Utility Deposits: What to Expect When Moving In
In Texas, like in much of the country, the power company requires an electricity deposit before you get electric service if you’re a new customer. This requisite protects the energy provider and other consumers from those who use electricity and then leave without paying. The utility company will pull your credit history, including your record of paying for utilities at any previous residences or your overall payment history. Assume that a new business is required to pay $500 as a security deposit to an electric utility before the utility provides electricity. The deposit will be refunded by the utility after six months of timely payments.
- Electricity deposits can be a one-time fee, or you can pay them in monthly installments.
- The electricity company typically refunds the entire deposit after 12 consecutive months of paying your utility bills on time.
- Paying for something you haven’t used or consumed yet may not feel right, but you should understand the purpose of a security deposit for electricity.
- If the credit of the business owners is not up to surety standards, they can be more difficult to place and may require collateral.
Most electricity providers require deposits, and we know paying this fee can be a hassle. How much an electricity deposit costs varies as several factors influence the required payment. These factors include the size of your home, your electricity provider, the type of utility service you need, and, yes, your credit history.
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Expect a refund check for the difference within 45 days of the settlement of your final bill. You even get a little interest on the deposit you paid when it’s refunded. If your utility bills were previously under your spouse’s name, but not yours, the utility company should allow you to submit your paperwork and give you a chance under your account. Check your bill amounts every month to keep an eye for overcharges or any opportunity to reduce your bill.
Being asked to put down a utility deposit doesn’t mean you have a dubious utility payment history or a low credit score. In fact, a high credit score won’t automatically exempt you from the requirement. Let’s look at why utility companies require you to pay utility deposits.
The amounts vary from company to company but are often based on a percentage of the estimated cost of their services to be used over a specific period. Because failure to pay the utility company on time can result in a claim these bonds are considered financial guarantee surety bonds. If the credit of the business owners is not up to surety standards, they can be more difficult to place and may require collateral.
An electricity deposit is a payment made upfront to a retail electricity provider (REP) to secure a connection to the power grid and guarantee a reliable supply of power. Electricity deposits can be a one-time fee, or you can pay them in monthly installments. This requirement is common, not just in Texas but throughout the country, and doesn’t imply that you have a poor credit history.
Applying for utility services
They can also have your service disconnected for not paying and need it to reconnect or if a prior customer who owes a balance lives at that address along with you. However, if you miss payments or do not make payments on time, the deposit will be applied toward the discrepancy. Unfortunately, there’s no real framework for the amount of a utility deposit. It can range from less than a hundred dollars to several hundred depending on your credit history.
When you create a new account with utility companies — think electricity, gas, water and TV/internet — you may have to pay a deposit upfront. As with security and pet deposits, utility deposits help insure against losses that result from unpaid or underpaid bills. After a period of time, the public utility will refund the customer’s utility deposit.
Examples of Utility Deposits in a sentence
However, if you opt for specific plans (such as prepaid electricity), you’ll pay for your consumption in advance. All new residential customers must first establish credit before receiving service. Duke Energy typically runs a credit check on consumers upon application to determine if the company will require a deposit. This can be paid online, at the provider’s various payment locations, or by calling the company’s customer service number. On average, electricity deposits come to about 20% of your estimated yearly power bill or the total of the estimated electricity bills for 2 consecutive months. Along with your apartment security deposit, it’s essential to keep track of any utility deposits.
- All new residential customers must first establish credit before receiving service.
- You can also choose a prepaid plan that usually doesn’t require a deposit or credit check.
- Let’s look at why utility companies require you to pay utility deposits.
- The amount is used to offset the final bill with your old provider, and any remaining amount will be returned to you.
- Putting down a deposit doesn’t mean saying goodbye to your hard-earned money.
The company is required to send you a letter stating the specific reasons or sharing how to get a more detailed explanation from them within 30 days. Depending on your state, utility companies can require you to pay a security deposit after several collection notices and disconnect your service. Keep your account in good standing and maintain a good credit score to avoid deposits.
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It protects the power provider from unexpected costs that will affect other customers in their service. By requiring a deposit, the company can ensure they have the funds to cover any unpaid balances. How you pay for energy depends on your plan type and arrangements with your energy provider. Generally, you consume energy before paying for it in the next billing cycle. That’s why most power companies require a deposit before connecting your service.
If you see any discrepancies, reach out to the utility company to ensure it gets addressed and a refund is made. Once you’ve signed your lease, you should start applying for your water, electricity and gas service. After signing the lease and booking the movers, you also have to change your address and set up your utilities to your new home and put down a utility deposit. These are also known as Utility surety bonds and Utility Guarantee surety bonds. Sometimes it may be triggered by a broken water meter in your complex or neighborhood, or perhaps a refund is due for an extended power outage.
Putting down a deposit doesn’t mean saying goodbye to your hard-earned money. The electricity company typically refunds the entire deposit after 12 consecutive months of paying your utility bills on time. If you pay your utility bills in full, you should expect to receive your entire deposit, plus interest, back after a set number of payments or when the agreement ends. The deposit usually isn’t more than two payments, but it will depend on the company. Paying for something you haven’t used or consumed yet may not feel right, but you should understand the purpose of a security deposit for electricity.
In case you move but continue service with your current utility provider at your new home, the deposit will transfer to the new account. The deposit, if applicable, will depend on your payment history as listed on your credit history. Often, if you rent a house or in a multi-unit building, you may not need to create utility accounts as they’re included in the rent and continue to be in the landlord’s name. But if you’re required to open your utility accounts, here’s how to approach it and tap into savings. The new business will record the deposit with a $500 debit to the current asset account Utilities Deposits and will credit the asset account Cash for $500. The amount is used to offset the final bill with your old provider, and any remaining amount will be returned to you.
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For example, if you’re trying to open a water utility account, they’ll look at your payment history and require you to pay a water deposit upfront to protect themselves from non-payment. The electric utility will record the customer’s security deposit with a $500 credit to the current liability account Customers’ Security Deposits and will debit its Cash account for $500. This way, the next time you move, you can collect all of your deposits without issue and not have to worry about it. The best way to get back your utility deposit is to continue taking care of your credit score and pay on time. If you apply for utility service and the utility company denies you, you have the legal right to know why.