How Electricity Deposits Work in Texas

When Is a Deposit Required?

Electricity providers in Texas use deposits to protect themselves against customers who might not pay their bills. Whether you need to pay one depends primarily on your credit:

• Good credit (typically 650+): No deposit required. You are approved based on your credit history.
• Fair credit (580 to 649): Deposit required by most providers. Some may offer a reduced deposit with autopay enrollment.
• Poor credit (below 580): Deposit required. The amount may be higher.
• No credit history: Most providers require a deposit, though some accept alternative documentation.

The specific threshold varies by provider. Some use traditional FICO scores, others use utility-specific scoring models, and a few have their own internal criteria.

How Much Deposits Typically Cost

Deposit amounts in Texas generally fall between $150 and $400. The exact number depends on:

• Your estimated monthly bill. PUCT rules allow providers to base the deposit on roughly one-sixth of your estimated annual charges. If you are in a large home in Houston with high summer cooling costs, your estimated annual charges are higher, and so is the deposit.
• The provider’s policy. Some providers set flat deposit amounts — for example, $200 for all new customers who do not pass the credit check, regardless of expected consumption.
• Your credit profile. Worse credit can mean a higher deposit.

Here is what typical deposits look like:

Scenario	Typical Deposit
Small apartment, low consumption	$150 to $200
Average home (1,000 to 1,500 kWh/month)	$200 to $300
Large home or high consumption	$300 to $400

How to Get Your Deposit Back

Under PUCT rules, providers must refund your deposit after 12 consecutive months of on-time payments. Here is how the process works:

1. Pay every bill on time for 12 months. One late payment resets the clock. “On time” generally means by the due date on your bill.
2. The provider applies the refund as a bill credit. Most providers do not mail a check — they credit your next bill. This means your bill will be significantly lower (or even zero) for one month.
3. If you leave before 12 months, the deposit is applied to your final bill. If any balance remains after covering your final charges, the provider refunds the difference.

Providers are also required to pay interest on deposits they hold for more than 12 months, though the interest rate is minimal — typically less than 1%.

What Counts as “On Time”

Each provider defines this slightly differently, but the PUCT standard is payment by the due date. Setting up autopay is the safest way to ensure you never miss a deadline and risk resetting your 12-month clock.

Alternatives to Paying a Deposit

If you do not want to — or cannot afford to — pay a deposit, you have options:

Prepaid Electricity

The most straightforward alternative. Prepaid plans require no deposit and no credit check. You load funds onto your account and pay as you go. The trade-off is a higher per-kWh rate. See our prepaid electricity guide for a full breakdown.

Letter of Credit

If you had a good payment history with a previous utility company (in Texas or another state), you can request a letter of credit from that provider. This letter confirms you paid your bills on time. Many Texas providers will waive the deposit if you provide this documentation.

To get a letter of credit:

1. Contact your previous utility provider.
2. Request a letter confirming 12 months of consecutive on-time payments.
3. Submit the letter to your new provider before or during enrollment.

No-Deposit Providers

Some providers specifically market no-deposit plans. These plans skip the deposit requirement entirely, though they may charge slightly higher rates to compensate for the added risk. See our guide to the best no-deposit providers for current options.

Autopay Discount on Deposit

A few providers will reduce the deposit amount if you enroll in automatic payments. This gives the provider confidence you will pay on time, which offsets some of the credit risk. Ask about this option when signing up.

PUCT Rules on Deposits

The Public Utility Commission of Texas sets the rules that all retail electric providers must follow when it comes to deposits. Key provisions include:

• Deposits must be reasonable. They should be based on the estimated average monthly bill, not an arbitrary number.
• Refund after 12 months. Providers must return the deposit after a year of on-time payments.
• Interest on deposits. If the provider holds your deposit beyond 12 months (because you had a late payment that reset the clock), they owe you interest.
• Final bill application. When you close your account, the deposit must be applied to your final bill first, with any remaining balance refunded.
• Written notice. Providers must give you written notice of the deposit requirement, the amount, and the conditions for refund.

If you believe a provider is not following these rules, you can file a complaint with the PUCT at puc.texas.gov.

Deposit vs. Prepaid: Which Is Cheaper Long-Term?

If you can afford the deposit, it is almost always cheaper over 12 months. Here is a rough comparison for a home using 1,000 kWh per month:

Option	Monthly Cost	12-Month Total	Notes
Fixed-rate plan + $250 deposit	~$120/month	~$1,440 + $250 deposit (refunded)	Cheapest long-term. Deposit returned after 12 months.
Prepaid plan, no deposit	~$170/month	~$2,040	No upfront cost, but ~$600 more over the year.
No-deposit plan, slightly higher rate	~$135/month	~$1,620	Middle ground. No deposit, lower premium than prepaid.

The deposit is an interest-free loan to the provider. If you have the cash, it is usually the better financial move. But if $250 upfront is not realistic right now, prepaid or no-deposit plans get you connected without that barrier.