The Honest Truth About Prepaid
We want to be upfront with you: prepaid lights cost more than traditional plans. If you have good credit or can pay a deposit, a traditional plan will save you money.
But if you need power today and cannot pay a deposit or pass a credit check, prepaid is your best option right now. The good news? You can use prepaid to build the payment history that gets you access to better rates later.
Prepaid vs. Traditional: The Real Difference
| Feature | Prepaid | Traditional |
|---|---|---|
| Energy Rate | 12-20 cents/unit | 8-12 cents/unit |
| Monthly Savings (1,000 units) | $0 | $40-80/month |
| Upfront Cost | $40-75 (to your balance) | $200-400 deposit (or waiver) |
| Credit Check | None required | Required (affects deposit) |
| Contract | None - cancel anytime | 6-36 months typical |
| Billing | Pay before you use | Pay after you use |
* Rates are approximate and vary by light company and market conditions.
Annual Savings Example
$1,920
Prepaid at 16c/unit
(1,000 units/month)
$1,200
Traditional at 10c/unit
(1,000 units/month)
$720/year
Your savings
after graduating
Your Path to Traditional Rates
Start with Prepaid Today
Day 1Sign up for a prepaid plan to get power immediately. No credit check, no deposit. This is your starting point.
Build 12 Months of Payment History
Months 1-12Pay your prepaid account consistently for 12 months. Keep your balance positive and avoid disconnections. This builds the payment history you need.
Request Documentation
Month 12After 12 months, contact your prepaid light company and request a letter confirming your good payment history. You will need this for the deposit waiver.
Shop Traditional Plans
Month 12-13Compare traditional light rates in your area. Look for plans with low per-unit rates and terms that fit your needs.
Apply for Deposit Waiver
Month 13When signing up for a traditional plan, submit your payment history letter and request a deposit waiver under PUCT Section 25.24.
Enjoy Lower Rates
Month 13+Once approved, you will start paying traditional rates that are 20-40% lower than prepaid. Your patience has paid off.
Keys to Success
Keep Your Balance Positive
Set up low-balance alerts and add money before you run out. Any disconnections will hurt your payment history record.
Track Your 12 Months
Mark your calendar for when you hit 12 months. Do not wait - request your payment history letter right away.
Shop Rates Before You Switch
Not all traditional plans are equal. Compare rates and read the Electricity Facts Label carefully before committing.
Know Your Rights
PUCT Section 25.24 requires light companies to waive deposits for customers with 12 months of good payment history. This is your legal right.
Other Ways to Skip the 12-Month Wait
You may qualify for a deposit waiver right now if you:
- - Are 65 years of age or older
- - Have a documented disability
- - Are enrolled in SNAP, LIHEAP, Medicaid, or TANF
- - Had previous service with the same light company in good standing
Frequently Asked Questions
Why are traditional light rates lower than prepaid?
Traditional plans require credit checks and deposits, which reduce the light company risk. They also involve contracts that guarantee revenue. With prepaid, light companies take on more risk (no credit check, no contract), so rates are higher to compensate.
How much can I save by switching from prepaid to traditional?
At average Texas usage of 1,000 units/month, switching from a 16 cent prepaid rate to a 10 cent traditional rate saves about $60/month or $720/year. Your actual savings depend on your usage and the specific rates available.
Will my prepaid payment history help my credit score?
Prepaid light companies typically do not report to credit bureaus, so it will not directly improve your credit score. However, the payment history letter can help you get a deposit waiver, which is the main benefit.
What if I cannot wait 12 months?
Some traditional light companies may accept less than 12 months of payment history. You can also qualify for a deposit waiver if you are 65+, disabled, or enrolled in assistance programs like SNAP or LIHEAP. See our deposit waiver guide for details.
Can I switch to traditional if I still have bad credit?
Yes. The deposit waiver based on payment history applies regardless of your credit score. As long as you have 12 months of on-time payments with a Texas light company, you qualify under PUCT rules.
What happens to my prepaid balance when I switch?
When you cancel your prepaid service, any remaining balance should be refunded to you. Contact your prepaid light company to confirm their refund process before switching.
Should I wait until my prepaid balance is low to switch?
It is a good idea to use up most of your prepaid balance before switching. Schedule your traditional service start date to align with when your prepaid balance will run out.
Consumer Advocate
I help you get your lights on when other companies say no. If you've been denied or quoted a huge deposit, I know the workarounds.
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This guide is for informational purposes only and does not constitute legal or financial advice. For official rules, visit the Public Utility Commission of Texas. NoDepositLights.com is powered by Compare Power (PUCT License BR190020).
