A Texas electricity provider can ask for a deposit before starting service, but only when it can’t establish that you have satisfactory credit. Public Utility Commission rules decide what that means, how large the deposit can be, and when it comes back. There are also ways to owe none: a waiver you may already qualify for, a prepaid plan, which by rule cannot carry a deposit, or passing the credit check behind a “no deposit” offer.
When a provider may ask for one
A provider may require a deposit from a new customer who does not have satisfactory credit (rule 25.478), and may not require one from a customer who does. The rule names five ways to have it. You need only one:
- Payment history. No more than one late payment on electricity bills in the last 12 months, and nothing currently delinquent.
- Credit rating. An acceptable rating from a consumer reporting agency. This is the credit check most providers run at signup.
- Age 65 or older, and not currently delinquent with any electricity provider.
- Family violence. A certification letter from the Texas Council on Family Violence.
- Medical indigence. Household income at or below 150% of the federal poverty guidelines, plus a physician’s certification that you cannot perform at least three activities of daily living, shown each year.
Without electricity payment history in your own name or much of a credit file, a deposit is likely. That is the usual case for a first apartment or a move from out of state; see setting up electricity when you move to Texas.
How much it can be
The cap is the greater of two figures: one-fifth of your estimated annual bill, or your estimated bills for the next two months. Take a home the provider expects to bill $1,800 over the year. One-fifth is $360, so the deposit can be up to $360. If you sign up in June and the provider’s estimate for the next two months adds up to more than $360, it may ask for that larger figure instead. After 12 months you can ask for the deposit to be recalculated.
Deposits earn interest at a rate the commission sets. There is also an alternative to paying one: the rule allows a letter of guarantee, in which another customer agrees in writing to cover your bill if you don’t. Ask about it.
Getting it back
Once you have paid 12 consecutive residential bills on time, the provider has to return the deposit, as a refund or a credit on your bill, with the interest it has earned. If you leave before then, it comes back with interest when the account closes, minus anything you still owe, or transferred to a new account with the same provider.
Already a customer?
A provider can’t demand a new deposit from an existing customer unless you have had more than one late payment or a disconnection in the last 12 months. One late bill in a year isn’t grounds.
No-deposit route one: a waiver
Three of the five routes don’t depend on your credit score or payment record: being 65 or older, holding a family-violence certification letter, or qualifying as medically indigent. Each is satisfactory credit by definition, and a provider can’t ask a customer who has it for a deposit. Signup forms often have no box for them, so say which applies and ask what document the provider wants.
No-deposit route two: a prepaid plan
You put money on the account, usage draws it down, and you top it up. The prepaid-service rule (rule 25.498) sets the terms for homes:
- The provider may not require a security deposit, regardless of credit. That is what makes prepaid the standard no-deposit electricity option.
- It may ask for a connection balance of up to $75 to start service.
- Service can be disconnected when your balance falls to the plan’s disconnection balance, at most $10 for a home, but not on weekends or while payment channels are down.
- There is no fee to switch from prepaid to a postpaid plan, or to another provider.
- Weather protections apply: no disconnection in a county during an extreme-weather emergency, and if your balance falls to −$50 or lower during one, the provider has to offer a deferred payment plan.
- Prepaid isn’t available to customers with a critical-care or chronic-condition designation.
- Every fee, every payment method and exactly when disconnection happens have to be in a Prepaid Disclosure Statement. Read it before you enroll.
Are prepaid rates higher?
Sometimes. It depends on the plan. A prepaid plan still has an Electricity Facts Label with average prices at 500, 1,000 and 2,000 kWh, and you compare it the way you compare any plan: on your own 12 months of usage, with delivery charges and every recurring fee included. See how to read an EFL. You give up the month of float a postpaid bill gives you; you avoid a deposit that can be a few hundred dollars tied up for a year. WattaWatt prices prepaid plans like every other plan and marks them with a Prepaid badge; each provider’s page says how many of its plans are prepaid.
What “no deposit” in an ad usually means
Many plans advertised as no-deposit electricity are ordinary postpaid plans sold with a credit check. Pass, and there is no deposit, as with most postpaid plans. Fail, and the deposit appears at the end of signup. Nothing in the ad is false, but it isn’t a prepaid plan, which can’t ask for a deposit at all. Check which kind it is before you hand over a Social Security number.
Watch too for a low advertised price that depends on a bill credit at exactly 1,000 kWh; those plans come prepaid and postpaid alike. See bill credit plans explained.
What to do
- Check the five credit routes. If age, a family-violence certification or medical indigence applies, say so at signup; no deposit is allowed.
- A year of on-time electricity bills in your name is satisfactory credit by itself. Say so.
- If a deposit is quoted, check it against the cap, and ask about a letter of guarantee.
- If you’d rather not pay one, compare prepaid plans on their labels, not on the word “prepaid.”
- Pay 12 bills on time, then ask for the refund with interest if it doesn’t appear on its own.
WattaWatt prices every plan it tracks, prepaid included, on your own 12 months of usage, so a no-deposit plan is compared on what it costs for a year rather than on how it is sold.