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Everything You Need to Know About Prepaid Electricity in Texas

Updated: 01/11/2023

Because of the competitive nature of the electricity market in Texas, companies are constantly devising new types of plans to entice potential customers. One unique plan option offered are prepaid electricity plans.

If the idea of prepaid electricity is new to you, you’ve come to the right place. This article will dig into everything there is to know about prepaid electricity in Texas. We’ll also help you decide if a prepaid plan is right for you or if you should consider a different type of electricity plan.

What is Prepaid Electricity?

Much like a prepaid phone or internet plan, prepaid electricity is where you pay for electricity at the start of the month before you use it. Many prepaid electricity plans allow you to purchase different amounts of electricity. However, as with a prepaid phone plan, you’re penalized if you exceed your allotted power for the month.

Prepaid electricity plans have been around for decades in Texas. However, they have recently gained in popularity thanks to the misconception that they’re better for people on a budget. Because you buy electricity at the beginning of the month, you won’t be surprised by big bills at the end of the month.

However, there’s always a chance that you’ll use your electricity too quickly and run out before the end of the month. When this happens, your power company will often notify you that you need to add more funds to cover the cost of electricity you exceed. In rare cases your power may be cut off if no action is taken to replenish you account balance in a timely manner. To keep the lights on you can either purchase more electricity or sit in the dark until the start of next month when your plan starts over.

Pros of Prepaid Electricity

No Credit Checks

One of the significant advantages of prepaid electricity plans is that they don’t require a credit check. A credit check is often necessary with postpay electricity plans, where you pay at the end of the month for the power you use. However, because there’s no risk to the power company that you can’t pay your bill, they won’t require a credit check.

Flexibility

Prepaid electricity plans are a good option if you’re new to Texas and don’t have enough information to enroll in a long-term plan. They operate on a month-to-month basis, which means you can enroll in a new plan at the end of each month.

No Commitment Needed

Finally, prepaid electricity plans don’t require you to sign a long-term contract. You can switch plans at the end of each month or re-enroll in the same prepaid option.

Cons of Prepaid Electricity

While there are several advantages to prepaid electricity plans, there are just as many disadvantages.

Higher Rates

The main downside of prepaid electricity plans is that they often have higher rates than fixed-rate plans. Fixed-rate plans have tiered rates where you pay based on the amount of power you use. Because prepaid plans have a single, flat rate, you have a higher overall rate. You also aren’t compensated for any unused electricity, and your power typically won’t carry over to the next month.

Power Outages

Another downside of prepaid plans just as serious as higher rates is the risk of having your electricity cut in the blink of an eye. When you use your allotted amount of electricity for the month, your power company can cut you off without notice. After all, you’re not enrolled with the actual power company, so they don’t have any obligation to you. Your retail electric providers are responsible for notifying you when you’re at your electricity limit so it is important to manage your usage closely.

Restart Fees

Once you run out of electricity, which happens more often than you might think, there’s a restart fee for the power company to turn your power back on.

Is Prepaid Electricity Right for Me?

If you’re new to Texas and don’t have time to choose the right electricity plan, a temporary prepaid plan isn’t a bad option. However, if you plan to live in Texas for a long time, you’ll save more money and have fewer headaches when you enroll in a fixed-rate electricity plan. To do that, enter your zip code into our free rate comparison tool at the top of the page, and ElectricityRates.com will help you find the right plan for you.

What are My Other Electricity Plan Options

Luckily, prepaid electricity plans are one of many options in Texas. You can choose between prepaid, fixed-rate, variable-rate, flat-rate plans, and free nights and weekends plans. In terms of popularity, fixed-rate plans are the preferred plans for Texans. They offer affordable rates, massive potential savings, and other perks and benefits.

How to Choose the Best Electricity Plan in Texas

If you don’t like the idea of purchasing a prepaid electricity plan and think a fixed-rate option is the way to go, ElectricityRates.com is here to help. We’re an online tool that you can utilize to find the best electricity plan based on your monthly usage, needs, and desires. Here’s how it works.

  • Our intuitive search engine shops for the best rates based on your exact home address, location, home size and actual usage.
  • A list of all the electricity companies in your area will pop up, giving you a personalized list of plans tailored to your home.
  • You can go through the list of plans and check things such as the listed rate, the tiered rates based on usage, your estimated bill, the REPs reputation, hidden fees, perks and benefits, and anything else you need to know pertaining to the plan.
  • Once you find the plan you like, you can select it and enroll immediately.
  • There won't be any service interruptions while we switch you from your old plan to the new one.

If you’re in the market for a new electricity plan in Texas, no one does it better than ElectricityRates.com. We’ll even help you understand your energy usage so that you can choose an electricity plan that fits your needs.