Electricity Consumer Security Deposits
1. When can electricity utilities ask for a security deposit?
It’s up to utilities to decide if a security deposit is required in cases where a customer doesn’t have good payment history with another electricity or natural gas utility, or if the customer can’t provide a satisfactory credit check (at the customer’s expense).
An electricity utility may also require a security deposit if, during a one-year period, a residential customer has received more than one disconnection notice from the utility; more than one cheque or pre-authorized payment has been returned for insufficient funds; or a disconnect / collect trip has occurred.
For non-residential customers using less than 50 kW the period is 5 years.
Security deposits protect all ratepayers by reducing the amount of bad debt a utility is exposed to.
2. How many years of good payment history does a customer need to be exempt from providing a deposit or from having their deposit refunded?
Residential customers must have one year of good payment history. Non-residential customers using less than 50 kW must have five years of good payment history.
The time period must be the most recent one year period (or five years in the case of non-residential customers using less than 50kW) to have occurred in the past 24 months.
3. How are security deposits calculated?
The utility has the discretion to ask for a security deposit up to a maximum amount. The maximum amount is calculated using bills from the most recent 12 months in the past two years as follows:
- 2.5 times a customer’s average bill if billed monthly
- 1.75 times a customer’s average bill if billed bi-monthly
- 1.5 times a customer’s average bill if billed quarterly
4. Are utilities required to pay interest on security deposits?
Yes, if a customer gives the utility cash or a cheque, the utility must pay interest once it gets the total deposit. The rate used to calculate the interest owed is the Bank of Canada’s Prime Business Rate less 2%. Interest accumulated must be paid at least once every 12 monthsor after a customer returns the security deposit application or closes his/her account, whichever comes first.
5. Do security deposits have to be paid in one lump sum?
No. Customers can pay the security deposit in equal instalments over six months. Utilities can accept instalments over a period exceeding six months at their discretion, or less than six months at the customer’s discretion.
6. If the utility did not ask for the maximum security deposit, can they ask for an additional deposit later
Yes, utilities can ask for an additional security deposit as long as the total amount does not exceed the maximum. Similarly, if your consumption increases, utilities can ask for an additional security deposit as long as the total amount does not exceed the maximum.
7. How long do utilities have to return security deposits if a customer moves or closes their account?
The utility has up to six weeks to return the security deposit however, if the customer failed to pay their final bill, the utility can apply the security deposit against the balance owing.
8. If a customer doesn’t pay a required security deposit can the utility disconnect the customer’s electricity service?
Yes. Electricity utilities have the option to disconnect or to refuse to connect a customer if the customer fails to pay a required security deposit.
Page last updated 2011-03-31
