BWL is returning $3.2 million in security deposits to thousands of customers. Here's why
LANSING — Thousands of Lansing Board of Water & Light customers, mainly those once considered a payment risk, are due to receive more than $3.2 million in returned security deposit funds.
The utility has already started issuing the credits to accounts for two groups including more than 7,000 account holders who will receive $2.6 million in security deposit refunds on their bills.
The city-owned utility has changed how it retains deposits.
Going into effect July 1, the utility now will keep deposits only when customers receive a shutoff notice during a 12-month period, according to an internal auditor report provided by BWL.
The utility had been retaining deposits from customers who had mostly paid their bills but may have been late or missed a month or two during a 12-month period.
The other change was a computer system error that largely affected customers with large security deposits. The error that went back to October 2021 and prevented the utility from releasing security deposits that were over $400, said Amy Adamy, a spokesperson for the utility, in a statement.
It led to credits for about 400 customers, who received a total of $635,769 on June 13, Adamy said.
BWL officials said they have been reviewing the utility's security deposit practices for years.
The utility requires a security deposit for customers who have an "unacceptable credit history." The deposit is typically twice the customer's monthly bill, either estimated or actual.
The security deposit is credited back to the customer's account after 12 months of acceptable payments.
People who cease service also get their deposit back, unless there are outstanding charges.
Under the new policy, BWL would pay interest on the security deposits, indexed to the federal funds rate from the last day of March of the current year, plus 0.25%, according to their auditor's report.
Contact Mike Ellis at mellis@lsj.com or 517-267-0415
This article originally appeared on Lansing State Journal: BWL is returning $3.2 million in credits to thousands of customers. Here's why
