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W A T E R E N E R G Y L I F E <br />1_ <br />V" 19& RIVERSIDE PUBLIC UTILITIES <br />P U B L I C U T I L I T I E$ Board Memorandum <br />BOARD OF PUBLIC UTILITIES DATE: FEBRUARY 12, 2018 <br />ITEM NO: 10 <br />SUBJECT: 2018 ANNUAL INTEREST RATE OF 0.02% TO BE PAID ON CUSTOMER DEPOSITS <br />ISSUE: <br />Approve the 2018 annual interest rate of 0.02% to be paid on customer deposits, as provided by <br />Riverside 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 <br />history, or from customers who have been disconnected and want service to be reconnected. <br />Approximately 17% of the Utility's customers fit this category, with combined deposits totaling almost <br />$5.1 million. Currently, 57% of that total represents commercial customers. <br />The minimum residential deposit is $100 for electric and $40 for water service. Commercial customers <br />are charged a deposit equal to two month's service for the location. Interest is applied monthly to the <br />deposits received. Deposits are held for one year or upon termination of services. If the customer <br />account is in good standing, the deposit, plus interest, is applied to the customer's account to offset any <br />outstanding balance or refunded to the customer if no balance is due. Electric and Water Rules 4 require <br />the Board of Public Utilities to annually establish the interest rate for the held deposits. <br />DISCUSSION: <br />The methodology used to determine the amount of interest to record monthly to utility customer deposits <br />is based on an average annual percentage yield (APY) provided by local banks' on basic customer's <br />savings accounts on deposit. The APY rates are obtained from four major banks' websites on a <br />quarterly basis and an average of the rates is calculated annually. The rate calculated for 2018 is 0.02%. <br />FISCAL IMPACT: <br />Deposits held on customer accounts are credited with interest earnings at current market rates. <br />Prepared by: Laura Chavez -Nomura, Utilities Assistant General Manager/Finance <br />Approved by: Todd Jorgenson, Interim 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 />