When you sign up for an electricity plan in Texas, your electricity provider will check your credit score to determine whether you need to pay a security deposit. Most Texas electricity companies require that you have a credit score from 580-600+ to enroll in an electricity plan without paying a deposit, aka a no-deposit plan.
When you compare plans on ElectricityRates.com and choose a plan, you’ll be prompted to provide your social security number and date of birth to confirm your credit score. This happens over an encrypted connection and has no impact on your credit score.
If you have a low credit score and need to sign up for electricity, there are several options available, including flexible deposit terms, no deposit or prepaid electricity and more.
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What Are Deposits and Why Do Providers Charge Them?
Electricity companies charge security deposits to ensure they get paid for the electricity they provide. If a customer uses electricity and doesn’t pay their electric bill, the deposit will cover the cost of the electricity they used.
If the customer pays their electric bill on time each month for the duration of their contract, the provider will pay the deposit back with interest. The rate of interest for electricity deposits change each year. For 2021, the rate of interest is 0.61%.
How to Avoid Paying a Deposit for Electricity
1. Sign-up for an Electricity Plan
If you haven’t already, enter your ZIP Code at the top of this page and compare electricity rates offered for your Texas utility’s service area. If you have satisfactory credit, you are good to go and won’t be required to pay a deposit to complete the sign-up process.
If you are required to pay a deposit, you have a few options available.
2. See If You Can Prove “Satisfactory Credit”
The Public Utility Commission of Texas (PUCT) outlines multiple ways customers can prove “satisfactory credit” and avoid paying a deposit. Here are two:
- If you have (1) been an electric customer for the “same kind of service within the last two years,” (2) don’t have any unpaid electric bills, (3) have not been late to pay your electric bill for the past 12 months, (4) have not had your service disconnected for not paying your bill and (5) can obtain a letter of credit history from your last electric utility, you can avoid paying a deposit. Electric utilities are asked to provide a letter of credit history with your final bill.
- If you are 65 or older and don’t have unpaid bills from the last two years from any electric utility for the “same type of utility service,” you can avoid a deposit.
You can also get a guarantor, show “letters of credit reference,” show that you are medically indigent, and more. To learn about all the ways you can avoid paying a deposit, check out the section titled “Credit Requirements and Deposits” on this PUCT document.
3. Contact The Electricity Provider
Whether you can prove satisfactory credit or not, your next step should be to contact that electricity provider. These companies deal with deposit issues all the time and many will have options that can help.
While it’s not guaranteed that the provider will offer them, here are some of the ways that providers can help with your deposit:
- Split Deposit Payments – This allows you to split up your total deposit into two or more payments over time.
- For Low-Income Customers – Some providers offer assistance programs for low-income customers. Those who qualify often must be on Medicaid, the supplemental nutrition assistance program (SNAP) or some other government assistance program.
- Active Military Personnel – Some providers will offer assistance to active military personnel.
Another popular way electricity providers can help you get around paying a deposit is by enrolling you in a prepaid plan.
4. Consider A Prepaid Electricity Plan
If you’ve tried the previous three steps and still need to put down a deposit, you may want to consider a prepaid electricity plan. These plans still require payment upfront, however, that payment may be significantly lower than a security deposit.
How Prepaid Electricity Plans Work
With a prepaid plan, you pay for a certain amount of electricity for the month prior to using it. Throughout the month, you can monitor your electricity consumption and add allowance as needed.
There are two types of prepaid electricity plans:
- Fixed-rate prepaid plans – These plans lock in your rate for a designated period of time. If you switch before the end of your contract, you may be subject to cancellation fees.
- Variable-rate (month-to-month) prepaid plans – With these plans, the rate can change each month and will generally cost more than a fixed-rate prepaid plan. However, there’s usually no cancellation fee and you can switch to another plan at any time.
Should You Get A Prepaid Electricity Plan?
Prepaid electricity plans do come with certain advantages:
- You won’t need a security deposit
- They can cost less upfront than a security deposit
- They force you to keep track of how much electricity you consume, which could lead you to use less
However, prepaid plans are certainly not without their disadvantages, the main one being that they will generally cost you more per kWh compared to a regular fixed-rate plan. This means if you use the same amount of electricity on each type of plan, you’re going to pay significantly more over time with a prepaid plan.
That’s why, if you can pay the security deposit, ElectricityRates.com still recommends choosing a fixed-rate electricity plan. The upfront cost can be tough now, but if you pay your bills on time, you will eventually get that money back (with interest) and save more in the long run.
How Much Are Texas Electricity Deposits?
Electricity deposits in Texas cannot exceed two months’ worth of your estimated monthly electricity payment. With the average residential electric bill in Texas being $134.07, you can expect the average electric deposit to be around $268.
However, there are a few factors that influence this.
- The Plan’s Electricity Rate – The above estimate is based on the average electricity bill in Texas. But electricity providers must base their estimate on the rate for the electricity plan you’re signing up for. If it’s lower than the average Texas electric rate of 11.76¢ per kWh, you may end up paying less.
- The Size Of Your Home – Some providers may charge a smaller deposit for those in apartments or smaller homes because they generally use less electricity than larger single-family homes.
How Much Are Deposits For Apartments?
If we assume that the average apartment in Texas uses 750 kWh, an electric deposit for an apartment could be around $176 based on Texas’s average residential electricity rate of 11.76¢ per kWh.
Deposits Based On Your Actual Usage
If you are resigning with a provider that you have been with for the past twelve months, you can request that the provider use your actual electricity usage to estimate how much your electricity consumption will be in the next two months. Then your deposit will be based on that usage.
For example, if you are signing up for a plan in June, the provider will use your electricity consumption from June and July last year to estimate your usage. If you used around 650 kWh each month, and the plan you are signing up for is 10.5¢ per kWh, your deposit could be as low as $137.
Go Find Your No-Deposit Electricity Plan!
As you can see, there are many ways to get a no-deposit electricity plan in Texas and pay little to nothing upfront.
To compare great electricity plans from leading providers in your area, enter your ZIP Code above.
Texas No-Deposit Plan FAQs
- Can I get electricity in Texas with no deposit?
You can get an electricity plan in Texas without a deposit as long as you have a good credit score. If you don’t, your electric company may require a deposit, but there are avenues that you can take to get around it.
- What electric company does not require a deposit?
Pretty much all electric companies require a deposit if you have poor credit and cannot prove satisfactory credit in other ways. The one exception to this is if you’re signing up for a prepaid electric plan, which doesn’t require a security deposit.
- Do you need good credit to get electric service?
Electric service in Texas does not require good credit. However, if you have a credit score under 600, you may be required to pay a security deposit. This deposit will be paid back to you with interest at the end of your plan.
- What is a soft credit check for electricity?
A soft credit check is how electricity providers look at your credit score. Unlike hard credit checks, soft credit checks have no impact on your score.
- What are prepaid electricity plans?
Prepaid electric plans allow you to pay for the electricity you use before you use it. Because you pay in advance, these plans don’t require a security deposit. Most providers offering prepaid plans let you monitor your usage and add more electricity throughout the month as needed.