Surety Bond Encyclopedia

Utility Deposit Bond - Public Service Company of Colorado in Colorado

Brief Summary

A new commercial account with Xcel Energy in Colorado can mean a cash deposit equal to about three months of power bills. A surety bond for the same amount keeps that cash in your business. Public Service Company of Colorado's tariff says it will accept a surety bond in place of the deposit, as long as it matches the required deposit and runs for two years.

Public Service Company of Colorado, which does business as Xcel Energy, requires first-time commercial and industrial applicants to post a deposit of an estimated 90 days' bill. Its electric tariff, Colo. PUC No. 8, accepts a surety bond or irrevocable letter of credit in place of the cash deposit. The bond must equal the required deposit and be issued for a two-year period.

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How to Apply for a Utility Deposit Bond:

Get the required deposit figure from Xcel Energy for the specific service address.
Legal name of the business exactly as it will appear on the utility account.
Owner credit review and, for larger bonds, business financial statements.
Pay the premium and have the bond issued for the full deposit amount with a two-year term.
Deliver the original bond to Public Service Company of Colorado in place of the cash deposit.

Detailed Information About the Colorado Utility Deposit Bond:

How big the bond has to be

There is no fixed bond amount. The bond equals the deposit Public Service Company of Colorado would otherwise collect, and for commercial and industrial service that deposit is an estimated 90 days' bill. A business with a large load posts a large bond. A small shop posts a small one. The utility sets the figure from your expected usage at that location.

When the bond can be used

The Commercial and Industrial Deposits and Refunds section of the electric tariff, Sheets R22 and R23, says a surety bond or an irrevocable letter of credit from a financial institution will be accepted in lieu of a deposit. It must be issued for an amount equal to the required deposit and for a two-year period. If the account has not kept a satisfactory payment record by then, the utility will require the bond beyond two years until it does.

A satisfactory record under the tariff means no disconnection for nonpayment and no more than two Notices of Discontinuance in the most recent 12 months, with none in the most recent six months.

Who does not need a deposit at all

Check these before buying a bond. A former commercial or industrial customer whose prior service lasted at least 24 months within the last three years, with a satisfactory payment history, does not have to make a deposit. An applicant can also ask the company to pull a commercial credit report in the exact account name. If it shows bills equal to or greater than the estimated monthly gas and electric bills are paid within 60 days, no deposit is required. That option is not available if the applicant has other commercial accounts with the company that lack a satisfactory history.

When a deposit comes back later

An existing business can be asked for a deposit, and so a bond, after the fact. That happens when service is cut off for nonpayment, when the customer receives a fourth Notice of Discontinuance within six months, when the customer opens a new location without a clean record on its other accounts, and when the business is in bankruptcy or court-ordered reorganization.

The rules behind the tariff

The Colorado Public Utilities Commission regulates deposits under Rule 3403 of 4 CCR 723-3, which covers applications for service, customer deposits and third-party guarantee arrangements. Confirm the deposit amount and the bond form the company wants with Xcel Energy before the bond is issued.

What it costs

You pay the surety an annual premium, not the face amount. The premium depends on the bond amount and the business owner's credit and financial history.

Eligibility and Requirements for a Colorado Utility Deposit Bond:

Public Service Company of Colorado named as obligee.
Bond amount equal to the required deposit, which for commercial and industrial service is an estimated 90 days' bill.
Two-year bond term, extended if the account does not keep a satisfactory payment record.
Account name on the bond matching the utility account exactly.
Separate deposit, and so a separate bond, may be required at each new location.

Colorado Utility Deposit Bond FAQs:

How much will my utility deposit bond be?

The same as the cash deposit Xcel Energy would ask for. For commercial and industrial accounts, the tariff sets that at an estimated 90 days' bill for the location, so the amount depends on your expected usage.

Can I avoid the deposit altogether?

Possibly. If you had commercial or industrial service with the company for at least 24 months in the last three years with a good payment history, no deposit is required. You can also ask the company to pull a commercial credit report showing your bills are paid within 60 days.

How long does the bond have to stay in place?

The tariff requires it to be issued for two years. If your payment record is not satisfactory at that point, the company will require the bond to continue until it is.

What happens if I do not pay my bill?

The utility can make a claim against the bond for unpaid charges. The surety pays valid claims up to the bond amount and then collects that money back from your business.