Surety Bond Encyclopedia

Utility Deposit Bond - Entergy Arkansas, LLC in Arkansas

Brief Summary

Entergy Arkansas lets non-residential customers secure an electric account with a surety bond instead of handing over a cash deposit. The bond keeps that money in your business, and the amount matches whatever deposit Entergy has calculated for your account.

Entergy Arkansas, LLC may require a security deposit from a business customer before or during service. Its published business customer terms say non-residential customers may secure their accounts in amounts and under terms acceptable to the company with an irrevocable letter of credit or a surety bond from a bank or surety company acceptable to Entergy. The bond amount is the deposit Entergy assigns to your account, so it varies from customer to customer.

We can help with all Arkansas bonds!

How to Apply for a Utility Deposit Bond:

Get the required deposit amount for your account from Entergy Arkansas in writing.
Ask Entergy whether it requires its own bond form or specific wording.
Have the Entergy account number and the account name exactly as they appear on the bill.
Complete the bond application and review the quoted premium.
Pay the premium and receive the executed bond with the power of attorney.
Deliver the original bond to Entergy Arkansas and confirm it has been applied to the account.

Detailed Information About the Arkansas Utility Deposit Bond:

The amount is set by Entergy, not by a fixed schedule

There is no single statewide figure for this bond. It stands in for the security deposit Entergy Arkansas would otherwise collect in cash, so the penal sum is whatever deposit Entergy calculates for your account. According to Entergy's business customer brochure, the initial deposit is never greater than two months' average billing for the same type of service, except in cases of fraud, tampering, bankruptcy, or a previous unpaid balance. When there is no usage history, Entergy estimates an average month's billing from your type of service.

Ask Entergy for the exact amount in writing before you order the bond. Getting the number wrong is the most common reason a utility bond is sent back.

When Entergy can ask for a deposit or raise it

Existing business customers can be asked for a new or larger deposit after problems in the past 12 months, such as two or more returned checks, late payments two times in a row or three times in a year, or appearing on the disconnection list more than once. Entergy can also raise the deposit if you use more service than the original estimate, move, or expand the business.

One trigger catches larger companies off guard. Under Rate Schedule CAC approved in Docket No. 09-084-U, any non-residential customer that fails to keep a credit rating of at least BBB- from S&P or Fitch, or Baa3 from Moody's, may be notified that Entergy intends to obtain or increase a deposit. Entergy must explain the reason in writing, and it can adjust the amount based on its monitoring of the customer's financial metrics.

How the bond works

The business is the principal, the surety guarantees payment, and Entergy Arkansas, LLC is the obligee. If the account closes with an unpaid balance, Entergy can claim against the bond up to its amount, and the surety then seeks repayment from the business. Arkansas utilities are not required to return deposits on business accounts until the account is closed, so plan on keeping the bond in force for as long as the account is open.

Entergy decides which sureties and which bond wording it will accept. Confirm the current form and filing steps with Entergy's Business Solutions Center before the bond is issued.

Eligibility and Requirements for a Arkansas Utility Deposit Bond:

Entergy Arkansas, LLC named as obligee.
Bond amount equal to the deposit Entergy assigns to the account.
A bank or surety company that Entergy finds acceptable.
Principal name matching the name on the Entergy account.
Bond kept in force while the account remains open.

Arkansas Utility Deposit Bond FAQs:

How much does the bond need to be?

It equals the deposit Entergy Arkansas sets for your account. Entergy's business terms say the initial deposit is never more than two months' average billing for the same type of service, unless there was fraud, tampering, bankruptcy, or a previous unpaid balance.

Can a residential customer use this bond?

Entergy's published alternative to a cash deposit by letter of credit or surety bond is described for non-residential customers. Residential customers should ask Entergy about the options open to them.

Why would Entergy ask an established business for a deposit?

Late payments, returned checks, higher than estimated usage, a move or expansion, or a credit rating below BBB- or Baa3 can all lead Entergy to request a new or larger deposit. A bond can be used to meet that request.

How is the premium figured?

The surety sets the premium from the bond amount and the business's credit and financial strength. Request a quote once you know the exact amount Entergy requires.

When is the bond released?

Arkansas utilities are not required to refund business deposits until the account is closed. Expect Entergy to hold the bond until the account is closed and the final bill is paid.