Prepaid vs Traditional Electricity Plans in Texas: Which Saves You More in 2025?

Choosing between prepaid and traditional electricity plans is one of the most important decisions Texas electricity shoppers face. With over 200 retail electric providers in the state, understanding these two fundamental plan types can save you hundreds of dollars annually—or cost you if you choose wrong.

This comprehensive guide breaks down everything you need to know about prepaid and traditional electricity plans in Texas, including real costs, hidden fees, and which option makes sense for your specific situation.

💡 Pro Tip: Not sure which plan type fits your lifestyle? Scan your current bill to see personalized recommendations for both prepaid and traditional options.

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Quick Comparison: Prepaid vs Traditional Plans

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What Are Prepaid Electricity Plans?

Prepaid electricity works like a prepaid phone plan—you pay for electricity before you use it. You load credits to your account, and the balance depletes as you consume power. When your balance gets low, you add more funds.

1. Sign up with a prepaid provider (no credit check, no deposit)
2. Add funds to your account ($20 minimum typically)
3. Use electricity as normal—balance decreases daily based on usage
4. Get alerts when balance is low (usually at $10-20 remaining)
5. Reload via app, phone, or retail locations (HEB, CVS, Walmart)

Texas has dozens of prepaid electricity providers. To compare your options:

1. Visit PowerToChoose.org — the official PUC comparison tool
2. Filter by "Prepaid" in the plan type dropdown
3. Compare rates, fees, and terms using the Electricity Facts Label
4. Check customer reviews on third-party sites

What to look for:

• Energy rate (typically 11-15¢/kWh in 2025)
• Daily or monthly fees ($0-10)
• Reload options (app, phone, retail locations)
• Disconnection notice period (24-48 hours typical)
• Customer service availability

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What Are Traditional Electricity Plans?

Traditional plans are contract-based agreements where you lock in a rate for a set period (typically 6-36 months). You receive a monthly bill after using electricity, and your rate remains fixed regardless of market fluctuations.

1. Credit check and potential deposit ($100-400 for lower credit scores)
2. Choose a contract length and rate structure
3. Use electricity throughout the month
4. Receive a bill 2-3 weeks after your billing cycle ends
5. Pay monthly by due date (usually 16-21 days after bill date)

Fixed-Rate Plans

• Locked rate for entire contract term
• Protection from price spikes
• Most popular option (70% of customers)

Variable-Rate Plans

• Rate changes monthly based on market
• No contract commitment
• Higher risk, occasional reward

Indexed Plans

• Rate tied to wholesale market + margin
• Transparent pricing
• Requires monitoring

Time-of-Use Plans

• Different rates for peak/off-peak hours
• Savings potential for flexible users
• Requires behavior adjustment

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The Real Cost Comparison

Let's break down actual costs for a typical Texas household using 1,000 kWh/month:

*Deposit refunded after 12 months of on-time payments

Traditional plans save approximately $40-150/year for customers with good credit. However, if you'd need to pay a $200-400 deposit, prepaid plans break even or come out ahead in Year 1.

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When Prepaid Plans Make Sense

Prepaid electricity is the better choice when:

• No credit history (students, recent immigrants)
• Rebuilding credit after bankruptcy or collections
• Avoiding hard credit inquiries
• Previous utility debt on record

• Short-term housing (month-to-month lease)
• Uncertain about staying in Texas
• Testing a new city before committing
• Seasonal residents or vacation homes

• Prefer paying as you go vs. monthly bills
• Need to avoid surprise large bills
• Want daily usage visibility
• Struggle with monthly budgeting

• Moving in same-day or next-day
• Emergency reconnection after disconnection
• Weekend or holiday move-in
• Avoiding traditional setup delays

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When Traditional Plans Make Sense

Traditional electricity is the better choice when:

• No deposit required
• Access to lowest rates
• Premium plan options available
• Rewards and loyalty programs

• 2-4¢/kWh savings vs. prepaid
• $200-500/year in potential savings
• Long-term rate lock protection
• Promotional rates and bill credits

• Predictable monthly bills
• No disconnection worries
• Longer grace periods for payment
• Customer service protections

• Savings compound at higher usage
• Bill credit triggers (use 1,000+ kWh, get $50)
• Tiered pricing advantages
• Time-of-use plan benefits

