1. (a) Credit requirements for permanent residential applicants.

   1. (1) A utility may require a residential applicant for service to establish and maintain satisfactory credit as a condition of providing service.

      1. (A) Establishment of credit shall not relieve any customer from complying with the utility's requirements for prompt payment of bills.
      2. (B) The credit worthiness of spouses established during the last 12 months of shared service prior to their divorce, will be equally applied to both spouses for 12 months immediately after their divorce.

   2. (2) A residential applicant can demonstrate satisfactory credit using one of the criteria listed in subparagraphs (A) through (C) of this paragraph.

      1. (A) The residential applicant:

         1. (i) has been a customer of any utility for the same kind of service within the last two years;
         2. (ii) is not delinquent in payment of any utility service account;
         3. (iii) during the last 12 consecutive months of service was not late in paying a bill more than once;
         4. (iv) did not have service disconnected for nonpayment; and
         5. (v) is encouraged to obtain a letter of credit history from the applicant's previous utility. Utilities are encouraged to provide such information with final bills.

      2. (B) The residential applicant demonstrates a satisfactory credit rating by appropriate means, including, but not limited to, the production of:

         1. (i) generally acceptable credit cards;
         2. (ii) letters of credit reference;
         3. (iii) the names of credit references which may be quickly and inexpensively contacted by the utility; or
         4. (iv) ownership of substantial equity that is easily liquidated.
      3. (C) The residential applicant is 65 years of age or older and does not have an outstanding account balance incurred within the last two years with the utility or another utility for the same type of utility service.
   3. (3) If the applicant does not demonstrate satisfactory credit using these criteria, the applicant may be required to pay a deposit pursuant to subsection (c) of this section.
2. (b) Credit requirements for non-residential applicants. If an applicant's credit for service has not been demonstrated satisfactorily to the utility, the applicant may be required to pay a deposit.

3. (c) Initial deposits.

   1. (1) A residential applicant or customer who is required to pay an initial deposit may provide the utility with a written letter of guarantee pursuant to subsection (j) of this section, instead of paying a cash deposit.
   2. (2) An initial deposit may not be required from an existing customer unless the customer was late paying a bill more than once during the last 12 months of service or had service disconnected for nonpayment. The customer may be required to pay this initial deposit within ten days after issuance of a written disconnection notice that requests such deposit. Instead of an initial deposit, the customer may pay the total amount due on the current bill by the due date of the bill, provided the customer has not exercised this option in the previous 12 months.

4. (d) Additional deposits.

   1. (1) Residential Customers.

      1. (A) During the first 12 months of service, the utility may request an additional deposit from a residential customer. To require the deposit, the customer's actual usage must:

         1. (i) be three times estimated usage (or three times average usage of most recent three bills);
         2. (ii) exceed $150; and
         3. (iii) exceed 150% of the security held.

      2. (B) An additional deposit may also be required if:

         1. (i) actual billings of a residential customer are at least twice the amount of the estimated billings after two billing periods; and
         2. (ii) a suspension or disconnection notice has been issued for the account within the previous 12 months.
      3. (C) An additional deposit may be required to be paid within ten days after issuing written notice of suspension or disconnection and requested additional deposit
      4. (D) Instead of additional deposit, the customer may elect to pay the total amount due on the current bill by the due date of the bill, provided the customer has not exercised this option in the previous 12 months.
      5. (E) The utility may disconnect service if the additional deposit or the current usage payment is not paid within ten days of request provided a written suspension or disconnection notice has been issued to the customer. A suspension or disconnection notice may be issued concurrently with the written request for the additional deposit or current usage payment.

   2. (2) Non-residential customers. An additional deposit may be requested from a non-residential customer.

      1. (A) To require such a deposit, the actual billings of the non-residential customer must be at least twice the amount of the estimated billings, and a suspension or disconnection notice must have been issued on a bill within the previous 12 months.
      2. (B) The utility may require that the new deposit be made within ten days after issuing a written suspension or disconnection notice and a request for an additional deposit.
      3. (C) The utility may disconnect service if the additional deposit or the current usage payment is not paid within ten days of the request provided a written suspension or disconnection notice has been properly issued to the customer. A suspension or disconnection notice may be issued concurrently with the written request for the additional deposit or current usage payment.
5. (e) Deposits for temporary or seasonal service and for weekend residences. The utility may require a deposit sufficient to reasonably protect it against the assumed risk for temporary or seasonal service or service to a weekend residence, as long as the policy is applied in a uniform and nondiscriminatory manner. These deposits shall be returned according to guidelines set out in subsection (k) of this section.

6. (f) Amount of deposit.

