Picture of a prepaid electricity meter in Texas

If you live in Texas, you are familiar with prepaid, or pay as you go electricity. But how does it work?

Prepaid electricity is made possible by smart meters, electronic devices that monitor and measure your home’s energy usage in real time and send live data to and from your electricity company.

Most houses, apartments and even mobile home communities have these advanced electricity meters installed, so it’s easy to get a same day power connection in Texas

Smart Meters 101

When you choose a prepaid electricity plan, your energy provider relies on your home’s smart meter to recieve detailed usage data, connecting and disconnecting your power as needed.

When you open a new prepaid account, you are depositing $29 cash, but are not purchasing kilowatt-hours right away. The smart meter registers electricity consumption throughout the day, and the electricity company calculates the charges based off the energy rate you agreed to.

The amount deducted from your account is based on your consumption profile and your energy rate.

Prepaid electricity companies send their customers daily texts and emails with detailed information about your daily consumption. These quick reminders help the customer to recharge their account as needed and work to prevent service interruptions.

Consumers have access to smart meter data as well. To learn how to read your smart meter, visit The Public Utilities Commission of Texas.

Benefits to smart metering include:

  • real time reporting available 24 hours a day
  • never waiting on a human meter reader
  • quick resolutions to any problems
  • power outages automatically reported to your designated TDU
  • instant detailed readings of your energy usage

Note that kilowatt-hour prices change over time, with the exception of fixed-rate electricity plans.

With a prepaid lights plan, you will notice the amount paid per kilowatt-hour varies. Texas electricity is normally more expensive during summer and winter, and also during peak demand hours on a daily basis.

Conditions vary for every electricity plan, so you should ask your energy supplier exactly how you will be billed for the kilowatt-hours used. Smart meters tend to be accurate, but human error is always possible. 

How Using a Prepaid Electricity Meter Can Save You Money

Technically speaking, a prepaid electricity meter has no effect on the energy efficiency of your home appliances. The amount of energy consumed stays the same if no habits are changed, and there is only a difference in the payment method.

However, a prepaid electricity plan has two features that tend to change consumption habits that lead to less spending:

  • You pay for energy upfront, and not at the end of a billing period. Using a prepaid electricity plan is like spending cash on hand, while using a normal postpaid plan is like accumulating debt in a credit card.
  • You get daily reminders of how much has been deducted from your account and the corresponding electricity consumption. If people notice that consumption is higher than normal on a given day, they will react immediately instead of waiting for an expensive power bill.

When Texan’s switch to a prepaid electricity plan for the first time, a common concern is running into a negative account and having the power disconnected. However, this is unlikely to happen when there are daily notifications about your kWh consumption and account balance.

Also noteworthy is that choosing prepaid electric gives you flexibility to switch power providers. Since you are paying in advance for the energy used, providers do not impose a early termination fee.