In accordance with Ontario Energy Board amendments to the Distribution System Code affecting all distributors in Ontario, Bluewater Power Distribution Corporation is amending its Conditions of Service by revising its Security Deposit Policy effective August 3, 2004.

Security deposits are required to reduce Bluewater Power’s exposure to financial risk and to encourage prompt payment of the account; otherwise uncollectable amounts must be assessed against the revenue obtained from established customers.

RESIDENTIAL

A security deposit is required from all customers in the Residential classification.

The amount of the deposit to be provided to Bluewater Power shall be calculated using the property’s average actual billing in the last 12 months prorated to 60 days. Where actual consumption is not available or not representative of typical consumption, reasonable estimates may be made by the utility. Where a customer has a payment history which discloses more than one disconnection notice in a relevant 12 month period, the distributor may use that customer’s highest actual or estimated monthly load for the most recent 12 consecutive months within the past 2 years for the purposes of making the calculation of the maximum amount of security deposit.

The residential security deposit will be waived if one of the following conditions is met:

• The customer provides a letter of reference from the customer’s previous hydro or gas utility in Canada, indicating the customer had a good payment history1 for at least one year and the account was in the same name.
• The customer is a past customer of Bluewater Power with a proven good payment history1 on file.
• The customer provides a credit check or consents to a credit check (at the customer’s expense) that is satisfactory to Bluewater Power, in its reasonable discretion.
• A deposit will not be required of an existing residential customer as long as the customer maintains their established record of good payment history1. An existing customer may be required to provide a deposit upon the occurrence of events disqualifying them from a good payment history1 or upon annual review identifying the same.

A residential rate class customer will qualify for refund of their security deposit when one consecutive year of good payment history1 has been achieved.

GENERAL SERVICE <50kW

A security deposit is required from all customers in the General Service <50kW classification.

The amount of the deposit to be provided to Bluewater Power shall be calculated using the property’s average actual billing in the last 12 months prorated to 60 days. Where actual consumption is not available or not representative of typical consumption, reasonable estimates may be made by the utility. Where a customer has a payment history which discloses more than one disconnection notice in a relevant 12 month period, the distributor may use that customer’s highest actual or estimated monthly load for the most recent 12 consecutive months within the past 2 years for the purposes of making the calculation of the maximum amount of security deposit.

The general service <50kW security deposit will be waived if one of the following conditions is met:

• The customer provides a letter of reference from the customer’s previous hydro or gas utility in Canada, indicating the customer had a good payment history1 for at least one year and the account was in the same name.
• The customer is a past customer of Bluewater Power with a proven good payment history1 on file.
• The customer provides a credit check or consents to a credit check (at the customer’s expense) that is satisfactory to Bluewater Power, in its reasonable discretion.
• A deposit will not be required of an existing General Service <50kW customer as long as the customer maintains their established record of good payment history1. An existing customer may be required to provide a deposit upon the occurrence of events disqualifying them from a good payment history1 or upon annual review identifying the same.

A general service <50kW rate class customer will qualify for refund of their security deposit when 60 consecutive months of good payment history1 has been achieved.

GENERAL SERVICE >50kW and GENERAL SERVICE >50kW TOU

A security deposit is required from all customers in the General Service >50kW and General Service >50kW TOU classification.

• The amount of the deposit to be provided to Bluewater Power shall be calculated using the property’s average actual billing in the last 12 months prorated to 30 days. Where actual consumption is not available or not representative of typical consumption, reasonable estimates may be made by the utility. Where a customer has a payment history which discloses more than one disconnection notice in a relevant 12 month period, the distributor may use that customer’s highest actual or estimated monthly load for the most recent 12 consecutive months within the past 2 years for the purposes of making the calculation of the maximum amount of security deposit. Allowable reductions may be calculated, by credit rating, as stated in Section 2.4.13 of the Ontario Energy Board’s Distribution System Code.
  
  The general service >50kW and General Service >50kW TOU security deposit will be waived if one of the following conditions is met:
  
  
• The customer provides a letter of reference from the customer’s previous hydro or gas utility in Canada, indicating the customer had an excellent payment history for at least one year and the account was in the same name.
• The customer is a past customer of Bluewater Power with a proven “good payment history”1 on file. The customer provides a credit check or consents to a credit check (at the customer’s expense) that is satisfactory to Bluewater Power, in its reasonable discretion.
• Waiver or reduction of a requested security deposit may also be attained where a credit rating from a recognized credit rating agency has been obtained at the customer’s expense. A deposit will not be required of an existing General Service >50kW or General Service >50kW TOU customer as long as the customer maintains their established record of good payment history1. An existing customer may be required to provide a deposit upon the occurrence of events disqualifying them from a good payment history1 or upon annual review identifying the same.

A general service general service >50kW and General Service >50kW TOU rate class customer will qualify for refund of their security deposit when 84 consecutive months of good payment history1 has been achieved.

LARGE USE

A security deposit is required from all customers in the Large Use classification.