   1. (1) The total of all deposits shall not exceed an amount equivalent to one-sixth of the estimated annual billing, except as provided in §26.29 of this title (relating to Prepaid Local Telephone Service). The estimated annual billings may include charges that are in a utility's tariffs including long distance charges only where the local exchange carrier bills those charges to the customer pursuant to its tariffs. Such charges shall not be included in calculating the deposit amount if federal authority so prohibits, or prohibits long distance charges as a condition for local service or as a reason for disconnection of local exchange service.
   2. (2) In determining the amount of any deposit permitted by this section, no revenue from non-tariffed products or services may be used.

7. (g) Interest on deposits. Each utility requiring deposits shall pay interest on these deposits at an annual rate at least equal to that set by the commission on December 1 of the preceding year, pursuant to Texas Utilities Code Annotated §183.003 (Vernon 1998) (relating to Rate of Interest). If a deposit is refunded within 30 days of receipt, no interest payment is required. If the utility keeps the deposit more than 30 days, payment of interest shall be made retroactive to the date of deposit.

   1. (1) Payment of the interest to the customer shall be made annually, if requested by the customer, or at the time the deposit is returned or credited to the customer's account.
   2. (2) The deposit shall cease to draw interest on the date it is returned or credited to the customer's account.
8. (h) Notification to customers. When a deposit is required, the utility shall provide applicants or customers written information about deposits by giving the customer a copy of the brochure, "Your Rights as a Customer".

9. (i) Records of deposits.

   1. (1) The utility shall keep records to show:

      1. (A) the name and address of each depositor;
      2. (B) the amount and date of the deposit; and
      3. (C) each transaction concerning the deposit.
   2. (2) The utility shall issue a receipt of deposit to each applicant paying a deposit and shall provide means for a depositor to establish claim if the receipt is lost.
   3. (3) A record of each unclaimed deposit must be maintained for at least four years.
   4. (4) The utility shall make a reasonable effort to return an unclaimed deposit.

10. (j) Guarantees of residential customer accounts.

    1. (1) A guarantee between a utility and a guarantor must be in writing and shall be for no more than the amount of deposit the utility would require on the applicant's account pursuant to subsection (f) of this section. The amount of the guarantee shall be clearly indicated in the signed agreement.
    2. (2) The guarantee shall be voided and returned to the guarantor according to the provisions of subsection (k) of this section.
    3. (3) Upon default by a residential customer, the guarantor of that customer's account shall be responsible for the unpaid balance of the account only up to the amount agreed to in the written agreement.

    4. (4) The utility shall provide written notification to the guarantor of the customer's default, the amount owed by the guarantor, and the due date for the amount owed.

       1. (A) The utility shall allow the guarantor 16 days from the date of notification to pay the amount owed on the defaulted account. If the sixteenth day falls on a holiday or weekend, the due date shall be the next workday.
       2. (B) The utility may transfer the amount owed on the defaulted account to the guarantor's own service bill provided the guaranteed amount owed is identified separately on the bill as required by §26.25(c)(4)(I) of this title (relating to the Issuance and Format of Bills).
    5. (5) The utility may disconnect service to the guarantor for nonpayment of the guaranteed amount only if the disconnection was included in the terms of the written agreement and only after proper notice as described by paragraph (4) of this subsection, and §26.28(b)(5) of this title (relating to Suspension or Disconnection of Service).

11. (k) Refunding deposits and voiding letters of guarantee.

    1. (1) If service is not connected, or is disconnected, the utility shall promptly void and return to the guarantor all letters of guarantee on the account or provide written documentation that the contract has been voided or refund the customer's deposit plus accrued interest on the balance, if any, in excess of the unpaid bills for service furnished. A transfer of service from one premise to another within the service area of the utility is not a disconnection, and no additional deposit may be required.
    2. (2) When the customer has paid bills for service for 12 consecutive residential billings or for 24 consecutive non-residential billings without having service disconnected for nonpayment of a bill and without paying bills late more than twice, and when the customer is not delinquent in the payment of the current bills, the utility shall promptly refund the deposit plus accrued interest to the customer, or void and return the guarantee, or provide written documentation that the contract has been voided. If the customer does not meet these refund criteria, the deposit and interest or letter of guarantee may be retained.
12. (l) Re-establishment of credit. Every applicant who previously has been a customer of the utility and whose service has been disconnected for nonpayment of bills or theft of service shall be required, before service is reconnected, to pay all amounts due the utility or execute a deferred payment agreement, if offered, and reestablish credit. The utility must prove the amount of utility service received but not paid for and the reasonableness of any charges for the unpaid service and any other charges required as a condition of service restoration.
13. (m) Upon sale or transfer of utility or company. Upon the sale or transfer of any utility or any of its operating units, the seller shall provide the buyer with all deposit records.

Source Note:The provisions of this §26.24 adopted to be effective May 6, 1999, 24 TexReg 3329.