In this article:
- What a utility deposit is used for in Ontario
- Reasons you may be asked to pay a deposit
- How electricity and natural gas deposits are calculated
- When and how your deposit is returned
According to the policies of the Ontario Energy Board, electricity and natural gas utilities have the option of requesting the payment of a security deposit before starting service. This deposit is used to pay your bill if you fail to pay it.
If they ask for a deposit, you are generally required to pay it, although some alternatives (such as providing a credit reference or enrolling in pre-authorized payments) may be available. Otherwise, utilities may refuse to start service or proceed with disconnection in accordance with regulations. Typically, deposits are required from new customers, but utilities may request a deposit from existing customers when they move to a new location.
Reasons for Having to Pay a Deposit
Utilities will typically perform a credit check in order to determine whether they should require a new customer to pay a security deposit, and how large the deposit should be. Reasons for new customers to pay a security deposit may include:
- Having no previous payment history with any utility
- Late or missed payments with a previous utility
- Poor credit history
Even existing customers of a utility may have to pay a security deposit in some circumstances, such as:
- Payments have been missed in the past, or a cheque was returned
- A warning notice of disconnection has been sent in the past year, or service was actually disconnected
- A utility representative has met with you regarding payment concerns or disconnection due to nonpayment
- A previous deposit has been exhausted by being applied to past debts, and you must renew your deposit.
Exceptions for Paying a Deposit
There are two ways you may be able to avoid having to pay a deposit. If you can demonstrate that you have been in good standing for at least one year with your previous utility, your new utility may waive the deposit.
Secondly, customers who meet the qualifications for being considered low-income may have deposits waived, particularly if enrolled in applicable assistance programs. In some cases, customers may also be required to enroll in a budget payment plan, in which payments are averaged over the course of the year.
How Much Will My Security Deposit Cost Me?
There is no single fixed amount for security deposits. Instead, deposit amounts are based upon estimated or historical energy usage. These calculations vary depending on how frequently you are billed. The maximum security deposit an electricity provider can require you to pay is generally:
- If you were billed monthly, up to approximately 2 times your average monthly bill
- If you were billed every other month, up to approximately 1.75 times your average bill
If you have never before received service, the deposit amount may be estimated based on expected usage for the property.
If, after you have paid your deposit, your average consumption increases significantly, your utility may ask you to pay an additional deposit. However, the total amount is still subject to the applicable limits.
The calculation for natural gas utilities is similar and is typically based on estimated consumption rather than a fixed amount. For example, Enbridge Gas may determine deposit amounts based on your projected usage and risk profile.
If it’s difficult for you to pay for your electricity or natural gas deposit all at once, you can request to pay your deposit in monthly installments for up to six months.
When Can I Get My Deposit Back?
Utilities cannot hold deposits indefinitely. If you have approximately one year of good payment history, you may request the return of your deposit. If you move or close your account, the utility will return your deposit after your final bill has been processed.
All deposits are returned with interest, at a rate set by the Ontario Energy Board and updated periodically.
Key takeaways:
- Utilities may require a security deposit before starting service.
- Alternatives to paying a deposit may be available (credit references or pre-authorized payments).
- Deposit requirements and amounts are regulated by the Ontario Energy Board.
- Electricity deposits are based on a multiple of your average bill, while natural gas deposits are based on estimated usage.
- Deposits can usually be paid in instalments if needed.
