In this article:

What is an Electricity Deposit?

Are electricity deposits common?

Why was I asked to pay a deposit?

How does the electricity company determine when a deposit is necessary?

Average Deposit Cost?

Can I avoid paying a deposit?

What is an Electricity Deposit? 

Electricity deposits are an upfront sum of money paid by consumers to a retail electricity provider (REP) in order to purchase electricity despite. REPs sometimes require deposits for several reasons that we will explain later on.

But deposits are primarily necessary because typically people use electricity AND THEN they pay for it, unlike other commodities and transactions.

Deposits are assessed in case a customer fails to pay their bills. In doing so, the deposit acts as the REP’s last-resort method of recuperating a customer’s unpaid balance.

Now you may be wondering, “Why do they want a deposit, and what does that mean about me and my payment/credit history?” So let’s jump right in an explain what every Texan should know about electricity deposits.

Are Deposits Common?

I can assure you this is a common thing for many Texans, and a deposit does not imply you have bad credit.

Why Was I Asked to Pay an Electricity Deposit?

Let’s start off by dismissing a common misconception;

Consumers are not asked to pay a deposit because their credit score is low. In fact a high credit score doesn’t exempt a consumer from being asked to pay the deposit. 

With that said, good utility payment history helps someone avoid this frustrating charge (i.e. telephone, cable, electricity, or water).

Here are some common reasons for deposit requests.

  • No utility payment history: no utility accounts established
  • Poor utility payment history: missed or late payments in the past twelve months 
  • Outstanding balance owed: unpaid balance either gets sent to a collection agency or reported to a major credit bureau
  • Unable to verify your identity: a credit freeze/fraud alert with any of the major credit bureaus blocked your information; mistyping personal information also triggers a deposit request

What Determines Whether a Deposit is Necessary?

Nearly all REPs perform a soft credit check during enrollment to assess whether customers will pay their bills on time. REPs use the info below to determine if a consumer needs to pay an electricity deposit. 

To clarify, soft credit checks require:

  • A full legal name
  • Social security number
  • Date of birth

Additionally, soft credit checks DO NOT AFFECT your credit score in any way!

How Much is the Average Deposit?

As always, deposits can range based on the size of your home, credit history, and even the REP you’re buying from. But deposits commonly add up to either 20% of your estimated annual electricity cost or the total of the estimated bills for the first two months of service.

There is a silver lining though…

…The Public Utility Commission of Texas (PUCT) requires all providers to return deposits in full plus interest. The PUCT determines the exact percentage of interest.

Available Electricity Deposit Waiver Options 

Again, we’d like to reiterate deposit waiver options differ based on the REP. However, here are some consistent exceptions most companies honor. 

When is an Electricity Deposit Returned?

Providers typically return deposits after 12 consecutive months of positive payment history. Otherwise, the refund happens after account closure minus any outstanding balance owed.

The deposit gets applied to any outstanding balance, and the provider refunds the remaining deposit amount. Remember, you can expect to accumulate some interest, even if nominal, on your deposit once it’s returned to you.

Ensure Your Electricity Deposit Gets Returned

Contact the provider by phone or email to ask about their specific deposit refund process.

For Energy Ogre members, send us a quick email at membercare@energyogre.com or call us at (832) 975-1000 for assistance. Our ogres help with this process.

How to Avoid Electricity Deposits in the Future?

Make your payments on time to avoid deposits. It may help to set up automatic payments when possible. 

We understand that paying on time isn’t always an option. Just work with your provider on setting up a payment plan before you receive a late fee or disconnection notice.

Energy Ogre enrolls members into competitive plans fitting their needs. We evaluate all available options, finding the right solution for each member. We submit all the necessary documentation and make sure our members get enrolled successfully. In conclusion, deposits rarely come as a welcome surprise, but they shouldn’t be a hurdle to affordable electricity service.

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