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WATER ENERGY LIFE <br />CITY OF <br />RjVEIZSIDE <br />lag <br />PUBLIC UTILITIES <br />RIVERSIDE PUBLIC UTILITIES <br />Board Memorandum <br />BOARD OF PUBLIC UTILITIES <br />DATE: FEBRUARY 26, 2024 <br />SUBJECT: ESTABLISH 2024 ANNUAL INTEREST RATE OF 5.10% TO BE PAID ON <br />CUSTOMER DEPOSITS <br />ISSUE: <br />Consider approving an annual interest rate on customer deposits for the calendar year 2024 <br />at the rate of 5.10% per annum, as provided by Riverside Public Utilities' Electric and Water <br />Rules. <br />RECOMMENDATION: <br />That the Board of Public Utilities approve the annual interest rate on customer deposits for <br />the calendar year 2024 at the rate of 5.10% per annum, as provided by Riverside Public <br />Utilities' Electric and Water Rules. <br />BACKGROUND: <br />Per Electric and Water Rules 4, deposits are collected from customers who wish to establish <br />service that do not have a good credit history, based on review from a national credit bureau <br />which evaluates the history of late payments and other negative events, or from customers <br />who have been disconnected and want service to be reconnected. Approximately 14% of the <br />Utilities' customers meet the criteria of this category, with combined deposits totaling just over <br />$5.8 million. Currently, 74% 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 <br />applied monthly to the deposits received. Deposits are held for one year or upon termination <br />of services. If the customer account is in good standing, the deposit, plus interest, is applied <br />to the customer's account to offset any outstanding balance or refunded to the customer if <br />no balance is due. Electric and Water Rules 4 require the Board of Public Utilities to annually <br />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 <br />customer deposits is based on the one-year annual average Daily Treasury Yield rate. The <br />use of the one-year average Treasury Yield for the allocation of interest to deposits is based <br />