If a Texas light company just asked you for a few hundred dollars before they'd turn the power on, you're not being singled out. Deposits are routine in this market. They're also capped by state rule, and there are several legitimate ways out of paying one.
No deposit electricity in Texas isn't a marketing gimmick. It's written into the Public Utility Commission's own rules. Some customers qualify for a waiver outright, prepaid plans are barred from charging a deposit at all, and even if you do pay one, the rule says when you get it back.
Here's how the whole thing actually works.
Your retail electric provider buys power on your behalf and bills you a month later. For that month, they're carrying you. PUCT rule §25.478 lets them ask you to "establish and maintain satisfactory credit" before they take that risk. If you can't, they can require a deposit before service starts.
That's the entire logic. It isn't a penalty and it isn't the provider's opinion of you. It's a credit decision with a state rulebook sitting on top of it.
The rulebook matters, because it also tells them what they can't do.
Texas runs two lists here, and which one applies depends on who you're signing up with. Affiliated REPs and providers of last resort use the longer list in §25.478(a)(3). Most competitive providers, the ones you're actually shopping, use the shorter list in §25.478(a)(4). I'll flag which is which as we go.
Under §25.478(a)(3)(A), an affiliated REP or provider of last resort treats you as having satisfactory credit if all three of these are true:
You've been a customer of any Texas REP or electric utility in the past two years
You aren't delinquent on any electric service account right now
Over your last 12 months of service, you were late paying no more than once
A satisfactory credit rating from a consumer reporting agency also does it under §25.478(a)(3)(B), again on that longer list.
One detail people miss: if you're recently divorced, §25.478(a)(2) says the credit the two of you built during shared service in the year before the divorce applies equally to both of you for a year afterward. You don't start from zero because your name wasn't the one on the account.
There's a hard ceiling. Under §25.478(e)(1)(A), your total deposits can't exceed the greater of:
One-fifth of your estimated annual billing, or
The sum of your estimated bills for the next two months
Whichever of those two is larger is the cap, and people usually assume it's the two-month figure. Run both. If a provider estimates your bill at $150 a month, that's an $1,800 annual estimate, so one-fifth is $360. Two months of bills is $300. The larger number wins, so the ceiling on that account is $360.
For a brand-new applicant, the provider is allowed to estimate using average usage for your customer class, because they have nothing else to go on. That cuts against you if your home uses less power than average.
So here's the move most people don't know about. Under §25.478(e)(1)(B), after 12 months of service you can ask your provider to recalculate the deposit using your actual historical usage instead of an estimate. If they guessed high, that recalculation is yours to request.
Be 65 or older. If you're 65+ and not currently delinquent on any electric service account, you're deemed to have satisfactory credit. This one is mandatory for every REP, not optional (§25.478(a)(3)(C) and §25.478(a)(4)(A)).
Certify as a victim of family violence. Under §25.478(a)(3)(D), a determination of family violence as defined in Texas Family Code §71.004 establishes satisfactory credit. It can come from a family violence center, treating medical personnel, law enforcement, a district or county attorney, the Attorney General's office, or a Texas Equal Access to Justice Foundation grantee. It's documented with a certification letter from the Texas Council on Family Violence, and the rule specifically allows it to be faxed straight to the provider on a toll-free line. Like the age waiver, every REP must honor it.
Bring a clean payment history. This is the §25.478(a)(3)(A) route above. If you've had service in the last two years and were late at most once in your final 12 months, ask your prior provider for a payment history letter. The rule requires them to keep that history for two years after your service ends specifically so you can request it.
Post a letter of guarantee instead of cash. Someone with good standing at the same provider signs on for your account, up to the same amount the deposit would have been. Affiliated REPs and providers of last resort are required to offer this option under §25.478(c)(2). Other REPs may offer it.
Qualify as medically indigent. Household income at or below 150% of the poverty guidelines, plus either a physician's certification that you or your spouse can't perform three or more activities of daily living, or out-of-pocket medical costs above 20% of gross household income. This one is narrower than the others: §25.478(a)(3)(E) applies to affiliated REPs and providers of last resort, and it has to be re-demonstrated every year.
