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Prepaid Electricity for Consumers with Poor Credit

When Texas consumers shop and compare electricity rates, they learn that there are two basic types of service.  Postpaid electric service is the most common arrangement.  The electricity company bills the customer based on how much energy they used since the last meter reading.  Prepaid electric service is very different and requires the customer to pay for kilowatt-hours they will use in the future. Thanks to smart meters, prepaid electricity plans have come a long way from the clunky billing process of the past.

Electricity Deposits

First, we examine why a consumer would be interested in a prepaid electricity plan. Your credit score considers many factors but mainly reflects your past payment issues.  The problem is that your current ability to pay may have little to do with those tough times.  When you try to sign up for a traditional electricity plan, you are informed that a deposit is required.  Although the Public Utility Commission of Texas limits the deposit amount, it can still be a decent chunk of change.  Having your hard-earned cash tied up in deposits may hinder your ability to pay your electricity or other household bills.

This feels a bit like chasing your tail: poor credit history leads to deposits that can lead to additional bad credit experiences. If avoiding a deposit with your electricity company helps you to stay current with your bills, then prepaid electricity may be your best option.

Smart Meters and Prepaid Electricity Service

Smart meters allow your electricity provider to monitor your energy use without waiting for a monthly meter reading. The smart meter records and stores your electricity usage in 15-minutes intervals and then sends that data to your electricity company.  Smart meter communication is two-way, which allows prompt disconnection of service for non-payment.  This technology is perfect for making prepaid electricity plans consumer-friendly and practical.

Prepaid electricity is now able to operate similar to prepaid calling cards and prepaid cell phone service. You simply establish an initial balance and then receive daily text or email notifications showing how much electricity you used, how much the electricity cost, your remaining balance, and an estimate of how many days you have before additional payment is required.

Loading additional money into your account has also been simplified. Payless Power, one of the pioneers in prepaid electric service, allows you recharge your account online or by phone using a credit card.  They also accept cash payments at thousands of payment centers across Texas.

These improvements in prepaid electricity have truly made it a great product for people with poor credit. Now your cash can be used for staying current with payments and improving your credit history instead of being tied up in utility deposits.

About: Suzanne Hewitt

Suzanne Hewitt has extensive experience in the energy industry ranging from oil and gas exploration to coal mining. After raising 2 daughters and managing the family finances for over 26 years, she knows the importance of being energy wise at home. Suzanne has a BS in Geological Sciences from UT Austin (Hook 'em) and a MS in Oceanography from Texas A&M University (Whoop!).

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