Surety Bond Encyclopedia

Utility Deposit Bond - Carroll Electric Cooperative Corporation in Arkansas

Brief Summary

Carroll Electric sets a commercial service deposit based on the transformer size at your location, and it holds that money for as long as the account stays open. A surety bond lets the business keep that cash. You pay a yearly premium instead, and the bond stands in for the deposit on the same terms.

Carroll Electric Cooperative Corporation of Berryville, Arkansas lets commercial members post a surety bond or an irrevocable letter of credit in place of the cash service deposit. The deposit amount is set by the transformer size at the service location, and under the Cooperative's application terms a commercial deposit or bond stays in effect for the duration of service.

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How to Apply for a Utility Deposit Bond:

Ask Carroll Electric for the deposit amount for your service location, since it is based on transformer size.
Confirm the Cooperative will take a surety bond for your account and ask whether it has its own bond form.
Have the company legal name, any DBA and the federal tax ID exactly as they appear on the Commercial Application for Service.
Complete the bond application and review the quoted premium.
Return the signed bond with the application, IRS Form W-9, ID, the $25 membership fee for new members and the $40 connect or transfer fee.

Detailed Information About the Arkansas Utility Deposit Bond:

Who uses this bond

Carroll Electric serves members in northwest Arkansas from offices in Berryville, Bentonville, Huntsville and Jasper. Its commercial service checklist asks every new business account for a service deposit based on transformer size at the service location, and says that in lieu of a cash deposit the customer can provide a surety bond or irrevocable letter of credit. The residential checklist offers a different substitute, a letter of good credit from a former utility, so this bond is a business account tool.

How long it stays in place

Plan on keeping the bond for as long as you take service. The commercial application states that commercial deposits, surety bonds or letters of credit remain in effect for the duration of service. That matches the Arkansas Public Service Commission rule at 23 CAR 455-406, which says utilities are not required to refund deposits on business or commercial accounts until the account is closed. Unlike a residential deposit, twelve months of on-time payments will not release it.

How the amount is limited

The Cooperative's application says security deposits are subject to APSC rules. Under 23 CAR 455-401, a deposit from a new applicant cannot be more than two average bills when service is billed after use. If the account later needs a larger deposit, 23 CAR 455-402 caps the total on deposit at the customer's two highest bills in the last twelve months. A larger load usually means a larger transformer and a larger bond, so a new building or an expansion can trigger a request to increase it.

What the bond guarantees

The bond promises Carroll Electric that the member will pay its electric bills. If the account closes owing money and the business does not pay, the Cooperative can claim against the bond up to its face amount. The surety then looks to the business to repay what it paid out.

Business owners without a corporate tax ID

The application adds one more requirement. If a commercial account does not have a corporate taxpayer identification number issued by the IRS, the Cooperative will also require a personal guarantee from the principal business owner. The bond does not replace that guarantee.

Eligibility and Requirements for a Arkansas Utility Deposit Bond:

Carroll Electric Cooperative Corporation named as obligee.
Bond amount equal to the service deposit the Cooperative assigns to the location.
Bond kept in force for the full time the business takes service.
Personal guarantee from the principal owner if the business has no corporate taxpayer ID.
Owner credit review by the surety, which shapes the premium rate.

Arkansas Utility Deposit Bond FAQs:

How much is the bond?

It equals the commercial service deposit Carroll Electric sets for your location, which is based on transformer size. APSC rules cap a new applicant's deposit at two average bills when you pay after service. Call the Cooperative at 800-432-9720 for your figure before the bond is written.

Will I get the bond released after a year of on-time payments?

No. That one year release applies to residential deposits. For commercial accounts, Carroll Electric's application says the deposit or bond stays in effect for the duration of service, and APSC rule 23 CAR 455-406 lets utilities hold business deposits until the account closes.

Can Carroll Electric ask for more later?

Yes, in limited cases. Under 23 CAR 455-402 a utility can raise a deposit for reasons such as late payments, returned checks, or using more service than the original estimate. The total on deposit cannot exceed your two highest bills in the last twelve months.

What does the premium cost?

The surety sets the premium from the bond amount and the owner's credit and business financials. You get a quote when you apply.