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Is a prepaid electricity plan a good option for you?

By powerwizard

One of the most significant benefits of Texas’ deregulated electricity market is that you have the freedom to choose your retail electricity provider (REP) and your electricity plan. Electricity providers typically offer several plan options, including fixed-rate, variable-rate, indexed-rate, flat-rate, and time-of-use plans. There’s also another unique option known as a prepaid electricity plan.

Choosing the best plan for your needs can be a bit overwhelming. Every plan is different, as is every energy provider. How do you know you’re getting the best deal? Power Wizard is here to help. We make the process of finding Texas electricity plans easier by showing you the best options for your needs (and your home’s historical energy use) with the best rates possible.

Still, it doesn’t hurt to have an understanding of how different electricity plans in Texas work. Here, we’ll take a closer look at prepaid electricity, including what it is, how it works, and whether it might be the right choice for you.

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What is a prepaid electricity plan?

With most energy plans, you receive a statement at the end of your billing cycle that tells you how much electricity you used and how much you owe for it (along with other necessary fees). You then write a check or make your payment online for the amount due.

Prepaid energy plans work a bit differently. They’re also known as “pay as you go” plans. Instead of paying for electricity you already used, you pay for the electricity you’ll use in the future.

So how do prepaid electricity plans in Texas work? Generally, you add funds to an account, and your retail energy provider deducts the cost of your electricity usage daily. REPs that offer these plans require you to maintain a balance over a set limit, preventing you from running out of money and facing disconnection. Your REP will send you text or email alerts to let you know you’re approaching your threshold.

Many REPs send notifications regarding your daily electricity usage, cost, and remaining balance. That allows you to monitor your consumption and make adjustments that can help you reduce your costs. While you won’t receive bills, you may receive monthly statements that detail the prior month’s payments, charges, and savings.

When should you consider a prepaid electricity plan?

When shopping for REPs and electricity plans in Texas, you’ll quickly find numerous options. Along with prepaid electricity plans, there are fixed-rate, month-to-month (variable-rate), and flat-rate plans, among many others. Each one has its benefits and drawbacks, so how do you know if prepaid is best?

Here are a few situations in which a prepaid electricity plan might make the most sense for you.

Pay for electricity in advance

Most energy plans bill you at the end of the month for your electricity usage. There’s nothing inherently wrong with bills. However, you generally won’t know how much energy you’re using (or what it will cost) until you receive your statement. If you’re on a variable-rate plan, that can sometimes lead to unpleasant surprises.

Prepaid plans, on the other hand, don’t use end-of-month billing. Instead, you pay ahead of time for the electricity you’re going to use in the future. You don’t have to worry about paying a set amount by a specific date. You only have to be sure you maintain a balance above your REP’s minimum threshold to avoid penalties or disconnection (and having to pay a reconnection fee). You can see your daily electricity usage and its cost, which allows you to take greater control over your consumption.

Avoid credit checks

With most plans, your energy provider checks your credit and requires you to pay a deposit based on your score. Generally, the lower your score, the more you have to pay for the company to start your service. If you have less-than-stellar credit (or you’re just getting started in life), those fees can make turning your electricity on cost-prohibitive, especially if you’re on a budget.

Prepaid electricity doesn’t require credit checks, so you won’t have to worry about a potential REP turning you down for a great plan if your score isn’t where you’d like it to be. Some REPs may require a specific starting balance to begin your service, but the amount won’t depend on your credit score.

How do prepaid electricity plans differ in cost?

Like with other types of energy plans, prepaid electricity rates vary from one REP to another. They are typically higher than those of fixed- and variable-rate plans, though. Rates can vary depending on factors such as the current market, supply, demand, global conditions, and more. You may also face higher fees for reconnecting your power if you get disconnected.

Despite the higher costs, prepaid plans can make you more aware of just how much you consume via regular monitoring of your energy consumption. That can help you take steps to improve your energy efficiency, reducing your energy consumption and your overall energy costs.

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Do all electricity providers offer prepaid plans?

Most electricity providers offer multiple plan types, including prepaid options. However, that doesn’t mean every company offers them. Power Wizard can help you find prepaid plans with the lowest rates from REPs serving your area. The best part is that Power Wizard can find those plans within seconds, saving you valuable time and effort.

Find an affordable electricity plan today

Whether you’re on a budget, you don’t plan on living in your current residence for long, or you’re looking for something with a bit more flexibility, a prepaid electricity plan could be a good fit for you. Despite the typically higher rates and fees, the lack of credit checks, deposits, and long-term contracts may work best for your situation.

No matter what type of electricity plan you’re looking for, Power Wizard is here to help. With some basic information, we can find the best plans with the most affordable rates for you. If you choose, we’ll even take care of signing you up. From there, we’ll continue to monitor the electricity market and send you an alert if we find a better plan later on.

Are you ready to find the most affordable electricity plans in your area? Visit Power Wizard today to get started!

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