North Carolina Utility Deposit Bond: A Comprehensive Guide
At a Glance:
- Average Cost: Between 2% to 15% of the bond amount per year based on the applicant’s credit
- Bond Amount: Determined on a case-by-case basis
- Who Needs it: Certain businesses that do not want to pay a cash deposit to activate utility services
- Purpose: To ensure utility companies receive compensation for financial harm if the business fails to pay their utility bills
- Who Requires Utility Deposit Bonds in North Carolina: Utility companies that provide services to the general public
Background
Utility companies in North Carolina often require customers expected to generate large monthly bills to pay a security deposit before initiating service. The security deposit protects utility companies from losses if the consumer fails to pay their monthly bills on time and in full. However, certain utility companies in North Carolina allow customers to purchase and maintain a surety bond in lieu of depositing cash. Unlike most surety bonds, utility deposit bonds are not required by a government agency but by the utility company providing the service (unless a municipality owns the utility company).
What is the Purpose of the North Carolina Utility Deposit Bond?
Certain utility companies in North Carolina require consumers that do not wish to pay a security deposit to purchase a surety bond as a prerequisite to obtaining utility services. The bond ensures that the utility company will receive compensation for financial harm if the consumer fails to comply with the provisions laid out in the bond form. Specifically, the bond protects the utility company if the consumer does not pay their monthly bills. In short, the bond is a type of insurance that protects utility companies if the consumer fails to remit all required payments.
How Can an Insurance Agent Obtain a North Carolina Utility Deposit Surety Bond?
BondExchange makes obtaining a North Carolina Utility Deposit Surety Bond easy. Simply login to your account and use our keyword search to find the “utility” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
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Which Companies Allow Utility Deposit Bonds in North Carolina?
The following North Carolina utility companies allow customers to purchase a surety bond in lieu of depositing cash:
Apex Utilities
Commercial customers that are required to pay a security deposit may opt to purchase a surety bond in lieu of depositing cash. The bond amount must equal a two-month average bill (actual or estimated) for the location. Businesses that submit a letter of credit from another utility company showing that they had no more than two late payments during a 12-month period may have their deposit requirement waived.
Agents can contact Apex Utilities here.
Brunswick Electric Membership Corporation
Non-residential customers must either purchase a surety bond or deposit cash before initiating service. The bond amount must equal twice the location’s average monthly bill (actual or estimated) or $500, whichever is greater.
Agents can contact the Brunswick Electric Membership Corporation here.
Duke Energy
Businesses are required to either purchase a surety bond or deposit cash. The bond amount is determined by Duke Energy on a case-by-case basis based on the location’s estimated usage.
Agents can contact Duke Energy here.
Clayton Utilities
Non-residential customers must either purchase a surety bond or deposit cash in an amount equal to two and half times the location’s average monthly bill or that of a similar business if the location is newly constructed. After 18 months of on-time payments, the bond amount may be reduced to the location’s average monthly bill.
Agents can contact Clayton Utilities here.
Dominion Energy
Commercial customers may opt to purchase a surety bond instead of depositing cash. The bond amount is determined on a case-by-case basis based on the customer’s estimated usage.
Agents can contact Dominion Energy here.
Fayetteville Public Works Commission
Businesses must either purchase a surety bond or deposit cash. The bond amount must equal twice the location’s estimated monthly bill, as determined by the commission.
Agents can contact the Fayetteville Public Works Commission here.
Greenville Utilities Commission
Businesses are required to either deposit cash or purchase a surety bond before initiating service. The bond amount must equal two times the location’s highest monthly bill or that of a similar business if the location is newly constructed.
Agents can contact the Greenville Utilities Commission here.
Haywood EMC
Non-residential customers must either purchase a surety bond or deposit cash. The bond amount must equal three times the location’s actual or estimated average monthly bill.
Agents can contact Haywood EMC here.
Mountain Electric Cooperative
Commercial customers are required to purchase a surety bond or deposit cash before initiating service. The bond amount must equal twice the location’s highest monthly bill (or that of a similar location).
Agents can contact Mountain Electric Cooperative here.
New Bern Utilities
Businesses applying for service can either purchase a surety bond or deposit cash. The bond amount must equal the location’s two highest bills during the past 24 months. If the location is a new construction, the bond amount will be determined based on the two highest bills of a similar location.
