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W A T F R F N i , G V L i F l <br />RIVERSIDE PUBLIC UTILITIES <br />W& Board Memorandum <br />PUBLIC UTILITIES <br />BOARD OF PUBLIC UTILITIES DATE: MARCH 8, 2021 <br />SUBJECT: 2021 ANNUAL INTEREST RATE OF 0.37% TO BE PAID ON CUSTOMER <br />DEPOSITS <br />ISSUE: <br />Approve the 2021 annual interest rate of 0.37% 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 0.37% for customer deposits. <br />BACKGROUND: <br />Electric and Water Rules 4 require the Board of Public Utilities to annually establish the interest <br />rate for the held deposits. <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 Utilities' customers fit this category, with combined deposits totaling just <br />over $5.5 million. Currently, 63% of that total represents commercial customers. <br />The minimum residential deposit is $100 for electric and $40 for water service. Commercial <br />customers are charged a deposit equal to two months service for the location. Interest is applied <br />monthly to the deposits received. Deposits are held for one year or upon termination of services. <br />If the customer account is in good standing, the deposit, plus interest, is applied to the customer's <br />account to offset any outstanding balance or refunded to the customer if no balance is due. <br />DISCUSSION: <br />The methodology used to determine the amount of interest to record monthly to utility customer <br />deposits is based on the 1 -year annual average Daily Treasury Yield rate. The use of the 1 -year <br />average Treasury Yield for the allocation of interest to deposits is based on the fact that it is the <br />same type of short-term security the City acquires for use in the Citywide investment portfolio. <br />The average annual rate is obtained from the U.S. Department of the Treasury website. The rate <br />calculated for 2021 is 0.37%. <br />