Surety Bond Encyclopedia

Utility Deposit Bond - Spire Alabama in Alabama

Brief Summary

Spire Alabama can ask for security before it turns on gas service or builds a main to reach your property, and on a large commercial job that number adds up fast. Its tariff lets the company accept a surety bond in place of cash for extension deposits, so a business or developer can meet the requirement without parking the money with the utility.

Spire Alabama may require a deposit to guarantee payment for gas service, and the Alabama Public Service Commission caps an ordinary service deposit at an estimated bill for two regular billing periods under Ala. Admin. Code 770-X-1-.08. For main extensions, Spire Alabama's tariff lets the company require a cash deposit, surety bond or other surety it accepts, and for some commercial, industrial and development projects the security can equal the total cost to provide gas service. Spire sets the amount and chooses the form of security.

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How to Apply for a Utility Deposit Bond:

Ask Spire Alabama whether the deposit is a service deposit or an extension deposit.
Get the exact security amount Spire sets for the account or the Extension Agreement.
Confirm Spire will accept a surety bond for that amount and whether it has its own form.
Order the bond with Spire Alabama Inc. as obligee in the exact legal name on the account or agreement.
Deliver the signed bond to Spire before service or construction is scheduled.

Detailed Information About the Alabama Utility Deposit Bond:

Two kinds of deposit

Spire Alabama asks for security in two different situations, and they work under different rules.

The first is the ordinary service deposit. Under Alabama Administrative Code 770-X-1-.08, a utility may require a cash deposit from a new, disconnected or former customer when it judges a deposit necessary to guarantee final payment. The deposit cannot exceed the amount of an estimated bill for two regular billing periods. The utility pays 7% annual interest on deposits it holds, and it may ask for more on five days written notice if the account falls out of good standing or usage rises enough to justify it.

The second is the extension deposit. Rule V.A.2 of Spire Alabama's Rules and Regulations for Gas Service says that when the cost to extend the distribution system exceeds the company's extension allowance, Spire may require an Extension Agreement and a deposit equal to the excess. At its option, the company may take a cash deposit, a surety bond or other sureties it accepts. For residential subdivisions, mobile home parks, industrial parks and individual commercial or industrial consumers, Spire may require a deposit or surety equal to the total cost to provide gas service.

Where a bond fits

The extension rule is where the tariff names a surety bond outright. Developers and commercial customers facing a large extension deposit can ask Spire to accept a bond for the amount it sets. For an ordinary service deposit, ask Spire whether a bond will be accepted for your account. Confirm the bond form and filing steps with Spire Alabama before the bond is issued.

Refunds

Spire refunds extension deposits as it serves additional customers from the new main for at least 30 consecutive days, and may refund commercial or industrial deposits based on the depositor's own consumption as agreed with the company. Under the PSC rule, residential service deposits on accounts in good standing come back after 24 months of retention, credited to the December bill.

What it costs

You pay a premium rather than the full deposit. The surety sets it from the bond amount and the applicant's credit and financial history.

Eligibility and Requirements for a Alabama Utility Deposit Bond:

Spire Alabama Inc. named as obligee.
Service deposits capped at an estimated bill for two regular billing periods under 770-X-1-.08.
Extension security up to the excess cost over Spire's allowance, or the total cost of service for some commercial, industrial and development projects.
Form of security chosen by Spire under tariff Rule V.A.2.
Credit review by the surety to set the premium.

Alabama Utility Deposit Bond FAQs:

How large can a Spire Alabama service deposit be?

Under Ala. Admin. Code 770-X-1-.08, a service deposit cannot exceed an estimated bill for two regular billing periods. Spire estimates that bill for your account.

Does Spire Alabama accept a surety bond?

For main extensions, yes, at the company's option. Rule V.A.2 of its tariff allows a cash deposit, surety bond or other sureties acceptable to the company. For an ordinary service deposit, ask Spire before you buy the bond.

Why is my commercial extension deposit so large?

For individual commercial or industrial consumers, subdivisions, mobile home parks and industrial parks, the tariff lets Spire require security equal to the total cost to provide gas service, not just the cost above the allowance.

When does the security come back?

Extension deposits are refunded as other customers connect to the new main or, for commercial and industrial depositors, based on consumption as agreed with Spire. Residential service deposits in good standing are refunded after 24 months.