4/23/1996 - Laserfiche WebLink

Home Browse Search

The process involved with using a surety bond in lieu of deposit is: • A new customer must pay the required deposit first, • The customer must make FPL aware of his intentions to utilize a surety bond to replace his deposit, • FPL will then send an application requesting information to the agency issuing the bond, • The agency will then send the completed application back to FPL along with the bond, • FPL will then accept or reject the bond; if accepted, the customer's deposit will be refunded. A surety bond can be obtained through an insurance company. Not all insurance companies, however, can provide surety bonds; only insurance companies which carry general liability insurance coverage can provide surety bonds. In order to obtain a surety bond from an insurance company, a company seeking a bond must provide a financial statement of the company to the bonding agency, and submit an application. The application for the use of a surety bond can be obtained from the utility company accepting the bond instead of a cash deposit. Florida Power and Light has a specific application it uses when a company chooses to use a surety bond. The City of Vero Beach's deposit requirements for the provision of electricity are the same as FPL's. The county deposit requirement for water and sewer is $50 per equivalent residential unit (ERU). Both the city and the county will accept either a bank letter of credit or a surety bond in lieu -of cash for the required deposit. Analysis At present, the City of Vero Beach, the County's Utility Department and Florida Power and Light will not waive their deposit requirements for commercially metered accounts, regardless of past credit history. Staff coordination with Florida Power and Light indicated that FPL does not waive required commercial electricity service deposits in any jurisdiction within the state. The deposit requirement can be satisfied only upon a cash payment, the submittal of a bank issued letter of credit, or the submittal of a secured. surety bond issued by an insurance company. According to all three utility providers, these deposit requirements are unlikely to change, due to the financial instability that commercial accounts have demonstrated in the past. To be economically feasible, a surety bond or bank letter of credit can be used only if the deposit requirement is greater than $5,000. Industrial utility customers with a utility deposit requirement of less than $5,000 will have to pay their utility deposit in cash. Since surety bond and letter of credit options exist with respect to utility deposit for large utility users, this analysis concentrates on commercial utility deposit requirements of less than $5,000. The County Utility Department charges commercial customers $50 per ERU for either water service or sewer service. The overwhelming majority of commercially metered utility customers are required to purchase 1 ERU for either water or sewer. With one ERU, a customer would be required to pay a $100 deposit for utility service, if both water and sewer are available. 35 April 23, 1996