Utility Deposit Bond - Southwest Gas Corporation in California

Brief Summary

A non-residential Southwest Gas customer in California can be asked for a deposit of twice its estimated maximum monthly gas bill. For a busy commercial account that is real money. A surety bond written for the same amount keeps that cash in the business, where Southwest Gas will take one in place of the deposit.

Under Rule No. 7 of the Southwest Gas California Gas Tariff, the deposit to establish credit for non-residential customers is twice the estimated maximum monthly bill, or twice the estimated average monthly bill for Small Business Customers. Residential applicants no longer post deposits under the 2022 tariff changes. Confirm the amount and whether Southwest Gas will accept a bond on its form before the bond is issued.

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How to Apply for a Utility Deposit Bond:

• Ask Southwest Gas for the deposit amount on your account and whether you are classed as a Small Business Customer.
• Confirm Southwest Gas will accept a surety bond in place of the cash deposit and whether it has its own bond form.
• Complete the bond application in the business's legal name exactly as it appears on the gas account.
• Provide owner or company financial details for the credit review and review the quoted premium.
• Pay the premium and receive the executed bond.
• Send the bond to Southwest Gas and confirm it has been applied to the account.

Detailed Information About the California Utility Deposit Bond:

Residential customers no longer post deposits

Since October 28, 2022, Southwest Gas's California Rule No. 6 establishes credit for non-residential applicants through a deposit under Rule No. 7, while residential applicants establish credit through a satisfactory guarantor or other means acceptable to the company. Rule No. 7 now limits deposits to non-residential customers. Residential customers whose service was shut off for nonpayment may have to pay the old bills, but not a new deposit. This bond is for business accounts.

How the deposit is calculated

There are two tiers in Rule No. 7.

• **Non-residential customers:** twice the estimated maximum monthly bill.
• **Small Business Customers:** twice the estimated monthly average bill.

The same figures apply when a business has to reestablish credit after service was discontinued for nonpayment. A customer that runs two months past due, or is late on six monthly bills in 12 consecutive months, can also be required to reestablish credit. Small Business Customers in that position may instead enroll in the Automatic Payment Program once in a 12 month period in lieu of a cash deposit.

What the bond guarantees and when it ends

The bond promises Southwest Gas that the gas bills on the account will be paid. The tariff says deposits apply to unpaid bills once service has been discontinued, and they are not used to pay past due bills to avoid a shutoff. Southwest Gas refunds a deposit when the customer orders service discontinued, less unpaid bills, or after 12 consecutive months of paying within 19 days of presentation. Ask Southwest Gas how a bond is released under those same conditions before you buy it.

Eligibility and Requirements for a California Utility Deposit Bond:

• Non-residential gas account with Southwest Gas Corporation in California.
• Southwest Gas Corporation named as obligee.
• Bond amount equal to the Rule No. 7 deposit: twice the estimated maximum monthly bill, or twice the estimated average monthly bill for Small Business Customers.
• Account holder name on the bond matching the Southwest Gas account.
• Credit review of the business and its owners, which sets the premium rate.

California Utility Deposit Bond FAQs:

Official and Additional Resources for the California Utility Deposit Bond: