Prepaid Electricity Plan
Texas Electricity Glossary
A prepaid electricity plan is a pay-as-you-go electricity account that requires no credit check, no security deposit, and no long-term contract. You load funds in advance — your balance depletes daily based on actual kWh consumed — and service disconnects automatically if the balance reaches zero. Prepaid plans are available from multiple REPs in the Texas deregulated market and are particularly useful for customers who cannot qualify for or afford a traditional deposit, or who want maximum billing flexibility.
How Prepaid Electricity Works Step by Step
- Activate: Sign up online or by phone, provide address and ID — no credit check. Make an initial payment (typically $20–$100).
- Connect: Your TDU connects service within 1–2 business days (or same day in some cases with a rush fee).
- Track daily: The REP reads your smart meter daily and deducts the day's usage cost from your balance. You receive usage alerts by text or app.
- Reload: Add funds when your balance runs low. Payment can be made 24/7 online, by phone, or at major retailers.
- Low balance alert: Typically at $10–$20 remaining, you receive a disconnection warning notice (required by PUCT rules).
- Disconnection: If balance hits zero before you reload, the TDU disconnects service. Reconnection typically happens within a few hours of adding funds.
Prepaid vs. Standard Postpaid Plans
| Feature | Prepaid | Standard (Postpaid) |
|---|---|---|
| Credit check | None | Usually required |
| Security deposit | None | $150–$300 if poor credit |
| Contract | None | 12–36 months (fixed) |
| ETF on exit | None | Up to $20 × months left |
| Effective rate | Often higher | Can be lower |
| Billing | Daily deduction | Monthly bill |
Texas PUCT Rules for Prepaid Plans
PUCT requires prepaid electricity providers to send a disconnection warning notice when your balance falls to a level that will result in disconnection within 24 hours. This notice can be sent by text, email, or phone call. Providers must also allow reconnection within a few hours after you add funds — same-day reconnection is typical.
Related Terms
- Smart Meter — required for daily balance tracking in prepaid accounts
- ETF — not applicable to prepaid plans
- Effective Rate — compare prepaid effective rates to fixed-rate alternatives
- PUCT — sets consumer protection rules for prepaid plans
Frequently Asked Questions
How does prepaid electricity work in Texas?
With prepaid electricity, you load funds onto your account in advance — online, by phone, or at a payment center. Your balance decreases daily based on your actual electricity usage. When the balance reaches a low-balance threshold (typically $10–$20), you receive an alert by text or email. If the balance reaches zero, service is automatically disconnected until you add more funds. There is no monthly bill — usage is metered daily.
Do prepaid electricity plans require a credit check?
No. Prepaid electricity plans in Texas do not require a credit check or a security deposit. This makes them popular for customers with poor or no credit history, recent movers who need service quickly, and anyone who wants to avoid a traditional deposit. A typical prepaid account requires as little as $20–$50 to activate.
Is prepaid electricity more expensive than standard plans?
Prepaid plans often have higher effective per-kWh rates than the cheapest fixed-rate plans in the market — the premium is the cost of no-deposit, no-contract flexibility. However, for customers who would otherwise have to pay a large security deposit (often $150–$300 on standard plans), prepaid may be cost-effective short-term. Always compare the effective rate to standard fixed-rate options for your ZIP.