Can the electricity company charge a deposit regardless of credit?

May 16, 2008 10:03 AM

I am new to renting and I just called the power company and they said that I have to pay a deposit no mater what my credit is. Is this normal practice?

I am a college student at Penn State University and I am renting a townhouse in the area. When I called the power company (Allegheny Power) to create an account, they told me that no matter what my credit, I still have to pay a deposit equal to an estimated two months of electricity.

Their monthly estimate for a 3 bedroom, 3.5 bath townhouse is $160/month which I know for a fact is high because the previous tenant said their highest bill was $70/month. This made my deposit $320.

My questions to the hive-mind are is this a normal practice? Are they allowed to do that without even taking into account your credit?

posted by stevechemist to Home & Garden (31 answers total)

Yes.
posted by enn at 10:09 AM on May 16, 2008

This was normal in the college town I rented in a few years back. Except it was a flat fee of $100.
posted by nitsuj at 10:09 AM on May 16, 2008

It was everywhere I looked in the Bay area.
posted by jeffamaphone at 10:10 AM on May 16, 2008

Only $320? IIRC, I had to give BC Hydro a $400+ deposit for my two bedroom apartment a couple of years ago. It's annoying as hell, but unfortunately status quo.
posted by Nelsormensch at 10:15 AM on May 16, 2008

My utilities provider only makes you pay the deposit if you opt to pay your monthly bills via cheque. If you authorize them for direct-debit, the deposit is waived. This is in a university town but is in Canada. I don't know how different stuff is in the States.
posted by LunaticFringe at 10:16 AM on May 16, 2008

For our electric company (the once mentioned on a Mefi podcast we-energies), you do have to give a deposit regardless of credit if you don't already have an active account with them.
posted by drezdn at 10:19 AM on May 16, 2008

Whoa! I had to pay a deposit that was later applied directly to my bill after six months, it was $17. If I run my AC my highest bill is $75/month, this is in the midwest though.
posted by Science! at 10:21 AM on May 16, 2008

Pretty standard from what I've seen, yes.
posted by restless_nomad at 10:25 AM on May 16, 2008

Yes (Austin, TX).

They're the power company, they're allowed to do whatever they want.
posted by fiercecupcake at 10:25 AM on May 16, 2008

I didn't have to, but the account is listed as me, 'renter at'. The local power company, PSEG, apparent does that a lot with apartments, where the complex as a whole has unit bills, and they just put you on as 'renter' for payment purposes. When you move out the bill reverts back to the complex for the month or so that the unit is empty while they clean and paint.
posted by mephron at 10:33 AM on May 16, 2008

Yep, this is normal.

(I am currently spending a lot of time in an electric co collections dept and they need those deposits, given the high default rate.)
posted by charlesv at 10:36 AM on May 16, 2008

Just reread your post, so full disclosure: Allegheny is a client of mine.
posted by charlesv at 10:39 AM on May 16, 2008

(In San Antonio, TX) Our deposit was contingent only on a history of on-time electricity bills with CPS. As I did not have any history with CPS, I payed a deposit that was refunded to me after 1 year.
posted by muddgirl at 10:42 AM on May 16, 2008

Sounds normal to me. I was able to get around the mandatory deposit when I lived in an apartment by setting up the electric bill to automatically draft from my checking account every month. Try asking if that is an option with your electric company?
posted by geeky at 10:43 AM on May 16, 2008

Wow, weird. I'm in Oregon, and I've lived in Vancouver, WA as well. In 8 years of renting (various places) and 4 years of homeownership, I've never payed a deposit.
posted by peep at 10:50 AM on May 16, 2008

Wow, apparently I should never move. I've never heard of this (Wisconsin).
posted by echo target at 10:50 AM on May 16, 2008

Yes, what everyone else said. However, you will get it back either when you move or after a year or so, which can help. In addition, I hate to be the one to tell you, but you're almost certainly going to have to pony up a deposit for the water company, landline phone (if any) and cable as well.
posted by mygothlaundry at 10:50 AM on May 16, 2008

Of course they can charge you a deposit. Why on earth wouldn't they be allowed to do that?
posted by toomuchpete at 11:15 AM on May 16, 2008

Yeah, also an Oregonian and never had to pay a deposit...I've actually never heard of a deposit for utilities before....
posted by Bibliogeek at 11:20 AM on May 16, 2008

I have lived in many different places and most of them I had to pay such a deposit, unless I was moving from one city to another but keeping the same utility. Only a couple of utilities did not require a deposit for new customers. It wasn't always just limited to electric utilities either.
posted by caddis at 11:26 AM on May 16, 2008

Dallas, Tx area, here. When I opened my first account with TXU electric about 5 years ago, I had to pay a deposit. I later switched companies and the deposit was refunded to me, with no deposit required at the new company due to good payment history with TXU. I've switched a few times since then(for a better rate, etc) and have never been asked to pay another deposit. I've never been late on a utility bill, either, though.
posted by owtytrof at 11:31 AM on May 16, 2008

Two months is high, in my experience, but paying deposits on all utilities is SOP. I've been pleasantly surprised the few times one wasn't requied of me, as a many-times renter and now homeowner.
posted by notashroom at 12:10 PM on May 16, 2008

In my experience whenever you open an account with a utility company that you've never done business with they will require a deposit. In my experience they have allowed the deposit to be paid over 2 to 3 billing cycles. When I opened an account with the local electricity company last year my deposit was the 2 months average bill. After 6 months of paying my bill on time they credited my account the full amount of the deposit and I didn't have to pay 2 months of bills because of the credit.
posted by illek at 12:27 PM on May 16, 2008

Ames, IA here, so another huge college town.

The only way I've attempted to opt out of a deposit was to get a letter of credit from my previous util company. Unfortunately, I got it late so I still had to pay a deposit. If you're moving from the residence halls and have never had utils in your name before, you're SOL. Usually if you just transfer addresses with the same util company, you shouldn't have to pay the deposit again assuming you were in good standing with them.
posted by sararah at 12:29 PM on May 16, 2008

I missed the part where you said you were a student earlier. When I was a student, my university had a special program they ran through the off-campus housing department. Students would pay a small fee to the university. The university would then acts as guarantor for the student and protects their credit, and the utility companies don't have to worry about getting paid. You may want to contact Penn State's off-campus housing department to see if they offer a similar service.
posted by geeky at 12:50 PM on May 16, 2008

Ottawa, Canada here confirming that yes, this is normal practice for Hydro Ottawa. The money is credited back to you in one year's time, not refunded but credited to your account. Now the amount of the deposit, THAT is up for grabs - they quoted me an astronomical deposit ($350 - 5 months of regular service cost!) but quoted a substantially smaller one ~$100 for my partner. I should note that I don't have bad credit, coming straight from University I simply didn't have ANY real credit history.
posted by Meagan at 12:53 PM on May 16, 2008

He's in Pennsylvania. Guess what? Public utility laws in California, Texas, Oregon, Washington, Wisconsin, Iowa, and Canada do not apply to him.

The facts are at the Pennsylvania Public Utilities Commission. The utility can require a deposit equal to two months' estimated billing if you lack a qualifying credit history or have a poor payment record with the utility. If you are certain these don't apply to you, fight the power! If you're a college student, though, chances are you don't have enough of a positive credit history to qualify (having no negative credit history isn't enough).
posted by gum at 12:56 PM on May 16, 2008

Laws vary from state to state, and practices vary from company to company. If a deposit isn't mandated by the state or county, companies usually choose require deposits from people for a variety of reasons:

Student status
Bad credit
History of people living in your building defaulting on bills
History of people living in your city defaulting on bills
Company policy
...And more!

But, yes, as others have said...they were perfectly within their rights to require a deposit. If you don't like it, then don't use electricity.
posted by phunniemee at 2:01 PM on May 16, 2008

I've paid deposit for utilities, so yes, it happens. Make sure you get interest. And it should be close to prime (~5%). There's got to be regulations on paying interest on deposits in PA, otherwise the utility company could all just ask for a $1000 "deposit" from all customers and effectively get a massive interest-free loan.
posted by kamelhoecker at 3:06 PM on May 16, 2008

He's in Pennsylvania. Guess what? Public utility laws in California, Texas, Oregon, Washington, Wisconsin, Iowa, and Canada do not apply to him.

Thanks for pointing out what we all assumed, gum. I think most of us were answering this part of his question:

is this a normal practice?
posted by muddgirl at 3:12 PM on May 16, 2008 [2 favorites]

I've never been charged a deposit by any of the electricity providers that I've used and I am actually surprised by the number of people that say this is a normal practice.
posted by gyc at 4:21 PM on May 16, 2008