When it comes time to start a new electric plan, many companies require new customers to participate in a credit check or pay a deposit prior to starting service. It’s the same approach that phone, cable, and other utility services tend to take with new customers, and it is often a process that requires hefty upfront payments or fees for those with less than perfect credit.

No Deposit Electricity

There are numerous companies offering no deposit electricity plans in Texas — Payless Power is one of the biggest and most well known.  They offer pre-paid electric service to thousands of customers in The Lonestar State.

Credit Checks for Electric Service

There are many reasons why utility companies and electricity providers conduct credit checks. Two of the biggest reasons for conducting a credit check include moving to a new residence or switching to a provider.

When an electricity consumer moves to a new home, it’s common for them to also set up their electricity with a new utility company or electricity supplier (in deregulated areas within the US like Texas, Ohio, Pennsylvania, etc.). In this situation, the consumer has to apply for electricity services. As part of the application process, the utility and electricity provider will need to determine the consumer’s credit history.

Please note that a poor credit history (or a lack of credit history) should not prevent a customer from obtaining electric service, though a deposit may be required to begin service.

Deposit Required

Some — if not more than half — of consumers require a deposit. There are a few reasons why companies require this kind of payment. One of the most common reasons is if a consumer has a low credit score or bad credit history. Other reasons include customers who haven’t paid past bills, have been late on payments, and have previously had electricity disconnected.

In some situations, companies will waive the deposit if the customer is 65 years or older, has a letter of credit from their current electricity provider, or has proof of on-time past electricity payments. However, loopholes don’t apply to every consumer. Many are still required to pay a deposit before they can start a new electricity service.

Deposits for New Electricity Service

For customers who have had their electricity service disconnected, deposits are often required if not mandatory. In this type of situation, in addition to the deposit, the customer will need to pay the past-due amount and perhaps even disconnection and re-connection fees. The amount of the deposit varies by company, but can range often reach hundreds of dollars.

The good news is that in most situations, a deposit paid to a company is credited back to the customer’s account if they make continuous, on-time payments for a defined period of time. Other companies may give the deposit back at the end of the contract.

Letter of Guarantee

In special cases, a customer can provide a Letter of Guarantee to the electricity provider. This letter needs to come from someone other than the customer. The reason for this is because if the customer fails to pay their bill, the person that provided the letter becomes responsible for the payment.

No Deposit & Pre-Paid Electricity in Texas

As an electricity customer, it is so important to contact your utility or provider when financial problems arise. Most companies offer many different solutions to help customers keep their light on — especially electricity providers.

Many electricity providers will offer options like no deposit or pre-paid electricity. These options give consumers the power to start a new plan without the need for costly and inconvenient deposits.

Pre-Paid Electricity

Pre-paid electric plans allow customers to sign up for a contract without a long-term contract, deposit, or credit check.

Pre-paid electric plans are very similar to pre-paid phone plans. When it comes to electricity, the customer is required to pay a small pre-payment amount towards their account to get the services up and running.

Once signed-up, customers will receive notifications regarding their daily usage and alerts when they are running low on credits. This means if the money the customer deposited into their electricity account is about to expire, they have the time and option to add more money to keep the electricity on and the account up-to-date.

The customer only needs to pay in advance for the electricity that they need, when they need it.

Pre-paid plans represent a new era in the energy industry, particularly in the deregulated electricity markets. The reason for this is because energy deregulated markets give consumers the power to choose where their energy comes from.

With pre-paid suppliers, individuals of all types have the power to enjoy affordable energy in a convenient pay-as-you-go set up.

Electricity Rates

The price of electricity (kWh rates) attached to pre-paid and no deposit plans are typically a little bit higher than those of “normal” plans.  This is due to the perceived elevated risk by the particular electric company offering those plans.

Customer Assistance

Contacting a provider for financial assistance can help a customer to better manage their electricity payments. Many companies are open to discussing payment arrangement options. While some REPs may offer assistance without conditions, some guidelines for assistance can include:

  • The customer must continue to pay the total amount future bills on time while making payments towards previous overdue bills.
  • Payments are still considered late, even with the payment arrangement in place. Customers need to inquire about how the company reports late payments to the credit bureau to determine the affect on their credit score.
  • If the customer continues to fail to make payments, the electricity will likely be disconnected.