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W A T E R E N E R G Y I I F F <br />19& <br />PUBLIC UTILITIES <br />RIVERSIDE PUBLIC UTILITIES <br />Board Memorandum <br />BOARD OF PUBLIC UTILITIES DATE: FEBRUARY 13, 2017 <br />ITEM NO: 5 <br />SUBJECT: 2017 ANNUAL INTEREST RATE OF 0.02% TO BE PAID ON CUSTOMER DEPOSITS <br />ISSUE: <br />Approve the 2017 annual interest rate of 0.02% to be paid on customer deposits, as provided by Riverside <br />Public Utilities' Electric and Water Rules. <br />RECOMMENDATION: <br />That the Board of Public Utilities approve the annual interest rate of 0.02% 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 18% of the <br />Utility's customers fit this category, with combined deposits totaling $4.6 million. Currently, 48% 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 />DISCUSSION: <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 2017 is 0.02%. The investment of funds on deposit must be <br />short-term and highly liquid. The calculation is performed annually and is reflective of current market <br />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 <br />Approved by: Girish Balachandran, Utilities General Manager <br />Approved by: John A. Russo, City Manager <br />Approved as to form: Gary G. Geuss, City Attorney <br />Certifies availability <br />of funds: Laura Chavez -Nomura, Utilities Assistant General Manager/Finance <br />