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CUC security deposits to earn annual interest
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Posted on Aug 09 2005
The Commonwealth Utilities Corporation has adopted new regulations allowing customers to earn interest on their security deposits for utility services.
In a public notice, CUC noted that the current regulations concerning commercial electrical service security deposits were “inappropriate to the needs of the utility.” CUC added that current restrictions on these funds could cause harm to the utility; hence, new regulations must be adopted immediately.
The corporation did not explain, however, how it is currently handling security deposits and how this process could be damaging to the utility. CUC executive director Lorraine Babauta, the only utility official reportedly designated by the governor to release information to the public, was not available to provide comments at press time.
Adopted on an emergency basis—or upon less than the normal 30-day notice—the new regulations will provide “greater financial flexibility and accountability with respect to customer security deposits for utility services.”
The new rules require CUC to maintain an account indicating the name of the customer, the date he or she paid the security deposit, and the amount of the deposit.
Effective Jan. 15 of each year, CUC should credit each account an amount equal to the average “passbook” savings rate payable during the past year. The interest amount will be based on rates from at least three banks insured by the Federal Deposit Insurance Corporation.
In January of each year, the corporation’s comptroller is now also required to prepare for the Board of Directors an annual report which explicitly details amounts of deposits received, interest rate to be paid for the previous year, and CUC’s total account liabilities.
According to the regulations, any customer who terminates a utility account is entitled to a full, cash refund of any deposit in excess of any remaining unpaid charges.
This refund must be provided to the customer within 30 days after the account is closed, unless the amount of the charges or security account balance is in dispute.
