No Deposit, Guaranteed. Sounds Great! Is it Harmful to the Customer?

by admin on February 2, 2009

The idea of a no deposit electric service sounds like an unneeded service when you consider almost every state has a Department of Health and Human Services that will gladly assist you in getting on an electric company with no deposit (if you are disabled). Believe me when I say many people have large pounding headaches due to the credit check and large requested deposit dollar amount soon to follow as you can see on this electric deposit forum website.

The problem is that it is a “problem” for most simply working with state low-income assistance programs because they are simply a hassle to deal with. There are often several factors that go into play to be accepted for these programs and when lights are needed fast you will never get a fast response from the government so why even try?

In Texas the assistance programs are not advertised to any great extent and the most popular program is the Lite-Up Texas program, which is for reducing your electric rate in the summer time. The deposit assistance program is not displayed for viewing anywhere so a lot of phone calling and research must be done. From what I can find you can receive electric bill help once you have an electric provider from different organizations based on your Texas city that work in tandem with the Department of Housing  and Community Affairs. Click here to find out what organization might be able to assist you

According to the new low-income resources website Texas promoted a deposit assistance program for hurricane Katrina victims who were in dire straights just getting housing.

Unfortunately no advertised program for deposit assistance is shown on their website for local Texan citizens although it is still a service some can achieve but not without a ton of paperwork, etc.

For Texas and federal government electric deposit waivers you must be able to prove that someone in your house is disabled. The evidence needed is a doctor’s note which you provide to the electric supplier you have decided to go with. Based on Texas law the provider must waive your electricity deposit if you provide the doctor’s note indicating you need the electric service to survive.

For instance, maybe you have life saving diabetic medication that must be stored at a certain temperature in your refrigerator and other such medical issues. The problem from here you may encounter is that the provider will attempt to match your name on file, phone number on file, address on file, social security number on file with what you gave them and what shows up in their query of the DHHS (Department of Health and Human Services) database. If something doesn’t match do not be surprised if your deposit waiver is declined.

The provider does not want to get put in a situation where they approve a deposit waiver that was never supposed to be approved in the first place, then the customer defaults on a bill, and finally the provider is out $300 – $400 because a customer failed to pay an electric bill.

Unless of a natural catastrophe like a hurricane an advertised program for electric service deposit waivers is unlikely to happen again.

Because it is difficult to get Texas government assistance to waive a deposit people choose a prepaid electric company.

If you choose a bad prepay company you typically on average will pay about $300 more annually for your electricity than someone on a traditional electric company.

If your residence is a high energy usage residence you will likely pay even higher amounts for your electricity compared to your neighbor of comparable usage.

When choosing a reputable prepaid electric company customers usually stay on the plan long term because they receive a good price compared to traditional rates.

The prices among prepaid providers have come down in 2012 because Texas has rolled out smart meters at almost every residence. Since electric usage can be measured in real time there is no longer huge inaccuracies in estimating electric usage and in fact there is no estimating going on at all.

The core problem with prepayment electric service is the fact that if you deplete the money in your prepay account and try to get additional electricity service to your home you will simply be turned off.

A low-income customer would have some delay with a traditional electric company but the whole idea of prepaid electricity is that you are paying in advance for the energy you will use in the future. If you deplete that balance you are fully aware of the fact that you need to prepay again or lose service.

Some government authorities say that alleviations should be implemented for low-income individuals that fail to make their prepayment because of an economic hardship but that would completely undermine the reason for the service in the first place.

You see a prepaid electric plan is to assist low-income individuals who need a way to avoid the economic hardship of an initial deposit due to a low credit score in the first place. This type of service is simply moving the risk to the customer and in return they pay no deposit.

The whole reason providers sell this service is because it is only profitable provided the energy company is able to guarantee the customer  pays their electric bill one way or another. In the prepaid business model it is guaranteed because the provider receives the money from the customer in advance of them using the electric service.

In conclusion, the customer is offered a service that provides a way out of the economic hardship of paying a large deposit while also avoiding the long tedious hassle of dealing with government bureaucracies.

Although many customers pay $300 or more above the state average for electricity service while with a prepaid electric company those who shop around and find the best deal come out ahead.

{ 1 comment… read it below or add one }

I could use service without the annoying deposit February 2, 2009 at 10:29 pm

It’s really about time an electric provider started offering a no deposit choice.

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