's of dollars. A surety bond would not be an effective alternative for a company with little electricity usage per month. A surety bond costs approximately $20 per $1000 dollars of liability coverage, with a $100 minimum cost. 34 April 23, 1996