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W A T E R E N E R 6, I <br />RIVERSIDE PUBLIC UTILITIES <br />W& Board Memorandum <br />PUBLIC UTILITIES <br />BOARD OF PUBLIC UTILITIES DATE: FEBRUARY 5, 2016 <br />ITEM NO: 4 <br />File ID — 16-0341 — C <br />SUBJECT: INTEREST RATE PAID ON CUSTOMER DEPOSITS <br />ISSUE: <br />The item for Board of Public Utilities consideration is approval of the annual interest rate to be paid on <br />customer deposits, as provided by Riverside Public Utilities' Electric and Water Rules. <br />RECOMMENDATION: <br />That the Board of Public Utilities approve the annual interest rate of 0.03% for customer deposits. <br />BACKGROUND: <br />Deposits are collected from customers who wish to establish service and do not have a good credit history, or <br />from customers who have been disconnected and want service to be reconnected. Approximately 17% of the <br />Utility's customers fit this category, with combined deposits totaling $4.0 million. Currently, 41% of that total <br />represents commercial customers. <br />The minimum residential deposit is $100 for electric and $40 for water service. Commercial customers are <br />charged a deposit equal to two month's service for the location. Interest is applied monthly to the deposits <br />received. Deposits are held for one year or upon termination of services. If the customer account is in good <br />standing, the deposit, plus interest, is applied to the customer's account to offset any outstanding balance or <br />refunded to the customer if no balance is due. Electric and Water Rules 4 require the Board of Public Utilities <br />to annually establish the interest rate for the held deposits. <br />The methodology used to determine the amount of interest to accrue monthly is based on an average of local <br />banks' passbook rates. The rate calculated for 2016 is 0.03% which remains the same as 2015. The <br />investment of funds on deposit must be short-term and highly liquid. The calculation is performed annually <br />and is reflective of current market conditions. <br />FISCAL IMPACT: <br />There is no fiscal impact associated with setting the interest rate paid to customer deposits. <br />Prepared by: Laura Chavez -Nomura, Utilities Assistant General Manager Finance/Administration <br />Approved by: Girish Balachandran, Public Utilities General Manager <br />Approved by: John A. Russo, City Manager <br />Approved as to form: Gary G. Geuss, City Attorney <br />