Surety Bond Encyclopedia

Utility Deposit Bond - Duke Energy Progress LLC in South Carolina

Brief Summary

Duke Energy Progress can ask a South Carolina business for up to two months of estimated electric bills as a deposit, and hold it for two years or longer. South Carolina's deposit rule lets the utility take a surety bond from a nonresidential customer instead. The cash stays in your operating account, and you pay an annual premium for the bond.

Duke Energy Progress may require a deposit from a South Carolina customer who cannot show satisfactory credit, has a record of late payments, has had service cut off for nonpayment or fraudulent use, or, for a business, is in financial difficulty under Duke's internal credit criteria. The deposit can be as much as an estimated two months of bills. For nonresidential customers, S.C. Code Regs. 103-331(C) allows the utility to accept a surety bond in place of the cash deposit, with Duke Energy Progress LLC as obligee.

We can help with all South Carolina bonds!

How to Apply for an Utility Deposit Bond:

Ask Duke Energy Progress whether it will accept a surety bond for your account and what amount it requires.
Get Duke's required bond wording or form, if it has one, before the bond is issued.
Have the account holder's exact legal name and the service address or account number.
Complete the bond application with owner or company financial information for underwriting.
Pay the premium and receive the signed bond.
Deliver the original bond to Duke Energy Progress and confirm it has been applied to the account.

Detailed Information About the South Carolina Utility Deposit Bond:

A bond is a business account option, and it is Duke's call

Most people assume any customer can swap an utility deposit for a bond. The South Carolina rule is narrower. Regulation 103-331(C) says that for non-residential customers the electrical utility may use security options other than the payment of a two-month cash deposit, including accelerated payment plans, surety bonds, bank letters of credit or a combination of these. The word is may. Duke Energy Progress decides whether a bond is acceptable for a given account, so get its agreement, the required amount and its bond wording before the bond is written.

Residential customers are handled differently. Under 103-331(A)(2) a new customer can avoid a deposit by showing good credit through a letter of good credit from an electrical utility, references that can be checked quickly, or an acceptable cosigner or guarantor on the same system within South Carolina who guarantees payment up to the maximum deposit.

When Duke can ask for a deposit

Regulation 103-331(A) lets an electrical utility require a deposit to guarantee payment of bills if any of these apply:

The customer has had two consecutive thirty day arrears, or more than two nonconsecutive thirty day arrears, in the past twenty-four months.
A new customer cannot demonstrate that it is a satisfactory credit risk.
The customer has no deposit and is currently delinquent on that same standard.
Service was terminated for nonpayment or fraudulent use.
A nonresidential customer or its parent company is experiencing financial difficulties under the utility's internal credit risk rating criteria, even with no default yet, and has not negotiated an alternative payment plan.

That last trigger surprises businesses that have always paid on time. A credit downgrade at the parent company can be enough.

How the amount is set

Regulation 103-332 caps the deposit at an estimated two months (sixty days) of bills for a new customer. For an existing customer the cap is the total of the highest two consecutive months of actual bills over the preceding twelve months, or the portion of the year if service is seasonal. The amount can be adjusted up or down to reflect actual billing and payment habits, so a bond sized to today's usage may need a rider if the account grows.

Getting released

Under 103-336(A) a deposit is refunded after two years unless the customer has had two consecutive thirty day arrears, or more than two nonconsecutive ones, in the past twenty-four months. Under 103-336(B) the utility does not have to refund a nonresidential customer's deposit while that customer or its parent is in financial difficulty or bankruptcy may be imminent. Ask Duke in writing how and when it will release the bond.

Eligibility and Requirements for a South Carolina Utility Deposit Bond:

Duke Energy Progress LLC named as obligee.
Bond amount no higher than the deposit Duke could require under S.C. Code Regs. 103-332, generally up to two months of estimated or actual bills.
Nonresidential account. Regulation 103-331(C) lists surety bonds as a security option for non-residential customers.
Principal name matching the name on the Duke account exactly.
Surety company acceptable to Duke Energy Progress.

South Carolina Utility Deposit Bond FAQs:

Does Duke Energy Progress accept a surety bond instead of a cash deposit in South Carolina?

For business accounts the rule allows it. S.C. Code Regs. 103-331(C) lets an electrical utility use security other than a two-month cash deposit for non-residential customers, and surety bonds are named in the rule. It is the utility's option, so confirm with Duke that it will accept a bond for your account before you buy one.

How much will the bond need to be?

It tracks the deposit Duke could require. Under 103-332 that is up to an estimated two months of bills for a new customer, or the highest two consecutive months of actual bills in the past twelve months for an existing one. Duke can adjust the figure up or down based on actual billing and payment history.

We have never paid late. Why is Duke asking for a deposit?

A new account that cannot show satisfactory credit can be asked for one. A nonresidential customer can also be asked if it or its parent company is in financial difficulty under Duke's internal credit risk criteria, even with a clean payment record, unless it has negotiated an alternative payment plan.

Can a residential customer use this bond?

The bond option in 103-331(C) is written for non-residential customers. A residential customer can avoid a deposit by showing good credit through a letter from another electric utility, checkable references, or an acceptable cosigner or guarantor on the same system within South Carolina.

When does the obligation end?

Cash deposits are refunded after two years unless there have been two consecutive thirty day arrears, or more than two nonconsecutive ones, in the past twenty-four months. Duke does not have to refund a business customer that is in financial difficulty. Ask Duke in writing when it will release the bond, and keep the bond in force until it does.