In Texas, retail electric providers are responsible for all billing and collection activities. They collect the charges associated with their energy rates as well as the Transmission and Distribution Utility delivery charges. Texas retail electric customers typically enroll in post-pay rather than pre-pay plans. Under these plans, the customers pay for electric service well after they have used the service.
The retail electric provider assumes the entire credit risk associated with serving the customer. In many cases, two months of electric service are received before the customer’s account is past due and the energy provider is aware of a possible bad debt problem. For this reason, Texas retail electric providers screen potential customers to determine what credit risk they pose.
Electricity Credit Protections
To ensure that credit requirements are applied in a fair and nondiscriminatory manner, the Texas Public Utility Commission includes a detailed policy in its Customer Protection Rules for Retail Electric Service. As with all Texas customer protection rules, these apply to residential customers and non-residential customers with a maximum peak demand less than 50 kW. Larger commercial customers can agree to alternative credit provisions.
Texas retail electric providers are divided into two categories: 1) those who were affiliated with utilities prior to electric deregulation, and 2) everyone else. The credit requirement rules are a bit different depending on the retail electric provider classification.
For customers seeking to enroll with an affiliated retail electric provider like TXU Energy or Reliant Energy, satisfactory credit can be established in a number of ways. First, a prospective customer can submit a credit reference from their previous electric service provider confirming a positive payment record for 12 consecutive months during the past two years. A positive payment history is defined as not paying a bill late more than once and not being delinquent on any amounts owed.
Second, a prospective customer can be deemed to have satisfactory credit by having an acceptable credit rating through a consumer reporting agency. The definition of an acceptable credit rating will vary between retail electric providers and can change from time to time as those providers seek to manage their credit risk portfolio.
Special Credit Provisions
Another way of establishing satisfactory credit for electric service is if the prospective customer is at least 65 years of age and does not have a delinquent balance with their current electric service provider. Finally, a prospective customer is deemed to have satisfactory credit if they are medically indigent or have been determined to be a victim of family violence. These situations require specific documentation and it best to contact the affiliated retail electric provider for requirements.
Non-Affiliated Electricity Suppliers
Texas retail electric providers not affiliated with an investor-owned utility prior to deregulation have more freedom to establish criteria for demonstrating acceptable credit, as long those criteria are not discriminatory. Additionally, these retail electric providers are required to waive deposits for 1) prospective customers that at least 65 years of age that do not have a delinquent balance with their current electric service provider and 2) prospective customers that have been determined to be a victim of family violence and submit the required certification letter.
When selecting a great electricity rate from a Texas retail electric supplier, you can expect to encounter at least a soft credit check. Some retailers use general consumer credit scores and some use credit scores specifically focused on utility payments. Either way, the standard rules of credit reporting apply and you have the right under the Fair Credit Reporting Act to know what information is on your report. Retail electric providers are always looking for customers who pay their bills on time. If you have an excellent payment history with your current provider, you will find that many energy suppliers will accept proof of that history as acceptable for initiating service without paying a deposit.