Pay As You Go Electricity: The Pros and Cons of Prepaid Electric Service

Pay as you go electricity also known as prepaid electricity allows customers to pay for their energy usage upfront instead of receiving a monthly bill. This payment model is growing in popularity across Texas and can benefit certain households. However, it also has some drawbacks to consider. This comprehensive guide will explain everything you need to know about pay as you go electric plans.

What is Pay As You Go Electricity?

Customers of pay as you go electricity service agree ahead of time to use a certain amount of energy, measured in kilowatt-hours (kWh). This prepaid balance is drawn down as you use electricity each day.

Smart meters track your real-time usage Once the balance gets low, you simply add more funds to continue uninterrupted service It’s similar to paying upfront for cell phone minutes or putting gas in your car before a trip.

How Pay As You Go Electricity Works

Here is a step-by-step overview of how prepaid electricity service works:

• Figure out how many kWh you use on average each month. You can look at your old electric bills or have your provider do it for you. This determines how much to prepay each month.

• Select a plan and deposit funds – Choose a prepaid plan that fits your needs and deposit money into your account to cover estimated usage for 30-60 days.

• Draw down balance as energy is used – Smart meters track your exact kWh consumption, deducting the cost from your balance in real-time.

• Receive balance alerts – Get notifications by text, email or app when your balance is getting low, typically when 25% remains.

• Add more funds as needed – Replenish your account balance online, by phone or at authorized payment locations before it reaches $0.

• Continue service – Repeat purchasing preapproved amounts of electricity to maintain uninterrupted service.

Pros of Pay As You Go Electricity

Prepaid electric plans offer several advantages:

• No credit checks or deposits – Qualifying is easy since no deposit or credit check is required. Everyone with the ability to prepay can sign up.

• No late fees – Prepaying eliminates late payments, removal fees, and service disconnection for non-payment.

• Pay for what you use – Unused kWh credits roll over month-to-month. You only pay for the energy you consume.

• Budgeting assistance – Prepaying makes it easier to budget household expenses. The cost of electricity for the month is already covered.

• Usage awareness – Frequent balance updates show when usage is increasing so you can adjust habits to conserve energy and costs.

• Flexible payments – Add funds whenever it’s convenient through numerous payment options – online, phone, app, and thousands of authorized retail locations.

• No long contracts – Prepaid plans don’t lock you into a long-term contract. You can switch companies anytime without early termination fees.

Cons of Pay As You Go Electricity

While prepaid electric plans can benefit many customers, there are also some potential disadvantages:

• Prepaying is required – The need to pay ahead of time could be difficult for some households on a tight budget.

• Prices may be higher – Prepaid electricity rates are sometimes higher than traditional postpaid rates. Compare costs carefully.

• Electricity cut off – Service will be suspended if your account reaches a $0 balance. Maintaining a positive balance is essential.

• Minimum balances – Prepaid plans often require keeping a minimum balance, tying up those funds.

• Fees for last-minute payments – Some providers charge convenience fees for short notice or emergency payments to restore service.

• Requires an app or internet access – Staying on top of your balance requires a smartphone, computer or internet service, which not all customers have.

Who Should Consider Pay As You Go Electricity?

While not right for everyone, prepaid electric plans best suit the needs of:

• Customers with a limited or poor credit history
• Renters or anyone uncertain of the length of their residency
• Those who want to closely monitor usage and regulate costs
• People with seasonal or fluctuating income streams
• Those who prefer pay-as-you-go models in general
• Anyone seeking to avoid security deposits and long contracts

Tips for Managing a Prepaid Electric Account

Follow these guidelines to successfully manage a prepaid electricity account:

• Accurately estimate your average monthly kWh usage
• Set usage alerts at 50% and 25% of your balance
• At 25%, immediately add more funds to avoid service disruption
• Learn ways to conserve energy around the home
• Take advantage of budget billing options if offered
• Have a backup plan to restore service if your balance reaches $0
• Compare electric rates annually and be willing to switch providers if better prepaid offers are available

Key Providers of Pay As You Go Electricity in Texas

Major retail electric providers in Texas offering prepaid electricity plans include:

• Payless Power
• TXU Energy
• Reliant
• Direct Energy
• Frontier Utilities
• PayGo Energy
• Express Energy
• Bounce Energy
• Infuse Energy

Shop and compare prepaid electric plans on ChooseEnergy.com by simply entering your zip code.

Prepaid electric service allows customers to pay upfront for exactly the amount of energy they use each month. While not the best fit for every household, it can benefit renters, those with no credit, and individuals wanting to carefully track electric costs. Be sure to compare prepaid plan rates and know the potential drawbacks before enrolling. With a prepaid account, staying on top of your usage and balance is key to avoiding any disruption in service.