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What Is Pay As You Go Electricity

By powerwizard

“Pay as you go” electricity plans sound like a great idea. 

Unfortunately, just like the phrase “you won a free cruise!” “pay as you go electricity” can disguise hidden fees for businesses that don’t have your best interest in mind.

Fortunately, Power Wizard has created a tool to sort through the thousands of available electric plans in Texas to find the cheapest plan for you.

Try the Power Wizard Shopping Tool!

And just for the record, if someone called at 11 pm, offered you a free cruise, and asked for your credit card information, they’re not going to give you a free cruise.

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Pay As You Go Electricity Texas

There are dozens of REPs in Texas, many of which offer pay-as-you-go electricity plans.

Instead of paying your electricity bill for the entire month all at once, you can make payments to your account that will then pay for the electricity that will be consumed in the future.

How To Get Pay As You Go Electricity in Texas

As mentioned above, many of the REPs in Texas offer pay-as-you-go electricity plans. Each plan may be slightly different in rate, perks, and other factors such as terms of service.

The best pay as you go plan for your electricity needs will depend on a few things:

  • Your home’s size and age
  • Your historical usage
  • Zipcode (plans will vary from area to area)
  • And other factors

How can you know which REP will have the best pay-as-you-go plan?

To find the best pay-as-you-go plan that will fit your electricity usage and lifestyle, you will have to research all available plans from each REP that services your area.

Researching every pay as you go plan could be time-consuming to do manually and the process may include:

  • Comprehensive spreadsheets
  • Comparing terms of service agreements
  • Feeling overwhelmed by tons of data
  • And more

Here at Power Wizard, our unbiased algorithm will do all that work for you.

We will filter through every available pay-as-you-go plan (as well as all other plans that could potentially match your unique electricity needs) in your area and find the best one for you. Try our Savings Estimate to get started – it takes less than 5 minutes.

How Does Pay As You Go Electricity Work?

Think about someone who could benefit from a pay as you go plan:

Steve leads a busy life, and his job often requires him to travel. If he were to get a promotion, he would probably have to move to a different area of Texas. His electricity usage is constantly changing from one month to the next.

Steve needs an electricity plan that gives him the flexibility to pay when it’s convenient for him. He doesn’t want to get stuck overspending, especially if he is traveling a lot and not consuming much electricity.

Could Steve benefit from a pay-as-you-go plan? Definitely.

The customer can pay their bill before consuming energy, which means they will only pay for what they use. They also avoid extra fees that some traditional plans get at the end of the month.

When the customer pays for their electricity upfront, a smart meter will keep track of how much electricity is consumed. You may need to know how to read a pay-as-you-go electric meter.

Much like a prepaid phone, the customer simply needs to pay again to refill their account balance before the previous payment runs out to avoid getting their electricity disconnected.

How Long Has Pay As You Go Electricity Been Around In Texas?

What is pay as you go electricity

Ever since electricity was deregulated in Texas in 2002, there have been many different types of electricity plans available.

Pay as you go electricity is just one of many plan options to choose from. It has been available since the beginning of deregulation, along with all the other types of electricity plans.

Does Every REP in Texas Offer Pay As You Go Electricity?

While many REPs in Texas do offer pay-as-you-go plans, it is not a requirement for each provider.

A REP can supply any type of electricity plan they want. One REP may offer (or even specialize in) pay as you go plans, while another REP might not offer pay as you go at all.

REPs will try to accommodate a broad range of customers, so it’s best to look at all REPs servicing your area to see which ones offer a pay-as-you-go plan.

To save time, you can use Power Wizard’s Savings Estimate to find all the REPs with pay-as-you-go plans. Our unbiased algorithm will match your unique energy needs with the best plan in the area. Then, we make signing up and getting electricity flowing to your home easily.

Is Pay As You Go Electricity The Same As “Prepaid?”

The terms “Pay as you go electricity” and “prepaid electricity” are interchangeable.

What does it mean to prepay for electricity?

As mentioned above, the customer will pay a certain amount into their account for electricity. As electricity is consumed, the money in the account will deplete.

Before dipping under a set threshold, the customer will somehow be notified (email, text, phone call, etc.) that it is time to make another deposit into the account.

As long as the account stays current, the customer’s electricity will run normally without getting disconnected.

Is A Pay As You Go Electricity Plan Best For Me?

Your electricity needs are specific to your house and your lifestyle. What’s right for you might not be the right electricity plan for your neighbor.

With so many different types of electricity plans in Texas, it can be hard to know which one is best for you.

Discover the best electricity rates.

Power Wizard finds you the best electricity plan and ensures you won’t overpay for electricity again.

