Power Deposits

Some may recall that, back in July, I argued that the City of Great Falls was giving SME a gift when it agreed to provide a 1.4 million dollar security deposit that was not otherwise required by contract. I stand by the questions I raised at the time.

In any event, though, the security deposit was justified by City Staff: "A standard industry practice requires security deposits equal to two months of energy supply costs."

It occurred to me, then, to see what our City Manager's power contract has to say about deposits. It's a little bit better deal than the city got. The contract provides that a deposit can be required only if service has been terminated for non-payment within the last year, if the customer has received 2 or more termination notices (for non-payment) within the last year, if the customer has a current delinquent account with ECP, for tampering with the utility services, or an unsatisfactory credit history.

None of those would apply in the case of the City's gift to SME (which was not provided for by contract prior to July 17). Further, the deposit in the City Manager's contract will be refunded with 5% interest if he were to make his payments on time for 12 months.

$1,400,000.00 x .05 = $70,000.00.