The $955 question
Prepaid costs about $955 more per year than traditional plans. For some people, that's worth it. For others, it's money they can't afford to lose. Here's how to know which one you are.
The Quick Answer
Choose Prepaid If:
- - You cannot pay a $200-400 deposit right now
- - You have credit challenges
- - You need power connected quickly
- - You want flexibility with no contract
Choose Traditional If:
- - You have good credit or can pay a deposit
- - You want the lowest possible rates
- - You plan to stay 12+ months
- - You do not want to monitor your balance
Side-by-Side Comparison
| Feature | Prepaid | Traditional |
|---|---|---|
| Upfront Cost | $40-75 (goes toward usage) | $0-500 (deposit, depends on credit) |
| Energy Rate | 12-20¢/unit (30-50% higher) | 8-12¢/unit (market competitive) |
| Credit Check | No | Yes (soft pull) |
| Contract Length | No contract | Month-to-month or 6-36 months |
| Early Termination Fee | $0 | $50-200 (if on contract) |
| Billing | Daily (pay before use) | Monthly (pay after use) |
| Disconnection Risk | Same day if balance hits $0 | After 2+ missed payments |
| Usage Awareness | High (daily tracking) | Low (monthly bill) |
| Best For | Short-term, credit challenges, flexibility | Long-term, budget planning, lowest cost |
The True Cost Over Time
Let us look at what you would actually pay over 12 months for a typical Texas home using 1,000 units/month:
Prepaid Plan
No deposit required. Cancel anytime.
Traditional Plan
*Deposit refunded, so net cost is $1,260.
The Bottom Line
In this example, prepaid costs approximately $955 more per year (about $80/month more). That is the real cost of avoiding a deposit. For some situations, that trade-off makes sense. For others, it does not.
Related: Texas Summer Rates 2026 — what to expect this summer.
Who Should Choose Prepaid?
People Rebuilding Credit
If you are actively working to improve your credit and cannot access good rates yet, prepaid keeps the lights on while you rebuild. Think of it as a bridge, not a destination.
Short-Term Residents
Staying somewhere for just a few months? Prepaid's no-contract flexibility means you can leave without early termination fees. No deposit to wait to get back.
Budget-Conscious Users
Daily balance tracking helps some people manage usage better than monthly bills. If you have struggled with surprise bills, prepaid forces awareness.
People Who Need Power Now
Prepaid can be set up same-day in most cases. If you cannot wait for credit checks and deposit processing, prepaid gets you connected fast.
Who Should Avoid Prepaid?
People with Good Credit
If you can qualify for no-deposit traditional plans, you are paying 30-50% more for no reason. Check your options first.
Long-Term Residents
Planning to stay 2+ years? The extra cost of prepaid adds up significantly. Even with a deposit, traditional plans save money long-term.
High-Usage Households
If you use 2,000+ units/month (large home, electric heating/cooling), the rate difference between prepaid and traditional becomes very expensive.
People Who Forget to Pay
Prepaid requires active balance monitoring. If you often forget bills or travel frequently, you risk disconnection. Traditional plans offer more grace period.
Frequently Asked Questions
Are prepaid lights more expensive than traditional?
Can I switch from prepaid to traditional lights?
Do prepaid plans affect my credit score?
Which type of plan is better for renters?
What happens if I run out of money on prepaid lights?
Do traditional plans always require deposits?
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).
