Hydro and Gas Security Deposits in Ontario: How Much, How to Avoid One, When It Comes Back

The deposit your hydro or gas company asks for follows Ontario Energy Board rules, not your lease. Those rules cap it, list the ways out of it, and set the dates it has to come back.

Picture a tenant who moved into a one-bedroom two years ago, opened a hydro account, and paid the security deposit the utility billed her for. She has since moved again and closed that account. She has not thought about that money once. It may have come back as a credit on her final bill. It may still be sitting with the utility, waiting for someone to ask.

I’m Arthur Zhao with AZ Real Estate Partners. Utility deposits are a small line on a move, and that is exactly why they get forgotten, both on the way in and on the way out. They are not set by your landlord and the Residential Tenancies Act does not govern them: section 105(1) of that Act only limits what a landlord can collect. A hydro or gas deposit is between the utility and whoever holds the account. The rules sit in two Ontario Energy Board documents that read almost word for word alike. Below, I go through them by the situation you are actually in.

If you are new to this utility

Electricity deposits are governed by the Distribution System Code (DSC), which applies to licensed local distributors such as Toronto Hydro, Alectra or Hydro One. Gas deposits are governed by the Gas Distribution Access Rule (GDAR), whose section 9 applies to rate-regulated gas distributors such as Enbridge Gas, for low-volume consumers.

Under DSC 2.4.9 (GDAR 9.2.3) a utility may ask a residential customer for a deposit unless that customer has a good payment history of one year. That year has to be your most recent stretch, and part of it has to fall within the last 24 months. Whenever a utility does ask, it must tell you the specific reasons.

If that utility has not served you in the previous 24 months, there is one more step it cannot skip. DSC 2.4.9A (GDAR 9.2.4) says that before requiring the deposit it must offer you an equal monthly payment plan, a pre-authorized payment plan, or both. If you choose to enrol, no deposit can be required. A second way around it is DSC 2.4.11(b) (GDAR 9.2.8(b)): a satisfactory credit check that you obtain at your own cost. The rules do not say what score counts as satisfactory, so ask the utility what it accepts.

If you do end up paying, the amount has a ceiling. Under DSC 2.4.12 and 2.4.16 (GDAR 9.2.11 and 9.2.13) it is the billing cycle factor multiplied by your estimated bill, and the estimate is based on your average monthly usage with that utility over the most recent 12 consecutive months within the past two years. Someone new to the utility has no such history, so the utility makes a reasonable estimate instead.

A purely hypothetical example: you are billed every two months, so the factor is 1.75, and the utility estimates your bill at $200. The ceiling is 1.75 × $200 = $350. That is a maximum, not a target: DSC 2.4.15 (GDAR 9.2.12) lets a utility ask for less for any reason, for example when you pay by pre-authorized payment. You can pay in cash or by cheque, or in another form the utility accepts (DSC 2.4.18, GDAR 9.2.15).

Pay the deposit, or enrol in a payment plan instead?

If you have a year of clean history somewhere in Canada

“Good payment history” has a precise meaning in DSC 2.4.10 (GDAR 9.2.7). You are treated as having it unless, during the relevant period, you received more than one disconnection notice, had more than one cheque or more than one pre-authorized payment returned for insufficient funds, had a disconnect/collect trip, or had your deposit applied to arrears and were asked to repay it. One returned payment or one notice does not, on its own, break the record.

The history does not have to be with the utility now asking for a deposit. DSC 2.4.11(a) and GDAR 9.2.8(a) bar a deposit when you provide a letter from another electricity or gas distributor in Canada confirming good payment history for the most recent relevant period, with part of it inside the last 24 months. For a residential customer, that period is one year. The rule says “shall not require”: if your letter qualifies, the utility has no discretion to charge you anyway.

If you qualify as a low-income customer

Both rule books give eligible low-income customers a waiver on request (DSC 2.4.11(c), GDAR 9.2.8(c)). Who counts differs slightly. For electricity, it is a residential customer approved for the Ontario Electricity Support Program (OESP) or approved by a LEAP Intake Agency for Emergency Financial Assistance. For gas, the definition covers only the second route: approval by a LEAP Intake Agency for Emergency Financial Assistance.

Under DSC 2.4.11.1 (GDAR 9.2.9), when a utility bills a residential customer for a deposit it must say, by bill insert, bill message, letter or phone message, that low-income customers can have it waived, and give its contact information and a referral to a LEAP Intake Agency. If that agency tells the utility it is assessing you, the due date for the deposit moves back by at least 21 days while you wait for the decision (DSC 2.4.11.2, GDAR 9.2.10).

Qualifying after you have already paid also helps. Utilities must remind residential customers at least once a year that an eligible low-income customer can ask for the deposit back, after arrears are taken off (DSC 2.4.23B, GDAR 9.2.24). Once you ask, the utility must reply within 10 days. If what is left is less than one month’s average billing, it is credited to your account. If it is equal to or more than that, you can ask for a cheque, which must be issued within 11 days of that request (DSC 2.4.23C, GDAR 9.2.25).

If you have already paid a deposit

A cash or cheque deposit earns interest, accruing monthly once the full amount is received. For electricity, DSC 2.4.21 sets the rate at the Prime Business Rate published on the Bank of Canada website less 2 percent, updated quarterly. For gas, GDAR 9.2.19 uses the average prime business rate over the period, less two percent. Either way, interest is paid at least every 12 months, or earlier when the deposit is returned or the account is closed, and it can come as a credit on your account.

The deposit is not meant to sit there indefinitely. These are the points where it comes back:

• The yearly review. The utility must look at every deposit at least once per calendar year and return all of it if you would now be exempt, or recalculate it against the cap (DSC 2.4.22, GDAR 9.2.20). If you paid in instalments, the first review falls in the calendar year of the anniversary of your first instalment.
• Your written request. From 12 months after paying, or 12 months after your first instalment, you can demand a review in writing, and the utility must respond promptly (DSC 2.4.23 and 2.4.23A, GDAR 9.2.22 and 9.2.23). If the review says money is due back, it must be returned promptly (DSC 2.4.25, GDAR 9.2.26).
• Closing the account. Within six weeks of closure, the utility must return the deposit, after setting off anything else you owe it (DSC 2.4.26, GDAR 9.2.28).

A review can also go the other way. If your usage has risen and the recalculated cap is higher, the utility can ask for more, and a residential customer can pay that increase over at least six months (DSC 2.4.25A, GDAR 9.2.27).

If you fall behind on bills

If a utility used your deposit to cover arrears, it may ask you to repay the amount it applied, and it has to let you rebuild it in instalments over at least six months (DSC 2.4.26B with 2.4.20A; GDAR 9.2.31). There is a second cost that is easy to miss: under DSC 2.4.10 and GDAR 9.2.7, having a deposit applied and being asked to repay it is one of the events that breaks your good payment history. That affects whether you can get a clean-history letter later. If the shortfall was the utility’s error, the rules say your history is not affected.

If you are struggling to keep up, the low-income routes above are worth checking before arrears build. The 21-day extension on a deposit due date applies once a LEAP Intake Agency tells the utility it is assessing you.

Your utility-deposit checklist

Group these by what they are, not by when they happen. Most of them come up both when you move in and when you move out.