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Hidden Costs to Watch For

1. Higher Energy Rates The 2-4¢/kWh premium adds up:

• At 1,000 kWh/month = $20-40 extra monthly
• At 2,000 kWh/month = $40-80 extra monthly

2. Reconnection Fees If your balance hits $0 and service disconnects:

• Reconnection fee: $25-50
• Minimum reload required: $50-100
• Next-day service (not same-day)

3. Balance Expiration Some providers expire unused balances after:

• 30-90 days of inactivity
• Account closure
• Provider switching

4. Limited Customer Protections

• Faster disconnection timeline
• Fewer dispute resolution options
• No utility commission oversight for some providers

1. Early Termination Fees (ETF) Breaking your contract costs:

• 12-month plans: $100-150
• 24-month plans: $150-200
• 36-month plans: $200-300

2. Deposit Requirements Based on credit score:

• 750+: Usually no deposit
• 650-749: $100-200 deposit
• 550-649: $200-300 deposit
• Below 550: $300-400 deposit or denial

3. Monthly Base Fees Often overlooked in rate comparisons:

• Range: $4.95-14.95/month
• Annual impact: $60-180

4. Usage Minimums Some plans advertise low rates that require:

• Minimum 1,000 kWh usage
• Higher rates below threshold
• "Minimum usage fee" of $5-10

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Switching Between Plan Types

When to switch:

• Credit score improved to 650+
• Planning to stay 1+ years
• Want lower rates
• Tired of reloading balance

How to switch:

1. Check your credit score (free at annualcreditcheck.com)
2. Compare traditional plans at PowerToChoose.org
3. Sign up with new provider (they handle the switch)
4. Use remaining prepaid balance
5. New service activates on meter read date

Timeline: 1-3 business days for same-address switch

When to switch:

• Contract ending (avoid ETF)
• Need short-term flexibility
• Struggling with monthly payments
• Moving to temporary housing

How to switch:

1. Check contract end date and ETF amount
2. Compare if ETF is worth paying vs. waiting
3. Sign up with prepaid provider
4. Schedule switch date
5. Final bill from old provider arrives in 2-3 weeks

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Prepaid Electricity Tips for Success

Most apps allow automatic reload when balance drops below a threshold:

• Recommended trigger: $20-30
• Recommended reload amount: $50-100
• Prevents disconnection surprises

Prepaid apps show real-time consumption:

• Identify energy hogs
• Adjust AC during peak hours
• Catch unusual spikes (leaks, issues)

Some providers offer reload bonuses:

• Extra credit for larger reloads ($100+ = $5 bonus)
• Promotional periods (back to school, holidays)
• Referral credits ($25-50)

TDU delivery charges apply regardless of provider:

• Oncor (Dallas): ~$40-50/month for average home
• CenterPoint (Houston): ~$35-45/month
• Learn more: Understanding TDU Charges

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Traditional Plan Tips for Success

• Mark your calendar 30 days before expiration
• Rates often increase on auto-renewal
• Compare plans at ElectricSave TX

• Lock longer (24+ months) when rates are low (winter)
• Go shorter (12 months) when rates are high (summer)
• Current outlook: Winter 2025 rates are favorable for locking

Every Texas plan has a standardized disclosure showing:

• Price at 500, 1,000, and 2,000 kWh
• All fees included
• Renewable content percentage

Many plans offer credits that trigger at usage thresholds:

• "Use 1,000 kWh, get $50 back"
• Calculate your typical usage first
• Don't artificially inflate usage to hit credits

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The Bottom Line

Choose Prepaid If:

• Credit score below 650
• Need same-day service
• Staying less than 6 months
• Want zero commitment
• Prefer pay-as-you-go budgeting

Choose Traditional If:

• Credit score 650+
• Staying 1+ years
• Want lowest possible rate
• Value billing predictability
• High-usage household (2,000+ kWh)

The Math: For a 1,000 kWh/month household with good credit, traditional plans save roughly $150-200/year. For those who'd need a $200+ deposit, prepaid plans make financial sense for the first year, then consider switching once credit improves.

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Ready to Compare Plans?

Stop overpaying for electricity. Whether you're looking for prepaid flexibility or traditional savings, we can help you find the best rates in Texas.

Scan Your Bill Now → Get personalized recommendations for your usage level and credit situation.

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Last updated: January 2025. Rates and availability subject to change. Always verify current rates on the Electricity Facts Label before signing up.