Texas Electricity Terms Series: Part 4 - Late Fees, Disconnections, and Early Termination Fees

Texas Electricity Terms Series: Part 4 – Late Fees, Disconnections, and Early Termination Fees

When Texas deregulated its electricity market in 2002, the Texas Public Utility Commission set out to protect consumers by establishing rules that standardized bills. But while these rules required retail energy providers to put term and conditions in “plain language,” it’s easy for Texas electricity consumers to get confused. With the Texas Electricity Terms series, we will examine common features of the Texas electricity market and clear up areas where plain language can sometimes seem a little misleading. We will also highlight key places where consumers need to pay closer attention.

What Happens When I Have Late Fees, a Disconnection, or Early Termination Fees?

Why Do I Have Late Fees?

Texas Electricity Terms Series: Part 4 - Late Fees, Disconnections, and Early Termination Fees

It’s simple – you probably paid your bill late. No matter how good of a customer you might be, everyone is bound to make a late payment once in a while. And when it comes to your Texas electricity company, you can expect to pay a late fee in this situation.

Payment for your electricity bill is due within 16 days after the bill is issued (or postmarked if mailed). Your payment is considered late when your payment is received outside that 16-day window. When this happens, your Terms of Service for your electricity company spells out what happens, but it typically works like this:

Texas Electricity Terms Series: Part 4 - Late Fees, Disconnections, and Early Termination Fees

If you have trouble paying your bill, it’s up to you to work out a payment arrangement with your REP. You can set up a payment plan to pay the outstanding bill after its due date, but before the due date of the next bill. You can also enter into a level plan which will provide you with a set amount due each month or you may qualify for deferred payment plan of the amount due in installments.

Be aware that this arrangement might require you setting up a switch hold agreement with your REP. This agreement prevents you from switching to another company before your outstanding balance is fully paid.

Why Do I Have Disconnection and Reconnection Fees?

There are two basic reasons your power might get disconnected:

Texas Electricity Terms Series: Part 4 - Late Fees, Disconnections, and Early Termination Fees

  1. There is a problem with the utility company in your area that causes a wide-ranging power outage in your area. This typically happens because of bad weather. You didn’t do anything to cause this, and you probably can’t do anything to fix it – besides calling the utility company for your area to advise them of the problem.
  2. You didn’t pay your bill.

Let’s talk about #2.

The day after the bill is due, your REP can send you a Disconnection Notice — though some will allow a grace period of few days for your bill payment to arrive by mail. The notice typically gives you ten (10) days to pay your bill before the local utility company disconnects your electric service.

Texas Electricity Terms Series: Part 4 - Late Fees, Disconnections, and Early Termination Fees

Once your power has been disconnected because of non-payment of a past-due balance, your REP can charge you a fee to issue the disconnection order to your local utility. If you do not pay to reconnect the service within a set number of days, your electricity company can cancel its service agreement with you. At that time, the company can turn over your debt to a collection agency — adding more fees and costs to your overdue bill.

When you decide to reconnect, you can face paying the entire past due amount of your bill, a reconnection fee, and a security deposit before service can be restored. As a consequence of disconnection/reconnection on a $100 bill, you could expect to pay double what you owe from additional fees. This could equal $50 (or more) plus another $125 (or more) for a deposit, which could damage your credit score.

One Final Note

If someone in your household has a critical medical condition that would worsen if power was turned off, you must establish this critical care status in advance. To do so, please follow these instructions:

  • Download the “Application for Chronic Condition or Critical Care Residential Customer Status” from the Public Utility Commission of Texas (PUCT). It is available in English and Spanish.
  • Bring a completed form to your physician. He/she will fill it out for you and fax it to your TDSP (Transmission and Distribution Service Provider, also known as your local utility company). The TDSP fax numbers are on top of Page 1 of the Critical Care Form.
  • Once your physician submits the form to the utility company for your area, that company will then contact First Choice Power to confirm your chronic or critical care status.

Please Note: Your physician must fax the form to your TDSP, not First Choice Power. Your TDSP maintains that list and verifies your Critical Care status, and then will contact us on your behalf so that we can note the status on your account.

What is an Early Termination Fee?

Texas Electricity Terms Series: Part 4 - Late Fees, Disconnections, and Early Termination Fees

Also known as an ETF, an Early Termination Fee is often built into fixed-rate plans as a penalty if you cancel the plan (usually by leaving the company) before your contract term ends. These fees are spelled out in the Terms of Service and Electricity Facts Label for your plan, and the amount of the fee typically depends upon the length of your contract term.

If you are thinking of switching from your current plan to a different REP, re-read your plan’s Electricity Facts Label to see if your current plan has an EFT. If it does, you must consider whether it makes sense to pay this penalty and switch or wait until your current contract expires.

ETF do not apply all the time!

If you have just received your new plan’s terms of service, you have three days to cancel or rescind the agreement. In which case, you must notify the electricity company by phone that you have changed your mind on the contract.

Moving can make things complicated. However, if you are going to move and must cancel your contract, you won’t be charged the ETF as long as you provide your REP with your forwarding address and proof (if required) that you will no longer reside at the address your plan services. And some REPs will help you transfer your current service to your new address, which means you you won’t face an ETF charge in that instance, either.

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Vernon Trollinger is a writer with a background in home improvement, electronics, fiction writing, and archaeology. He now writes about green energy technology, home energy efficiency, the natural gas industry, and the electrical grid.