EMC Security Deposits — Adequate Protection?

Law360, New York (July 31, 2009, 2:53 PM EDT) -- Unfortunately, in today’s economy, many electric membership corporations (EMCs) are faced with the question of how to deal with members who appear to be financially unstable or have filed for bankruptcy protection.

Security deposits have long played an important role in protecting EMCs from customer defaults. Given the unique challenges posed by the current economy, however, it may be worthwhile for EMCs to revisit their bylaws, service rules and regulations and contract provisions regarding security deposits.

EMCs should consider two questions in particular:

1) Do company...
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