Cities may require a deposit from customers to protect the utility against potential losses from unpaid bills or bad debts. The deposit should be large enough to cover the amount a customer could accrue before service is terminated for non-payment. When calculating deposit amounts, consider the period between meter reading and service cutoff, ensuring the deposit adequately covers expected usage during that time.

Some utilities offer waivers or refunds of deposits under specific conditions. For example, a new homeowner who provides verification of a good payment history from a previous utility may have the deposit waived. Similarly, residential customers who maintain a good payment record for two consecutive years may be eligible for a deposit refund.

If such policies are adopted, it is important to remember that the primary purpose of a deposit is to guarantee payment for outstanding charges in cases where a customer is unable or unwilling to pay.