Utility Deposits Will Be Kept Longer

Finance Director Greg Siler discusses a new utility deposit policy with members of the Smithfield Town Council. Johnston County Report Photo

SMITHFIELD -Each year, the Town of Smithfield averages $150,000 in unpaid utility accounts that are sent to collections. A collection agency hired by the Town in April 2021 has only been able to collect about $5,000 in delinquent debt.

Customers are required to pay a deposit when establishing utility services with the Town. Under the current policy, after 12 consecutive months of timely payments for residential customers and 24 months for commercial accounts, the Town refunds the deposit.

Finance director Greg Siler said five neighboring towns were surveyed about their utility deposit refund policy, Benson, Angier, Clayton, Kenly and Selma. Four of the towns only refund a utility deposit when the account closes. Selma refunds after 24 months of consecutive timely payments.

Siler recommended Smithfield keep the deposit on all new utility accounts until the account is closed. Existing accounts that pay on time would not be affected by the policy change. And deposits on existing accounts would be refunded based on the existing policy of 12 or 24 consecutive months of timely payments.

The Town of Clayton has a 99 percent collection rate on their utility accounts. Siler said Clayton credited holding the deposit until the account was closed as one of the primary reasons for the high collection rate.

Mayor Andy Moore asked Siler if keeping utility deposits for the life of the account would create an extra burden on the finance department. Moore gave an example of his parents who have lived at the same Smithfield home since 1972 and in that case the town would have to kept up with their deposit for 49 years.

Siler said in the 1970’s their deposit would likely have only been $15 or $20, but regardless the town would not have an issue maintaining utility deposit records for extending periods of time.

The council voted 7-to-0 to adopt the new utility deposit retention policy for the life of the account with all new customers.