After months of trying to find the perfect home, have you finally secured your first apartment or new residence? Before moving in, it may benefit you to set up all of your utility accounts to ensure a comfortable transition. When signing up for a new utility service, such as electricity, your electric company may require you to pay a deposit upfront depending on if you have good credit and a good history of timely payments. Payless Power, a Texas electric provider, offers a deeper understanding of what to expect from an electricity deposit below.
Understanding Electricity Deposits
When choosing a utility provider, it is important to understand the underlying fees that are associated with the energy plan you choose. Many electric plans require utility deposits which may potentially be hundreds of dollars before you even get electric service in the first place. Read on to understand why utility deposits are required, how much they are, and how to avoid them all together.
Why Do Utility Companies Request Electricity Deposits?
While not every utility company may require a deposit for every customer or energy plan, many take into consideration your credit score and history of timely payments and try to protect themselves against customers potentially defaulting on their monthly bill.
To Protect Themselves
Generally speaking, customers use electrical service for a period of time before having to pay a bill, which is determined by the agreed upon electric rate and the amount of energy that was used in that billing period. To protect themselves against customers who may default on payments or end their service without paying, which also affects all customers, utility companies will request a security deposit. This protects the provider and the customers and helps keeps rates down.
Credit Score and History of Utility Payments
It is common for utility companies to perform a credit check when evaluating if a potential customer is a high-risk candidate for defaulting on their monthly bill. If you have a poor history of not paying your bills on time, this will make your credit score go down, which doesn’t look good to the utility company you’re trying to get service from. A security deposit is meant to cover the amount a utility company may need if the customer does not pay for service. Also, utility deposits are often required for first-time renters or homeowners since they have no history of making a utility payment on time.
Can an Electricity Deposit Be Waived?
Though required deposits aren’t typically waived, utility companies will make exceptions under certain circumstances. For instance, if you or a well-qualified co-signer has good credit and a history of paying utility bills on time, if you have a letter of credit from your previous utility provider, or if you are a senior citizen, a victim of domestic violence, or have proof of medical indigence, then a utility provider may waive your deposit.
How Much Does an Electricity Deposit Cost?
The cost of an electricity deposit will vary widely across providers and customers. It can be determined based on your credit score and payment history, particularly if you have any unpaid past-due balances, or a provider can set a flat rate to bill you for regardless of your credit standing. Typically, the cost of an electricity deposit ranges from one month’s service to two times the residence’s average monthly bill. You may pay a deposit in one installment or multiple and they don’t carry any interest. If you choose to pay monthly installments, they will be added to each month’s utility bill until the balance of the deposit is fully paid, but if you are late to pay one installment, you will likely have to immediately pay the entire deposit in full. You may pay utility deposits online, by phone, at local provider offices, and authorized payment locations.
How Do I Get My Deposit Back?
Your deposit will be accruing interest at a rate established by the Public Utility Commission for the first year of electric service that you receive from your utility company. If you are able to make on-time payments for 12 consecutive months, you will get your deposit back in full with interest as a credit on your utility bill. However, if you have a late payment on your record or you don’t pay your bill all together, your deposit will be applied towards paying this amount. If you are moving and switching electric providers, your deposit plus interest will go towards your final bill and a refund check for the difference will be mailed to you within 45 days. On the flip side, if you are staying with the same electric provider as you move to your new home, your deposit will simply transfer to this new location or account.
Avoiding Electricity Deposits All Together
Is your credit score not where you want it to be, you can’t afford to pay a deposit and you still need energy to power your home ASAP? You are not alone! Check out Payless Power’s no deposit, no credit check prepaid electric plans. No deposit electricity is a feature of prepaid energy plans where customers aren’t charged upfront to receive service in the first place. Prepaid energy plans gives customers the control of paying for an initial amount of energy and consuming it until they have met the limit of that particular payment. At Payless Power, everyone is instantly approved for a no deposit electric plan regardless of their credit score or payment history, taking away the barrier to electric service for all who need it.