The amount of the deposit to be provided to Bluewater Power shall be calculated using the property’s average actual billing in the last 12 months prorated to 30 days. Where a customer has a payment history which discloses more than one disconnection notice in a relevant 12 month period, the distributor may use that customer’s highest actual or estimated monthly load for the most recent 12 consecutive months within the past 2 years for the purposes of making the calculation of the maximum amount of security deposit. Allowable reductions may be calculated, by credit rating, as stated in Section 2.4.13 of the Ontario Energy Board’s Distribution System Code. Allowable reductions will be calculated, by credit rating, as stated in Section 2.4.13 of the Ontario Energy Board’s Distribution System Code.

The Large Use security deposit will be waived if one of the following conditions is met:

• The customer is a past customer of Bluewater Power with a proven good payment history1 on file.
  Waiver or reduction of a requested security deposit may be attained where a credit rating from a recognized credit rating agency has been obtained at the customer’s expense.
• A deposit will not be required of an existing Large Use customer as long as the customer maintains their established record of good payment history1. An existing customer may be required to provide a deposit upon the occurrence of events disqualifying them from a good payment history1 or upon annual review identifying the same.

Bluewater Power shall return 50% of the paid deposit when 84 consecutive months of good payment history1 has been achieved. Bluewater Power may return the full deposit as its sole discretion.

PRINCIPLES APPLICABLE TO ALL RATE CLASSES:

(1) ANNUAL REVIEW

If it is determined, upon annual review, that the amount of the security deposit should be adjusted upwards, this amount will become payable as of the due date of the customer’s next regular bill. A review of all customer security deposits will be undertaken at least once in a calendar year. The review will be completed in conjunction with the anniversary date of the full payment of the security deposit. A review will determine whether Bluewater Power will return the deposit or whether the amount of the deposit is to be adjusted based on the maximum allowable amount.

(2) PAYMENT OF DEPOSIT

Residential Customer class:

Payment of a security deposit shall be cash or cheque, at the discretion of the customer.

Non-Residential Customer class:

Payment of a security deposit shall be cash, cheque or an automatically renewing, irrevocable letter of credit from a bank at the discretion of the customer.

(3) NON-PAYMENT OF DEPOSIT

Non-payment of a security deposit shall result in suspension of service following the established collection process.

The Customer Service Representative will add the pending deposit to the Security Deposits Receivable spreadsheet located on the Intranet to enable the Dunning Department to monitor the collection of pending deposits.

The Dunning Department will monitor the collection of pending deposits and only the Dunning Department Lead Hand or Manager of Market Services will have the authority to adjust deposit requirements and/or require deposits for existing customers.

(4) INTEREST & REFUNDS & TRANSFERS

All deposits on file are subject to interest to be applied to the account a minimum of once every 12 months or upon closure of an account. The annual rate of interest will be equal to the Bank of Canada published Prime Business Rate less 2% and will be updated quarterly.

Upon closure of an account the deposit will be refunded on the final bill and reapplied to the first bill of the new service location if the customer has not proven good payment history1. In the case where a larger security deposit is required the customer will be notified of the difference and billed accordingly.

(5) MAXIMUM SECURITY DEPOSIT

For calculation of the maximum security deposit amount, Bluewater Power may use the customer’s highest actual or estimated billing information for the most recent 12 consecutive months within the past 24 months multiplied by the applicable billing cycle factor.
The bill cycle factor, as defined in the Ontario Energy Board Distribution System Code is 2.5 if the customer is billed monthly, 1.75 if the customer is billed bi-monthly or 1.5 if the customer is billed quarterly.

(6) RETAIL CONSOLIDATED BILLING

In the case of a customer that chooses to move to a retailer that offers in whole, or in part, retailer consolidated billing, any security deposit on hand shall be applied to the final bill in accordance with section 2.4.27 of the Distribution System Code.

(7) CUSTOMER REVIEWS

A customer may request a review of a security deposit 12 months after paying the deposit in full.

1Good payment history is defined as per Section 2.4.9 and 2.4.10 of the Ontario Energy Board Electricity Distribution System Code as follows:

“2.4.9 A distributor may require a security deposit from a customer who is not billed by a competitive retailer under retailer-consolidated billing unless the customer has a good payment history of 1 year in the case of a residential customer, 5 years in the case of a non-residential customer in a <50 kW demand rate class or 7 years in the case of a non-residential customer in any other rate class. The time period that makes up the good payment history must be the most recent period of time and some of the time period must have occurred in the previous 24 months. A distributor shall provide a customer with the specific reasons for requiring a security deposit from the customer.

2.4.10 For the purposes of section 2.4.9, a customer is deemed to have a good payment history unless, during the relevant time period set out in section 2.4.9, the customer has received more than one disconnection notice from the distributor, more than one cheque given to the distributor by the customer has been returned for insufficient funds, more than one pre-authorized payment to the distributor has been returned for insufficient funds or a disconnect / collect trip has occurred. If any of the preceding events occur due to an error by the distributor, the customer’s good payment history shall not be affected.”