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How Does Prepaid Electricity Work?

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What is Prepaid Electricity?

Prepaid Electricity is an electric plan that allows customers to control electricity use by paying before using electricity. Prepaid electricity plans are available in states like Texas and Maryland due to their deregulation laws. Thanks to its flexibility, the plans are known as to as pay as you go plans.

Prepaid electricity is gaining popularity as an easy way to be in total control of your electricity use. Not only is it convenient, but it can also help you save on your electricity costs. And prepaid electricity allows you to sidestep the many hassles involved in using traditional power. Some providers try to dangle free nights and weekends as a way to get you to stay with their company. However, prepaid electricity doesn’t have to use these types of gimmicks – which, by the way, don’t always produce the advertised savings, can often lock you into contracts for a long time, and charge hefty termination fees when you try to leave.

However, some pre-paid customers report saving up to 27% compared to other electricity providers. That’s because they’re only paying for the electricity that they actually use.

But how does prepaid electricity work, and how do you know if it’s right for you and your family?

Below, we’ll walk you through the process.

Prepaid Electricity Eligibility

In the past, large utility companies could generate and distribute power – and determine how much to charge for it. Fortunately, Texas is one of the U.S. states that has deregulated electricity, which means that energy production and energy distribution are handled by separate companies. Now, companies like Payless Power are known as a retail electricity provider (REP) and we work with transmission and delivery utility (TDU) companies to provide the best rates. In fact, Payless Power works with TDUs in more than 400 communities in Texas. If you live in one of these deregulated areas, you are eligible for prepaid electricity.

It’s that simple. With prepaid service, there is no deposit needed. Instead, the REP will ask for a balance of up to $75 to set up and provide electric service. Additionally, you may be required to pay the REP for Transmission and Distribution Utility (TDU) fees, which could result in a total amount due exceeding $75 before service initiation. What could be easier and more convenient than that?

Enrolling in a Prepaid Electricity Plan

Enrolling in a prepaid electricity plan is easy: customers can sign up online or call a customer service representative. Entering your zip code on Payless Power’s website, or other sites that compare prepaid plans, allows you to see if your home is in the coverage area and your available plan options.

For example, Payless Power offers two popular prepaid electricity plans (also called pay-as-you-go electricity). Our Premier 12 prepaid plan guarantees a fixed rate for the 12-month contract. This plan can save customers money when rates fluctuate and allows you to adjust your home’s usage to save even more. Payless Power’s Easy Choice prepaid plan is a month-to-month variable rate plan that provides needed flexibility for those who just moved or are shopping for the best fixed-rate plan. Both prepaid plans require a minimum connection fee that goes toward the cost of electricity, not a pricey deposit like many other companies require.

If your home already has a smart meter, service could be connected in just 4 to 6 hours. However, this will depend on other factors, like whether you have a meter that can be activated remotely. If it can’t be connected remotely, it may take an additional day for a technician to come out to your home.

If you don’t already have a smart meter, one will be installed in your home, and it can usually be connected on the same day that it is installed.

The Payment Process

By paying for electricity in advance, customers won’t receive a billing statement at the end of the month. Instead, you deposit money into your account before you use the electricity. Every day, your meter is read remotely and sends customers either a text message or an email that shows how much electricity was used and the available balance in the account. Just like putting gas in your car, you’re filling up the tank to then operate your car. In a prepaid electricity plan, when you add funds to your account, you’re filling up your balance. In both scenarios, you can fill it up a little or a lot – but you don’t want to wait until the gauge/balance is empty.

You can make your prepaid electricity payments online and you’ll receive a confirmation by text or email. Customers can pay via the app, by phone, or in person at one of the many Moneygram locations.

Tracking Use

Since your electricity use is being monitored on a daily basis, you’ll always know how much electricity you’re using, how much it costs, and how much remains on your balance. The daily alerts you receive are quite detailed. For example, a typical daily alert might look like this:

Kilowatt-hours consumed for the day: 27.8

Balance remaining: $94.56

Savings for the day: $1.31

Estimated days remaining: 23

With such detailed information, you can avoid those unpleasant surprises that result when you receive a paper bill at the end of a billing period and realize that you’ve used a lot more electricity than you thought. Daily alerts can also keep you discover where you can save money and lower your bill even more. For example, you might decide that it’s best to turn the HVAC off when leaving your home for the day. According to the U.S. Environmental Protection Agency, heating your home accounts for 29% of your energy usage, following by 17% for cooling costs. When you’re home in the summer, just raising your thermostat a few degrees and using a ceiling fan can help you save money without decreasing your comfort level. In the winter, just lowering your thermostat a few degrees and using your ceiling fan in reverse (so that it turns counterclockwise), can help to distribute the heat.

Also, remember to change your air filters at least every 3 months, and regularly vacuum your registers to keep dust from building up, since dirty filters and registers can decrease your HVAC’s efficiency, and result in higher bills.

Daily monitoring can also alert you to a potential problem in your home. For example, spikes in your bill could lead you to discover that your dryer may not be working correctly, or your refrigerator is about to die. Wouldn’t you rather discover that you have a problem as soon as possible rather than waiting until you finally get a bill in the mail to find out that your power consumption has doubled or even tripled?

Prepaid electricity allows you to take the guesswork out of your energy costs each month. With daily updates, and convenient monitoring and payment options, there’s no need to spend your energy worrying about your energy bill.

What our customers are saying

See why our power customers say we're the best electricity provider in Texas!

Affordable and easy to make payments

I was worried about getting electricity for my home through a prepaid company. I was calling around to see different rates then going through all the hassle of credit checks while dropping points each…

Christine M. in Killeen

Happy Customer

I have been with this company for several years and have been very happy since. Even when I moved, they made my usually stressful situation very easy and carefree. I recommend them to everyone that I…

Julia L. in Webster

Long term customer

I have enjoyed the service for 2 years now. In the beginning this service was planned to be temporary but with the service being so effective for me i decided to keep it for the long haul. I’m a happy customer.

Kalandra H. in McKinney