Learn More in Under 2 Mins
What is pay as you go electricity

Here are some things to consider about pay as you go plans:

  1. You won’t receive a monthly paper bill. Since you prepay, you won’t have to pay again until you consume enough electricity to use up the account’s balance. The time it takes for that to happen will vary depending on your electricity usage.
  2. You can easily split the cost with roommates or tenants. If you are sharing the living space, you can either take turns paying or split the cost of your electricity each time you need to make a payment to your account.
  3. You need access to phone or other electronic notifications. To know when your account is getting close to the disconnection balance, you’ll need to set up a notification system with the company.

Benefits of Pay As You Go Electricity

There are a few benefits to pay as you go electricity that might appeal to you. Some customers need the added flexibility of a prepaid plan. Before switching plans, take a look at these benefits to see if they’re a good fit for you.

Summer Electricity Bills

Summers in Texas can get very hot. Running the air conditioner constantly can definitely run up your electric bill.

With other types of electricity plans, it would be easy to not think about the added electricity consumption of another large appliance or constant air conditioner use.

Since you can monitor how much electricity you are using, it can help you to be a bit more conservative with your usage to hopefully save money during the hotter months.

Manage Your Usage

As mentioned above, you can monitor your electricity usage with a pay-as-you-go plan. If you have a budget you’d like to stick to, you can keep track of how much electricity you are using and find ways to cut back on consumption if needed.

Even though you can manage your usage, you can’t manage the constantly changing rates for pay as you go electricity plans.

Essentially, you are prepaying for a dollar amount of electricity, whereas other plans are charging for kilowatt-hours (kWh).

There are other types of plans that offer a fixed rate so that you don’t pay more when electricity prices go up. Pay as you go plans do not have this option, so you could end up overpaying.

No Long Term Contracts

Are you not planning on staying in the same location for very long? Do long-term contracts seem too permanent? Or maybe you’d like the ability to switch electricity plans at any time?

Pay as you go electricity plan might be a good solution since they don’t require long-term contracts. You can pay as you go for as long as it suits you.

But keep in mind:

  • Rates are changing from month to month and season to season, so you could overpay if rates get too high.

Consider this scenario:

John relocates to Houston for his job. He signs up for a pay-as-you-go plan in case the job requires him to relocate again down the road.

He ends up staying in that area for 4 years.

John could have benefited from a fixed rate of some sort, so chances are he overpaid at one point or another within those 4 years.

Not getting tied down by a long-term contract would be nice, but it’s important to make sure the alternative is realistic and isn’t going to lead to overspending.

No Credit Checks or Deposits

Traditional electricity plans will usually require a credit check, which could lead to having to pay a large deposit before receiving electricity service.

A deposit is not required for pay-as-you-go plans, making it possible for some customers to get electricity right away as long as they make an initial payment to their account.

But, pay as you go plan isn’t the best choice for everyone. You can skip the deposit, but you may end up paying more from month to month if the rates go up in your area.

The Downside of Pay As You Go Electricity

While there are pros to a pay-as-you-go electricity plan, there are also cons to consider.

Not every pay-as-you-go plan is the same, so be sure to read through the plan’s entire terms of service agreement.

Keeping a Minimum Account Balance

Each pay-as-you-go plan will have a minimum account balance set by the REP. Many REPs require anywhere from $30-$75 to initiate service. The minimum requirement will vary from one REP to another.

At the time of signup, the customer agrees to consistently keep the balance above the minimum. If they fail to keep it above that threshold, they risk getting their electricity shut off.

Cancellation Fees

Without a contract, there is no way for a REP to know when you will decide to cancel services.

If you request to end your pay-as-you-go plan, you might get hit with a cancellation fee. The amount of the fee can vary from one plan to another.

Higher Rate of Disconnection

As mentioned before, pay-as-you-go plans require that your account balance stays above a certain amount. You’ll get a notification once the balance is getting close to that set minimum.

If you don’t make another payment before your account goes below the threshold, your electricity will be disconnected.

This could be potentially dangerous in extreme weather conditions, such as a lack of air conditioning during the very hot summer months.

Just imagine:

You forgot to make a payment to your pay-as-you-go account, and an entire workday goes by.

You get home and realize your electricity has been shut off, the food in your fridge is spoiled, your freezer’s ice is melted all over the floor, and it’s hot and stuffy from lack of A/C.

Since you don’t have a set day at the end of the month to pay your bill, it can be harder to remember to keep up with payments. A missed account payment could lead to your electricity being shut off.

Let us find you the best plan in seconds and start saving.

Hidden Fees

There is a variety of hidden fees that a REP could potentially charge on a pay-as-you-go plan. Some of these include:

  • Fee for paying online or another certain way
  • Fee for paying with a check
  • Disconnection and reconnection of service
  • Fee for move-in and move-out meter reads
  • And more

To avoid hidden fees, you’ll need to read each plan’s terms of service thoroughly.

How can you narrow your search down to the best plan and avoid reading dozens of terms of service agreements?

