Prepaid and no-deposit electricity are closely related, but they are not exactly the same. Prepaid electricity is a billing method in which customers add money to their account first, and charges are deducted as the smart meter reports daily usage.
It helps to understand why deposits exist in standard monthly-billing electricity plans to see the difference:
Traditional electricity is billed after usage. The provider delivers power for 30 days and then sends a bill afterward. If a customer cannot pay, the company absorbs the loss. Deposits exist to reduce this financial risk by acting as security against unpaid balances or late payments.
Prepaid electricity removes this risk entirely. Since the customer pre-pays for all consumption, the provider is never delivering power without payment. That’s why prepaid plans do not require a credit check, a security deposit, or a long-term contract.
Instead of a deposit, prepaid service requires a small Connection Balance—typically between $20 and $75, depending on the provider. This money is not held by the provider like a deposit; it is applied to electricity usage immediately, allowing service to start right away. In most situations, the same day as you sign up.
It’s also important to note that “no-deposit electricity” is a broader marketing term. Some postpaid “traditional” plans may waive deposits if a customer passes a soft credit check or meets specific criteria. Prepaid electricity, however, always qualifies as no-deposit because its billing model eliminates the need for a deposit.