How prepaid service works
With a standard plan you use power first and pay a bill later. With prepaid service you pay first. The provider tracks your balance as you use power and warns you as it runs low. When the balance reaches a set low point, service can be disconnected until you add money.
The rules cover residential and small commercial customers. They require the provider to give you a Prepaid Disclosure Statement and to acknowledge your enrollment in writing.
Source: 16 Tex. Admin. Code § 25.498, prepaid service. Rule text checked October 9, 2026. Rules can change, so confirm on the Public Utility Commission of Texas site before you rely on a detail.
What the state rules limit
| Rule | What it says |
|---|---|
| Deposits | A provider must not require a security deposit for electric service. A deposit is allowed only if you later move to a standard plan. |
| Connection balance | No more than $75 for a residential customer to start or restart service. |
| Disconnection balance | The balance level at which the provider can start disconnection is capped at $10 for a residential customer. |
| Low balance warning | A warning one to seven days before the balance is estimated to reach the disconnection level. |
| Extreme weather | A provider must not start a disconnection during an extreme weather emergency, and not on weekends or when payment methods are unavailable. |
| Price test | The price must be at or below the maximum default provider rate for a residential customer at 500, 1,000 and 2,000 kWh. |
Source: 16 Tex. Admin. Code § 25.498, prepaid service. Rule text checked October 9, 2026. Rules can change, so confirm on the Public Utility Commission of Texas site before you rely on a detail.
Who prepaid suits, and who should look elsewhere
Prepaid can fit people who would otherwise face a deposit, who want to see their spending day by day, or who are building a payment history. It can be a poor fit for households with a high summer load, because the balance can run down quickly in a heat wave, and for anyone who cannot easily top up on the day it is needed.
- A provider must not knowingly offer prepaid service to a customer who is a critical care or chronic condition residential customer.
- A provider must not tie a prepaid contract to the length of a lease, or require a tenant to choose it as a condition of a lease.
Compare it with a standard plan
Leaving prepaid
The rules bar fees for moving from prepaid to a standard plan with the same provider, for removing equipment and for switching providers, except an early termination fee that the rules allow. If you move to a standard plan, the provider can then ask for a deposit under the normal deposit rule.
Sources and rules
Frequently asked questions
Does prepaid electricity in Texas require a deposit?
No. Texas rules say a prepaid provider must not require a security deposit for electric service. A deposit can be asked for only if you later move to a standard plan.
How much does it cost to start prepaid service?
A provider can require a connection balance of no more than $75 for a residential customer. It may also require delivery company fees before it sets up or reconnects service.
When can a prepaid provider disconnect me?
It can start a disconnection when your balance falls to the disconnection balance, which the rules cap at $10 for residential customers. It must send a low balance warning first and must not disconnect during an extreme weather emergency.
Is prepaid electricity cheaper?
Not necessarily. The price must stay at or below the maximum default provider rate, but plans can carry fees. Compare the total cost at your usage with standard plans.