Utility Deposit Bond - Pacific Gas and Electric Company (PGE) in California
Table of Contents
Brief Summary
This bond is for businesses, not households. PG&E cannot ask a residential customer for a deposit to start new service, but it can ask a commercial account for up to twice the estimated monthly bill. A surety bond lets a business meet that security request without handing PG&E a large cash deposit that sits on the account for a year or more.
PG&E may require a nonresidential customer to establish or reestablish credit before or during service. Under Electric and Gas Rule 7, the deposit can be twice the estimated maximum monthly bill for most business accounts, or twice the estimated average monthly bill for a Small Business Customer. Rule 6 lets a customer establish credit to PG&E's satisfaction in place of a cash deposit, and PG&E credit letters have listed a surety bond among the accepted forms of security. The bond is written to PG&E and its amount matches the security PG&E requests.
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How to Apply for an Utility Deposit Bond:
- Read the PG&E security request letter for the amount and the deadline.
- Confirm whether your account is classed as a Small Business Customer, since that changes the deposit formula.
- Ask your PG&E credit contact for the current bond form and delivery instructions.
- Apply for a surety bond in the requested amount with PG&E as obligee.
- Pay the premium and send the executed bond to PG&E by the deadline on the request.
- Track your payment record so the account qualifies for release at the twelve month review.
Detailed Information About the California Utility Deposit Bond:
Residential customers are not asked for this
Under CPUC Decision 20-06-003, PG&E Electric Rule 6 and Gas Rule 6 bar PG&E from requiring any residential customer to pay a deposit to establish credit for new service. This bond is a business account product.
How PG&E sets the amount
Electric Rule 7 and Gas Rule 7 set the deposit for nonresidential accounts. A customer that is not a Small Business Customer may be asked for twice the maximum monthly bill as estimated by PG&E. A Small Business Customer may be asked for twice the average monthly bill. The amount can be adjusted at the customer's request or on PG&E's review. The bond amount is whatever figure appears on PG&E's security request.
When PG&E asks for security
A new nonresidential applicant can establish credit with a deposit, a qualified guarantor, or another arrangement satisfactory to PG&E. An existing business may be asked to reestablish credit if service was cut off for nonpayment in the last twelve months, if it fails to pay past due bills within five days of a disconnection notice, or if its conditions of service have materially changed. A Small Business Customer gets a warning letter after the first late payment in a twelve month period before a deposit is requested for a second one. PG&E waives reestablishment deposits for customers affected by a disaster under its Emergency Consumer Protection Plan.
Using a bond instead of cash
Rule 6 allows credit to be established to PG&E's satisfaction, and PG&E credit letters filed with the CPUC have listed a cash deposit, an irrevocable letter of credit or a surety bond as acceptable security. Confirm PG&E's current bond form and where to send it with the PG&E credit contact named on your request before the bond is issued.
Getting released
PG&E reviews the account after the first twelve months a deposit is held and monthly after that. A business with no more than two past due bills and no disconnection for nonpayment in the prior twelve months qualifies for release, provided its credit is otherwise established under Rule 6. Ask PG&E to return or release the bond at that point.
Eligibility and Requirements for a California Utility Deposit Bond:
- A nonresidential PG&E electric or gas account.
- Bond amount equal to the security PG&E requests under Rule 7.
- Pacific Gas and Electric Company named as obligee.
- Business name and account details matching the PG&E account exactly.
- Owner and business credit review by the surety, which sets the premium.
California Utility Deposit Bond FAQs:
Not to start new service. Under CPUC Decision 20-06-003, PG&E Rules 6 and 7 prohibit establishment of credit deposits for any residential customer.
Up to twice the maximum monthly bill PG&E estimates for most nonresidential accounts, or twice the average monthly bill for a Small Business Customer. Your request letter states the exact figure.
Rule 6 allows a business to establish credit to PG&E's satisfaction, and PG&E security requests have listed a surety bond as an option alongside cash and a letter of credit. Confirm the current bond form with PG&E before you buy.
PG&E reviews the account after twelve months. With no more than two past due bills and no disconnection for nonpayment in that period, the security qualifies for release if your credit is otherwise established.
The surety prices it from the bond amount and the credit and financial strength of the business and its owners. A quote on the amount in your PG&E letter is the only reliable figure.
