Security Deposits and Your Local Utility

Both your electricity and natural gas utilities may ask you for a security deposit upon starting service. They may use this security deposit for your bill if you have not paid it. This policy is approved of by the Ontario Energy Board and is not optional: if you have been requested to pay a security deposit and do not do so, your local utility may refuse to start your connection or disconnect you from service. A security deposit is usually asked of new customers, but existing customers may also be asked to pay a security deposit if they need service at a new location.

When You Will Have to Pay a Security Deposit

When you open a new account, you utility will ask to do a credit check to determine whether you will need to pay a security deposit and how much you will have to pay.

If you are a new customer:

You will likely have to pay a security deposit if:

• You have no payment history with another utility
• Your payment history with another utility is poor
• Your credit record is not satisfactory

Exemptions
You are exempt from paying a security deposit if you can demonstrate at least one year of good payment with another utility

If you are a returning customer:

Even as an existing customer of your local utility, you may still be required to pay a security deposit if:

• You have bounced more than one cheque or you have not paid more than one pre-authorized payment
• You have received a warning noticeof disconnection or have been disconnected from service at least once in the past year
• Your utility has come on a collecion or disconnectiont trip to your place of service
• Your deposit has already been applied to outstanding debt and you must pay it back

Exemptions
You may be exempt from paying a security deposit if you are a qualified low-income customer. For natural gas, you must also sign up for Budget or Equal Billing plans, and must have 2 years good payment history.

Security Deposit Amount

The security deposit required for electricity is calculated based on your previous bills. If you have no history with a previous Canadian utility (if this is the first time a utility is in your name or if you are moving into the province), your deposit will be based off of average bills from the residence that you are moving into. Depending on the billing schedule of your previous utility, the maximum amounts that can be asked for electricity are:

• 2.5 times your average monthly bill,
• 1.75 times your average bi-monthly bill, or
• 1.5 times your average bill

If your energy consumption increases you may be asked to add to your security deposit accordingly, though it cannot exceed this maximum amount.

For natural gas, the security deposit amount that customers have to pay depends on the utility: Enbridge requires a fixed $250 deposit, while the security deposit for Union Gas is equal to two of the average month’s gas usage based on the last 12 months usage history.

You can ask to pay the deposit in equal installments for up to 6 months, for both electricity and natural gas

When is the Security Deposit Returned?

You are entitled to receive your security deposit after one year of good payment history. If you close your account or move, your utility must return your deposit within six weeks. All deposits must be paid back with interest (calculated at Bank of Canada prime business rate minus 2%), which is paid annually when the deposit is kept. Most of the time you will see this interest as a credit to your bill (to your final bill, if you are closing your account).

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