Shopping for electricity in Texas comes with plenty of choices for residents in deregulated areas, and one option some Texans are turning to is pay-as-you-go electricity. These plans can be appealing if you want more control over your monthly spending, are working on building up your credit, or prefer not to be tied to a contract. But before signing up, it’s important to understand how these plans work and what to look out for.
Pay-as-you-go electricity, also called prepaid or no-deposit electricity, lets you pay for electricity before you use it. Instead of receiving a monthly bill, customers load money into their account and use power until the balance runs out—similar to topping up a prepaid phone plan. Once the balance gets low, they simply add more funds to keep the lights on. These plans are especially popular with people who want a no-deposit setup, no credit check, and a fast same-day connection. In Texas’s deregulated market, this setup gives households more flexibility and control over how and when they pay for power.
If you want same-day electricity service, you must enroll before your retail electricity provider’s (REP) cutoff time and have a smart meter installed. Enrollment cutoff times vary by REP, but many fall before 2 pm CT.
Prepaid electricity is designed to be straightforward. Here’s what you need to know:
Prepaid plans are appealing because they remove many of the barriers found in traditional electricity contracts.
For some Texans, the convenience and flexibility of prepaid electricity outweigh the need for a long-term contract.
While pay-as-you-go electricity gives you control, it also requires more attention than a standard electricity plan. Before enrolling, keep in mind:
Continued prepaid electric service depends on you prepaying for service in advance. It is important to keep your account balance at or above the disconnection balance or your service may be disconnected. A Retail Electric Provider (REP) can set a disconnection balance of up to $10, so it is important that you are aware of this minimum balance and make prepayments to avoid disconnection. If your current balance falls below the disconnection balance, your service will be disconnected with little notice. You will be notified one to seven days before your account balance is expected to fall below your disconnection balance. If your account balance falls below your disconnection balance more quickly than expected, service may be disconnected in as little as one day after you receive the low balance notification.
The biggest difference between prepaid and traditional electricity plans is how you pay for your power. With prepaid electricity, you buy energy in advance and use it until your balance runs out. Traditional plans, on the other hand, bill you after you’ve already used the electricity, typically on a monthly cycle. The table below outlines how each plan works, so you can decide which best fits your needs.
| Feature | Prepaid (“Pay As You Go”) Electricity | Traditional Electricity Plans |
|---|---|---|
| Payment Model | Pay upfront for electricity before you use it. | Pay after usage on a monthly bill. |
| Credit & Deposits | No credit check or deposit required. | Will require a soft credit check and may require a deposit. |
| Contracts | Usually, no long-term contracts; flexible for renters and short stays. | Often, 3–60 month contracts with early termination fees (ETFs). |
| Rates | May have higher per-kWh rates. | Typically lower per-kWh rates, especially with fixed-rate plans. |
| Monitoring & Billing | Real-time usage alerts, no monthly paper bill; requires frequent account balance checks. | Monthly paper or electronic bill with a more predictable billing cycle. |
| Risk of Shutoff | Power is disconnected immediately if the balance hits the minimum threshold. | Disconnection only after nonpayment over time, with notice. |
| Activation Speed | Same-day or next-day activation is common. | Same-day activation availability varies by REP. Typically, one business day sometimes requires more processing time. |
| Best For | Consumers who want flexibility, have no/low credit, need fast service, or want closer control of usage. | Consumers are seeking long-term stability, lower rates, and less frequent monitoring. |
Even though pay-as-you-go electricity plans can have slightly higher per-kWh rates, they can still help Texans save money with the right approach.
One of the biggest advantages of prepaid electricity is visibility. Because you can track usage and balance changes in real time, it’s easier to understand how your daily habits affect your overall spending.
Prepaid plans help you connect your everyday actions to real-dollar impacts on your remaining balance.
Saving money also comes from making your home more efficient. The improvements below can help your prepaid balance go further without sacrificing comfort.
Because prepaid plans rely on staying funded, awareness is your best tool for avoiding outages or overspending.
If you’re thinking about trying a pay-as-you-go plan, Power Wizard can help you find one that truly fits your needs. With our comparison tool, you can see prepaid and traditional electricity offers available in your ZIP code—all in one place. Start your search today and see how much you could save with Power Wizard.
Prepaid plans let you pay for power upfront, while traditional plans bill you after use. Prepaid options offer flexibility, no deposits, and same-day setup. Traditional plans provide stable billing and potentially fewer service interruptions.
If your prepaid electricity balance runs out, your power will automatically shut off until you add more funds. Most providers send low-balance alerts, and service typically resumes within minutes or hours after payment. Keep in mind that most REPs will charge a reconnection fee.
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