N.Y. Comp. Codes R. & Regs. tit. 16 § 13.7

Current through Register Vol. 46, No. 45, November 2, 2024

Section 13.7 - Security deposits

(a) Deposit requirement.

(1) A utility may only require the payment of a security deposit from:

(i) a new customer; or

(ii) an existing customer:

(a) who is delinquent;

(b) whose financial condition is such that it is likely that the customer may default in the future; provided, however, that the utility must have reliable evidence of such condition, such as reports from accepted financial reporting services or credit reporting agencies;

(c) who has filed for reorganization or bankruptcy; or

(d) who has been rendered a backbill within the last 12 months for previously unbilled charges for service that came through tampered equipment.

(2) A utility shall offer an existing customer, from whom a deposit is required under clauses (1)(ii)(a) or (b) of this subdivision, the opportunity to pay the deposit in three installments, 50 percent down and two monthly payments of the balance.

(3) A utility shall establish a written procedure covering its deposit policy and practice.

(4) A request for a deposit or deposit increase shall be in writing and shall advise the customer:

(i) why the deposit is being requested;

(ii) how the amount of the deposit was calculated;

(iii) that the deposit is subject to later upward or downward revision based on the customer's subsequent billing history;

(iv) that the customer may request that the utility review the account in order to assure that the deposit is not excessive;

(v) the circumstances under which the deposit will be refunded;

(vi) that the customer will receive annual notice of the interest credited to the account;

(vii) about the available deposit alternatives; and

(viii) that for an existing customer from whom the deposit is being requested because of delinquency or financial condition, the deposit may be paid in three installments.

(5) A utility shall issue, to every customer from whom a deposit is obtained, a receipt showing the date, the account number, the amount received, the form of the payment, and shall contain a notice explaining the manner in which interest will accrue and be paid and that the receipt is neither negotiable nor transferable.

(b) Deposit calculation.

(1) The amount of a deposit shall not exceed the cost of twice the customer's average monthly usage, except in the case of customers whose usage varies widely such as space-heating or -cooling customers, or certain manufacturing and industrial processors, where the deposit shall not exceed the cost of twice the average monthly usage for the peak season.

(2) In the case of an existing customer who has 12 months or more of billing history, the amount of the deposit shall be based on service used during the previous 12-month period as evidenced by the billing history.

(3) In the case of a new customer or a customer with less than 12 months of billing history, the amount of the deposit shall be based on one or more of the following, as available:

(i) the billing history of the customer;

(ii) information provided in the application by the customer about the expected load and use of service;

(iii) information contained in a load study of the premises prepared by the utility; and

(iv) the billing history of the previous customer, provided there have been no significant changes in the load.

(c) Deposit review.

(1) A utility shall, at the first anniversary of the receipt of the deposit and at least biennially thereafter, review the billing history of every customer who has a deposit with the utility, to assure that the amount of the deposit conforms to the limitations contained in subdivision (b) of this section. This requirement does not limit the right of a utility to review a deposit at any time.

(i) If a deposit review shows that the deposit held falls short of the amount that the utility may lawfully require by 25 percent or more, the utility may require the payment of a corresponding additional deposit amount from the customer.

(ii) If a deposit review shows that the deposit held exceeds the amount that the utility may lawfully require by 25 percent or more, the utility shall refund the excess deposit to the customer in accordance with subdivision (f) of this section.

(2) Upon request of a customer for a downward revision of the deposit, which request is substantiated both by the customer's billing history and by a permanent documented change in load and consumption, a utility shall refund any portion of the deposit in excess of the amount the utility may lawfully require in accordance with subdivision (f) of this section.

(d) Deposit alternatives.

(1) A utility shall accept deposit alternatives which provide a level of security equivalent to cash, such as irrevocable bank letters of credit and surety bonds.

(2) A utility may, at its discretion, accept from the customer, in lieu of a deposit, a written promise to pay bills on receipt and a written waiver of the customer's right to be sent a final termination notice until 20 calendar days after payment is due.

(e) Interest.

(1) Every cash deposit shall accrue interest at a rate prescribed at least annually by the commission in light of the current economic conditions and current charges paid for money borrowed by such utility, taking into account the expenses incurred by such utility in obtaining, handling, returning or crediting the sum deposited.

(2) Interest shall be paid to the customer upon the return of the deposit, or, where the deposit has been held for a period of one year or more, the interest shall be credited to the customer no later than the first bill rendered after the next succeeding first day of October and at the expiration of each succeeding one-year period.

(3) Interest shall be calculated on the deposit until the day it is applied as a credit to an account or the day on which a refund check is issued. If the deposit is credited in part and refunded in part, interest shall be calculated for each portion up to the day of credit and refund.

(f) Deposit return.

(1) A utility shall return a deposit or portion thereof, plus the applicable interest, in accordance with paragraphs (2) and (3) of this subdivision, as soon as reasonably possible, but no more than 30 calendar days after:

(i) the day an account is closed;

(ii) the issuance date of the first cycle bill rendered after a three-year period during which all bills were timely paid, provided there is no other basis for the utility to request a deposit under subparagraph (a)(1)(ii) of this section; or

(iii) a review pursuant to subdivision (c) of this section shows that deposit reduction is warranted.

(2) A deposit or portion thereof plus the applicable interest that is subject to return under paragraph (1) of this subdivision:

(i) shall be credited to the account it secured in the amount of any outstanding charges;

(ii) may be credited to the account it secured in the amount of the next projected cycle bill, if applicable; and

(iii) may be credited to any other account of the customer not secured by a deposit, in the amount of the arrears on that account.

(3) If a balance remains after a utility has credited the customer's account(s) in accordance with paragraph (2) of this subdivision, a refund check shall be issued to the customer.

(g) Utilities shall comply with this section no later than March 18, 1988.

N.Y. Comp. Codes R. & Regs. Tit. 16 § 13.7