Agents can contact New Bern Utilities here.
Piedmont Natural Gas Company
Commercial customers whose security deposit amount exceeds $500 may choose to purchase a surety bond instead of depositing cash. The bond amount must equal the location’s two highest monthly bills within the previous year (estimated if new construction).
Agents can contact the Piedmont Natural Gas Company here.
Randolph Electric Membership Corporation
Commercial customers required to pay a security deposit can choose to purchase a surety bond in lieu of depositing cash. The bond amount is determined on a case-by-case basis based on the customer’s credit rating and/or overall risk profile (as determined by the corporation).
Agents can contact Randolph Electric Membership Corporation here.
Rocky Mount Utilities
Commercial customers must either purchase a surety bond or deposit cash. The bond amount is determined on a case-by-case basis based on the business’s estimated usage.
Agents can contact the city of Rocky Mount here.
Shelby Utilities
Non-residential customers whose required security deposit amount is less than $2,000 and do not meet the city’s creditworthiness requirements may purchase a surety bond, obtain a letter of credit, or deposit cash. However, non-residential customers whose deposit amount exceeds $2,000 must purchase a surety bond. The deposit amount is determined by the city on a case-by-case basis.
Agents can contact Shelby Utilities here.
Statesville Utilities
Commercial customers must either deposit cash or purchase a surety bond before initiating service. The bond amount must be a minimum of $300 and equal the location’s highest bill during the previous 12 months (estimated if a new construction).
Agents can contact the city of Statesville here.
Smithfield Utilities
The town of Smithfield allows businesses to purchase a surety bond instead of depositing cash. The required bond amount must equal twice the location’s average monthly bill.
Agents can contact the town of Smithfield here.
Union Power Cooperative
Commercial customers are required to either purchase a surety bond or deposit cash. The bond amount must equal the location’s two highest monthly bills (estimated if a new construction).
Agents can contact Union Power Cooperative here.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
Is a Credit Check Required for the North Carolina Utility Deposit Bond?
Surety companies will run a credit check on the applicant to determine eligibility and pricing for the North Carolina Utility Deposit bond. Applicants with excellent credit and work experience can expect to receive the best rates. Applicants with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.
How Much Does the North Carolina Utility Deposit Bond Cost?
Most North Carolina Utility Deposit bonds will cost anywhere between 2% to 15% of the bond amount per year. Insurance companies determine the rate based on a number of factors, including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $10,000 bond requirement.
$10,000 Utility Deposit Bond Cost
| Credit Score* | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $200 | $20 |
| 680 – 799 | $300 | $30 |
| 650 – 679 | $500 | $50 |
| 600 – 649 | $750 | $75 |
| 550 – 599 | $1,500 | $150 |
North Carolina Utility Deposit bonds required by Duke Energy are priced differently and can cost anywhere between 2% to 7.5% of the bond amount per year. Below is a breakdown of the approximate cost for a $10,000 bond requirement.
$10,000 Duke Energy Utility Deposit Bond Cost
| Credit Score* | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $200 | $20 |
| 680 – 799 | $500 | $50 |
| 600 – 679 | $750 | $75 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Do North Carolina Utility Customers File Their Bonds?
Utility customers in North Carolina should submit their completed bond forms, including the power of attorney, to the company requiring the bond. The surety bond requires signatures from both the surety company that issues the bond and from the customer. In some instances, the bond will require witness signatures as well. Generally, the surety company will include the following information on the bond form:
- Name and address of entity/individual(s) buying the bond
- Surety company’s name and address
- Entity requiring the bond
- Bond amount
- Date the bond is signed
- Date the bond goes into effect
What Can Utility Customers in North Carolina Do to Avoid Claims Against Their Bonds?
To avoid claims on their bonds, utility customers in North Carolina must ensure they pay their utility bills on time and in full.
What Other Insurance Products Can Agents Offer Utility Customers in North Carolina?
Utility companies generally only require businesses to be bonded. As such, agents can offer their customers general business and liability insurance in addition to the utility deposit bond. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
Should Your Customer Purchase a Surety Bond or Deposit Cash?
Surety bonds are generally considered the better option for businesses, as they free up working capital that would otherwise have to be deposited with the utility company. For more information on whether your customer should purchase a bond or deposit cash, check out our Surety Bonds vs. Letters of Credit article here.