You can use our 100% unbiased algorithm that will find the best plan that fits your particular electricity needs. We take into account all the possible fees that could arise to help you save money.

What’s The Difference Between Energy Plans and Electricity Plans?

It could be easy to think energy and electricity are the same things when, in fact, they are different.

Electricity is a form of energy and is mainly about the charge of atoms. As electrons move quickly between atoms, electricity is created.

Energy gives things the ability to work and move. There are different ways to measure energy, but electrical energy is mainly measured by watt-hour.

An energy plan is not the same thing as an electricity plan. An electricity plan won’t include gas, but an energy plan might.

Pay As You Go Energy

There are dozens of energy providers in Texas. Some of these providers also supply electricity plans.

There may be pay as you go energy providers in your area, but pay as you go energy is not the same thing as pay as you go electricity.

Other Types Of Electricity Plans

What is pay as you go electricity

Pay as you go plans are not the only option to choose from. REPs usually offer multiple types of electricity plans to better serve a broad range of electricity needs.

With all the hidden fees, technical jargon in the contracts, and all the other stipulations surrounding pay-as-you-go plans, it’s hard to know if they’re truly right for your unique electricity needs.

Even if you think it’s best for you, how can you be 100% sure?

You might find that a pay-as-you-go plan isn’t right for you.

So, what other options do you have for electricity? Here is a quick look at a few other types of electricity plans.

Fixed-Rate Electricity Plans

A fixed-rate electricity plan offers the customer the option to pay for electricity at a fixed rate each month. This means your rate won’t change even if the cost to generate electricity goes up.

You usually have the same rate for a certain period, such as 12 or 24 months depending on your contract terms.

How Is This Different Than a Pay As You Go Electricity Plan?

Unlike a pay-as-you-go plan, a fixed-rate plan requires you to sign a contract.

You will also have a monthly bill at the end of the month, which is different than a pay-as-you-go plan.

Variable-Rate Electricity Plans

If you have a variable-rate electricity plan, your rate will fluctuate from month to month depending on the current market prices of electricity.

The cost of electricity changes daily based on things like:

  • Weather
  • Demand
  • Distribution
  • And more

How Is This Different Than a Pay As You Go Electricity Plan?

While pay as you go plan and a variable-rate plan both don’t require a contract, a variable-rate plan does have a monthly bill.

You will pay for the month’s consumed energy all at once at the end of the month. Pay as you go plan requires you to prepay for electricity.

Indexed Electricity Plans

An indexed electricity plan means the price of your electricity is connected to another variable, or “index.” This could be the cost of electricity on the market for the month or another similar index.

The price of the index will determine the price of your electricity, and it must be disclosed by your REP in the contract.

How Is This Different Than a Pay As You Go Electricity Plan?

An index electricity plan requires a contract and has a monthly bill at the end of each month.

Power Wizard takes the guesswork out of choosing an electricity plan.

With Power Wizard, the burden doesn’t fall on you to pick your plan.

Here’s what we can do for you:

  1. Compare costs between all 3 types of plans
  2. Match your electricity needs to the plan that benefits you best
  3. Continue to monitor the market for possible rate changes
  4. If we find a better price, we’ll switch your electrical company to the most cost-effective option

You don’t have to do a thing.

Use our Savings Estimate to learn just how much money you can save each month.

Discover the best electricity rates.

Power Wizard finds you the best electricity plan and ensures you won’t overpay for electricity again.

Learn More in Under 2 Mins

How Do Electric Companies Set Their Pay As You Go Electricity Rates?

Rates will vary from one pay-as-you-go plan to the next. Rates will fluctuate depending on the current cost of electricity on the market.

Just like gas prices changing constantly, the price of electricity is also changing. The rate for a pay-as-you-go plan will adjust automatically to stay in line with the changing cost of electricity.

How Do You Get The Best Electricity Rates in Texas?

With so many different REPs to choose from, it can be hard to track down the best electricity rates. Your electricity needs are specific to you and your house or business.

You’ll need to find a plan that fits all your criteria and offers you the best rate at the same time.

Price It Out By Going To Each Companies Website

There are dozens of REPs servicing your area in Texas.

To find the best rate, you would have to visit each of their websites one by one to compare all the different plans and available rates.

This method might help you find a good plan eventually, but it can take hours of work.

Save Tons Of Time By Using Power Wizard

Instead of combing through all of the REPs’ websites, you can use Power Wizard’s Savings Estimate to allow us to do the work for you.

All you have to do is enter a few pieces of information so we know what to search for.

Then, our 100% unbiased algorithm will search through each available plan until we find the best one for your electricity needs.

It takes less than 5 minutes.

Pay as you go plan might be a good choice for you, or a different type of electricity plan might be better. Think about what you want in an electricity plan, and let us help you find the best solution for your electricity usage.

Let us find you the best plan in seconds and start saving.

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