Utility Deposit Bond - City of Huntsville, AL in Alabama

Brief Summary

A utility deposit bond lets a business open or expand service with Huntsville Utilities without tying up cash in a deposit that sits with the utility for the life of the account. You pay an annual premium instead, and the money you would have deposited stays in your operating account.

The Huntsville Utilities deposit bond is posted by a customer in place of a cash security deposit on a utility account. Huntsville Utilities is the obligee. The bond guarantees the utility that the customer will pay its bills, and the utility sets the amount based on the account. Confirm the amount and the bond form Huntsville Utilities will accept before the bond is issued.

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How to Apply for a Utility Deposit Bond:

• Ask Huntsville Utilities for the required deposit amount in writing and whether it accepts a surety bond on its own form or yours.
• Have the account holder's legal name exactly as it appears on the utility account application.
• Provide owner and business information for the credit review, and recent financial statements if the surety asks.
• Complete the bond application and review the quoted premium.
• Pay the premium and receive the signed bond with power of attorney.
• Deliver the original bond to Huntsville Utilities before service is connected.

Detailed Information About the Alabama Utility Deposit Bond:

What the bond does

Huntsville Utilities provides electric, natural gas and water service in the Huntsville area. Like most utilities, it can ask a new or expanding customer for security before turning on service. A surety bond is a way to provide that security without handing over cash. If the account goes unpaid, Huntsville Utilities can claim against the bond for the unpaid balance, and the surety then seeks repayment from the business.

Who usually posts it

Commercial and industrial customers with large expected monthly bills are the most common buyers, because a cash deposit sized to a few months of usage can be a significant sum. A bond is also useful for a business opening several locations at once.

How the amount is set

The utility decides how much security an account needs. The figure generally tracks the expected size of the bill, so the amount on your bond should match exactly what Huntsville Utilities tells you in writing. Ask for that figure and for the bond form the utility accepts before you apply.

What affects your premium

Premium is priced on the bond amount and on the credit and financial history of the business and its owners. A bond of this kind is a financial guarantee, so the surety looks closely at payment history and financial strength.

Eligibility and Requirements for a Alabama Utility Deposit Bond:

• Huntsville Utilities named as obligee.
• Bond amount equal to the deposit the utility requires for the account.
• Surety company authorized to write bonds in Alabama.
• Principal name matching the utility account holder exactly.
• Bond kept in force for as long as the utility requires security on the account.

Alabama Utility Deposit Bond FAQs:

Official and Additional Resources for the Alabama Utility Deposit Bond: