Hydro One, Ontario’s largest electricity provider, announced Tuesday it will permanently eliminate security deposits for all residential customers and will return more than $12 million already held by the company. The funds will be returned to approximately 12,000 residential and commercial customers.
Hydro One says it will also reduce the length of time it holds security deposits for commercial customers, from five to seven years of good payment history to just one year.
In total, $1.7 million in security deposits will be returned to 5,600 residential customers – an average of $300 each. Commercial customers, whose security deposits are significantly higher than residential customers due to greater usage and larger monthly bills, will see $10.7 million returned. The money will be split between 6,300 businesses, an average of $1,700 per customer.
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Hydro One says this shift in policy is being made out of “fairness to all customers” and a desire to assist those who’ve fallen behind on their bills.
“This policy targeted new customers or customers that were having difficulties keeping current on their bills,” said Ferio Pugliese, executive vice president of customer service at Hydro One. “Requiring a security deposit to be paid when they are potentially already having a hard time with their finances didn’t seem fair.”
The Ontario Energy Board, which regulates portions of the province’s electricity sector, allows companies to charge residential and commercial customers security deposits. Any new customer without previous billing history from another utility — or a “satisfactory” credit check paid for at the customer’s expense — can be assessed a security deposit.
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Customers with poor payment history — those who’ve missed more than one payment, been sent multiple disconnection notices or had someone show up at their home or place of business to collect an overdue balance or perform a disconnection — may also be assessed a security deposit.
New customer relief
In addition to relaxing its security deposit rules, Hydro One is also launching a new relief program to help residential customers who’ve accumulated more than $2,500 in unpaid bills.
The new program is an extension of the company’s Winter Relief Program that launched last December following a Global News investigation into inconsistencies in the company’s billing practices and disconnection policy.
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The program will offer one-on-one assistance to more than 3,300 eligible customers. It will provide a free, in-home energy efficiently audit, enrollment in the province’s various energy assistance programs, a programmable thermostat and more flexible payment options.
“We believe this encourages folks to work directly with us and to find payment plans they can continue to support,” said Pugliese.
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Hydro One says it will also refrain from disconnecting any customer behind on their bill until at least June 1. This is one month longer than the May 1 deadline imposed by the Ontario Energy Board after a Global News investigation into winter disconnections led Premier Kathleen Wynne to ban the practice.
Hydro One says it will go even further by refraining from disconnecting any customer after the company’s self-imposed June 1 deadline so long as they’re working to pay down their bill. According to Pugliese, understanding the needs of individual customers while preventing disconnection is a key component of the company’s efforts to become a more customer-centered organization.
New policy differs from other companies
Hydro One’s new security deposit rules differ significantly from those of other companies and the minimum requirements outlined by the Ontario Energy Board.
Last week Global News profiled Toronto-area business owner Mary Stantis, who alleges her utility provider – Toronto Hydro – refuses to release a $4,000 security deposit at the end of a promised five-year term, despite numerous assurances the company would.
In Stantis’ case, Toronto Hydro says it made a mistake by initially placing Urban Tan in a category of business customers that requires a five-year security deposit instead of seven years.
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Despite this mistake, Toronto Hydro says it will not release Stantis’ security deposit for another two years. As of Tuesday, this has not changed.
“We feel for the customer as they’re an independent business and we recognize that this is likely not a small amount of money to them,” said Tori Gass, a spokesperson for Toronto Hydro, adding the company will look into the situation and make sure it doesn’t happen again
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According to Gass, Toronto Hydro assesses a five- or seven-year security deposit for all new businesses without previous billing history or a satisfactory report from a credit rating agency. Deposits are collected to protect Toronto Hydro — and its customers — from any unpaid debts or losses should a new business go bankrupt.
Citing Industry Canada statistics, Gass says less than half of new small and medium-sized business make it to their fifth year. The security deposit is therefore essential to protect the company from incurring bad debt, says Gass.
Hydro One, meanwhile, says releasing security deposits to businesses after only one year of good payment history will encourage companies to grow. The hope, says Pugliese, is that by returning the funds early, companies will be able to hire more, expand services or pay down existing debt.
“There’s certainly risk associated, but it’s a calculated risk and one that we’ve looked at,” said Pugliese. “So, if they’re paying their bills and they’re in good standing, we want to work with them so they can unlock that value and apply it to their business and continue to get on with what they want to do.”
— With files from Sean O’Shea and Alana MacLeod
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