Surety Bond Encyclopedia

Utility Deposit Bond - Jonesboro City Water & Light in Arkansas

Brief Summary

A utility deposit bond lets a business opening or expanding service with Jonesboro City Water & Light secure its electric and water account without handing over a cash deposit. The premium is a fraction of the cash the deposit would tie up, and that money stays available for payroll, inventory and the build out.

Jonesboro City Water & Light (CWL) can require a deposit when it connects or reconnects electric or water service. CWL describes itself as a municipal improvement district operating as a consolidated utility district under Arkansas law and City of Jonesboro ordinances, and the Arkansas Public Service Commission states that it does not regulate municipally owned utilities. That means CWL sets its own deposit terms rather than following a PSC tariff. CWL's published fee schedule does not mention accepting a surety bond in place of cash, so get CWL's agreement, the deposit amount and any required bond wording before the bond is issued.

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How to Apply for a Utility Deposit Bond:

Ask CWL for the deposit amount on the account and whether it will accept a surety bond in place of cash.
Get any bond form or required wording from CWL before the bond is issued.
Provide the legal business name and service address exactly as on the CWL account.
Provide owner information for the credit review, and business financials if the surety asks for them.
Pay the premium and receive the executed bond naming Jonesboro City Water & Light as obligee.
Deliver the original bond to CWL and confirm the deposit requirement is marked satisfied on the account.

Detailed Information About the Arkansas Utility Deposit Bond:

CWL writes its own deposit rules

Many customers look for an Arkansas Public Service Commission rule on deposits and come up empty. The Commission's electric utilities page says it does not regulate municipally owned utilities, public power agencies or exempt wholesale generators. CWL describes itself as a municipal improvement district that operates as a consolidated utility district, organized under Arkansas state law and City of Jonesboro ordinances. Deposit terms for CWL accounts come from CWL, not from a PSC tariff.

When CWL asks for a deposit

CWL's service fee schedule lists its connect charges plus deposit if required. For reconnection after nonpayment, and in cases of meter tampering, the schedule says an additional deposit may be required. CWL also lists a Charges and Deposits form among its customer service forms.

Does CWL accept a surety bond?

CWL's published fee schedule does not mention a surety bond in place of a cash deposit. CWL decides whether to accept one. Get CWL's acceptance, the deposit amount and any bond wording it wants in writing before the bond is issued.

Who posts it and how much

The customer on the account posts the bond. The obligee is Jonesboro City Water & Light, under the legal name CWL gives you. The bond amount is the deposit CWL sets for the account, so there is no single published figure.

What the bond guarantees

The bond guarantees CWL that the customer's utility bills will be paid. If the account closes with an unpaid balance, CWL can make a claim on the bond up to its amount. The surety then looks to the customer for repayment under the indemnity agreement.

How the premium is set

The surety looks at the owners' credit, the business's financial strength and its history with utility accounts. A larger deposit or a newer business usually means more underwriting, and a well established customer with strong credit pays less.

Eligibility and Requirements for a Arkansas Utility Deposit Bond:

Jonesboro City Water & Light as obligee, using the exact legal name CWL provides.
Bond amount equal to the deposit CWL sets for the account.
Written acceptance of the bond by CWL, since its published fee schedule does not mention bonds.
Bond kept in force for as long as CWL requires security on the account.
Indemnity agreement signed by the business and its owners.

Arkansas Utility Deposit Bond FAQs:

Does the Arkansas Public Service Commission set CWL's deposit rules?

No. The Commission states that it does not regulate municipally owned utilities. CWL is a municipal improvement district operating under Arkansas law and City of Jonesboro ordinances, and it sets its own deposit terms.

Will CWL take a surety bond instead of cash?

CWL's published fee schedule does not mention a surety bond in place of a cash deposit. Ask CWL directly and get its acceptance, the deposit amount and any required wording in writing before the bond is issued.

How much will the bond be?

The same as the deposit CWL sets for your account. CWL's fee schedule does not publish a deposit amount, so get the figure from CWL.

Can CWL ask for more security later?

Yes. CWL's fee schedule says an additional deposit may be required for reconnection after nonpayment and in meter tampering cases.

Who pays if a claim is made on the bond?

The surety pays CWL up to the bond amount, then seeks repayment from the business and its owners under the indemnity agreement. The bond protects CWL, not the customer.