Remember the two lists. Under §25.478(a)(4), a competitive provider is only required to honor the age and family violence waivers. It may add its own paths on top, so long as the criteria aren't discriminatory.
But read the second sentence of §25.478(a)(4): notice of those options "shall be included in any written or oral notice to a customer or applicant when a deposit is requested." If a provider asked you for a deposit and never mentioned the waivers, that's not a gray area.
This is the cleanest answer to "no deposit light company," and it's the one that actually holds up.
A REP offering prepaid electricity must not require security deposits for electric service. That's §25.498(c)(11)(D), stated flatly, with no credit test attached. The same subsection caps the up-front connection balance at $75 for a residential customer.
So a prepaid plan gets you powered on with no credit check and no deposit, for a connection balance the state has already limited. Providers like Payless Power build their plans around prepaid service for exactly this reason.
Now the honest part. Prepaid isn't free money. You're paying ahead instead of behind, your balance can run down, and service can be interrupted when it does. Prepaid rates aren't automatically cheaper than postpaid, either. Compare the Electricity Facts Label the same way you'd compare any other plan.
One more piece of good news: under §25.498(c)(12)(A), a provider can't charge you a fee to move from prepaid to postpaid later. They can ask for a deposit at that point, but the transition itself is free.
A deposit is not a fee. It's your money sitting with the provider, and the rule sets out when it comes home.
Situation | What the rule requires |
|---|---|
12 consecutive residential bills with no late payments | Deposit must be refunded, and it can come back as a bill credit (§25.478(j)(1)) |
You switch providers or close the account | Deposit plus accrued interest transfers to your new REP or is refunded, minus anything you still owe (§25.478(j)(2)) |
Provider held it more than 30 days | Interest accrues from the date of deposit (§25.478(f)) |
That interest rate is set annually by the Commission. If the deposit is refunded within 30 days, no interest is owed.
Twelve clean bills is the number to circle. Pay on time for a year and the deposit is supposed to come back on its own, without you asking.
Only under specific conditions. Under §25.478(c)(3), a provider can't require an initial deposit from an existing customer unless you were late paying more than once in the last 12 months, or your service was terminated or disconnected for nonpayment in that window. Even then, they have to issue a written disconnection notice, and you get ten days.
There's a separate path for an *additional* deposit in §25.478(d), and it takes two things at once: your actual billings over the last 12 months averaging at least double the original estimate, and a termination notice or disconnection in the previous 12 months. One without the other isn't enough.
Start with the provider. Ask them, in writing, which subsection of §25.478 they're relying on and what your deposit was calculated from. Citing the rule number changes the conversation.
If that goes nowhere, the Public Utility Commission takes informal complaints from customers directly. That's the enforcement backstop, and it's free to use.
Yes. A prepaid plan doesn't run a credit check and can't charge a security deposit under §25.498(c)(11)(D). You'll need a connection balance, which is capped at $75 for residential service.
It depends on your estimated usage, but it's capped. The limit is the greater of one-fifth of your estimated annual billing or two months of estimated bills, under §25.478(e)(1)(A). Larger homes see larger deposits because the cap is tied to what you're expected to use.
Yes, if the provider holds it more than 30 days. Interest runs from the date you paid it, at a rate the Commission sets each year, and it's paid out when the deposit is returned or credited.
It doesn't stay stuck. Once your old REP is no longer your provider of record, §25.478(j)(2) requires them to either transfer the deposit plus interest to your new REP or refund it to you, minus any balance you still owe.
Sometimes, sometimes not. Prepaid plans compete on rate like any other plan, and the only way to know is to read the Electricity Facts Label for the specific plan and compare it at your own usage level.
If a deposit is the thing standing between you and getting the lights on, you have real options: check whether you qualify for a waiver, ask a prior provider for a payment history letter, or look at prepaid plans that legally can't charge one.
When you're ready to compare what's actually available at your address, compare Texas electricity plans by ZIP code and check the deposit terms alongside the rate.
*Energy Outlet earns a commission when a reader enrolls with a provider through our site. That never affects how plans are ranked. We rank on real-time pricing and plan terms, not on what a provider pays us.*
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