photo by: Journal-World Photo Illustration

Lawrence Journal-World Editorial

The city of Lawrence should amend its utility deposit policy to clarify that utility deposits will be settled at the time an account is closed.

Such a policy is sensible and reasonable and avoids the confusion surrounding the current policy, which allows for the return of a deposit, charged mostly to renters, when a customer completes 18 months of on-time utility payments. The Lawrence City Commission will discuss the policy at a meeting Tuesday.

The city billing notification for new rental accounts notes that there is a $40 deposit that “may be refunded (with interest) after 18 months of on-time payments, or it will be applied towards your final bill at the termination of service.” What the notification doesn’t specify is that renters who qualify to receive the deposit back because of good payment history must call the city to request the refund.

Kansas Corporation Commission billing standards require that utilities inform customers of the terms and conditions regarding the retention and return of deposits.

The city has $1.1 million in deposits collected from utility customers, but it isn’t clear that the city has the ability to comply with the return policy if there was a sudden run on refund requests from renters paying the deposit, who make up 40 percent or about 12,000 of the city’s accounts.

City utilities billing manager Kristy Webb said the city doesn’t know how much of the $1.1 million is unclaimed deposits owed to customers, because the city’s software system, which can’t automatically track whether customers have paid their bill 18 months in a row. Rather, the city has to manually track payment history to determine eligibility. Doing so on all 12,000 accounts would take hundreds of hours.

The city is hopeful that a new billing system, scheduled to be online in October 2019, will be able to track customer eligibility.

But maintaining deposits is necessary to ensure accounts are paid in full and refunding a significant number of deposits could expose the city to significant losses in unpaid water bills in the future. A better approach might be to revise policy to give all customers a deadline — 90 days, for example — to request a refund of their deposits. After that deadline has passed, all current and future deposits would be refundable only when the account is closed.

Such a policy would allow the city to uphold its commitment to current customers while setting reasonable requirements for future accounts.