Utility Deposit Bond - Los Angeles Water & Power in California

Brief Summary

When LADWP asks a business for a deposit before turning on water or power, the number is usually two or three months of estimated bills. A utility deposit bond lets you meet that request with a surety guarantee and keep the cash in the business.

The Los Angeles Department of Water and Power may require any applicant for water or electric service to furnish a satisfactory guaranty, by deposit or otherwise, for payment of its bills. A utility deposit bond is that guaranty in surety form. For non-residential accounts the security is no less than two times the average periodic bill or three times the estimated average monthly bill, so the bond amount is set by LADWP for your account.

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How to Apply for a Utility Deposit Bond:

• Get the deposit amount and account number from LADWP in writing.
• Confirm with LADWP that a surety bond is acceptable for your account and ask whether it has its own bond form.
• Provide the legal name on the LADWP account, the service address and owner details for the credit review.
• Complete the bond application and review the quoted premium.
• Pay the premium, sign the bond and deliver the executed original to LADWP as instructed.

Detailed Information About the California Utility Deposit Bond:

Why LADWP asks for security

Rule 6 of the LADWP Rules Governing Water and Electric Service says each applicant may be required to furnish and maintain a satisfactory guaranty, by deposit or otherwise, for payment of service charges. LADWP can skip the requirement when it is satisfied the applicant's credit is good enough. The bond guarantees that if the account holder does not pay, the surety covers the unpaid charges up to the bond amount.

How the amount is set

There is no single bond figure. Rule 7 sizes the deposit to the account:

• Residential accounts generally pay no more than the estimated average bill for two billing periods.
• Non-residential accounts pay no less than two times the average periodic bill or three times the estimated average monthly bill.
• Every account is subject to a minimum set from time to time by the General Manager.
• Where a customer's credit record shows a risk of nonpayment, LADWP may require a larger amount, fixed at a level where it will not risk a loss.

LADWP tells you the amount it needs. Your bond should match that figure exactly.

When existing customers get asked

Rule 6 lets LADWP require a customer to reestablish credit when a prior deposit was applied to a bill, service was discontinued for cause, the account fell delinquent, the existing guaranty became inadequate, or the customer owns master metered residential property that had a utility lien filed in the last two years. A bond is often the quickest way to answer that notice.

Before you buy

Confirm with LADWP that it will accept a surety bond for your account, the exact amount, and any bond form it wants used. The bond is posted by the account holder, with LADWP named as obligee.

Eligibility and Requirements for a California Utility Deposit Bond:

• Bond amount equal to the deposit LADWP sets under Rule 7.
• Los Angeles Department of Water and Power named as obligee.
• Principal name matching the LADWP account holder exactly.
• A surety authorized to write bonds in California.
• Owner credit review. Premium is based on credit and the bond amount.

California Utility Deposit Bond FAQs:

Official and Additional Resources for the California Utility Deposit Bond: