What’s Up With Texas Electricity Rate Plan Deposits?

Electricity is fully deregulated in the state of Texas, with the exception of a few municipalities and cities, such as Austin. In Texas, customers can no longer purchase electricity supply from local utilities, such as Oncor, TMNP,  CenterPoint, AEP Texas Central, or AEP Texas North. In fact, Texas customers must purchase their electricity from a retail energy provider. Since retail providers handle all billing, many of them require a credit check from customers and even a security deposit. Here is what you need to know about security deposits on Texas electricity rate plans.

Why The Deposit?

In other deregulated states, such as Pennsylvania, local utility companies are still actively involved in the electricity supply process. In these states, consumers have the option to purchase electricity from a supplier or from their local utility. And what’s more, the local utility companies are still in charge of billing.

If you elect to choose a supplier in these types of states, the supplier’s charges show up right on your local utility bill. In fact, you still pay one bill to your utility provider. The utility company, then in turn, sends the supplier their portion of the electricity bill.

There are no credit checks or deposits with suppliers in these states because the local utility company guarantees payment to the supplier. Because they have the power (no pun intended) to shut off a customer’s electricity due to non-payment, it becomes easier to collect what’s owed.

Texas, on the other hand, is a whole different animal. Because Texas electricity providers are responsible for their own billing, they also have to collect payments from their customers. Even more, Texas energy providers do not hold the authority to shut off a customer’s electricity supply. Even in scenarios where the supplier’s charges appear on the local utility bill, the supplier doesn’t get paid by the utility company until the customer pays his/her bill. For these reasons, many suppliers require customers to put up a deposit or pass a credit check.

Are There No Deposit Plans?

Yes! There are many suppliers in Texas offering plans with no deposits or credit checks. Remember, energy deregulation created a free market for suppliers to compete for your business. Offering rate plans with no deposit is another way suppliers try to stand out from the crowd. Some suppliers even pull a soft credit check, and as long as your credit score is above a certain threshold, no deposit is required.

How Can I Find A Zero Deposit Electricity Plan In Texas?

Using our energy shopping website is a great start! In fact, deposits is a filterable search option on our site. Simply enter your Texas zip code and enter your search parameters on the left side of the page. All of the rates and offers that meet your criteria will be displayed for you to browse.