What Is a Switch-Hold?
A switch-hold is a hold on your electricity account that prevents you from switching your electricity provider. Switch-holds help companies collect unpaid bills or address meter tampering issues but can also provide convenience to consumers through deferred payment options.
Reasons for Placing a Switch-Hold on an Account
Your retail electricity provider (REP) or transmission and distribution utility (TDU) may initiate a switch-hold on your account for two reasons: to collect pending payments by offering you a deferred payment plan or if it suspects meter tampering. Here is a closer look at both reasons.
Deferred Payment Plans and Switch-Holds
The Public Utilities Commission of Texas (PUCT) amended its customer protection rules to require REPs to offer a deferred payment plan to customers with unpaid bills.
A switch-hold is a condition for a deferred payment plan, allowing the provider to receive complete payment before you can switch to another provider. Customers do not get burdened with a single, large payment and do not risk disconnection because of unpaid bills.
Meter Tampering and Switch-Holds
An electricity customer may try to avoid or lower their electricity bills by tampering with their energy meter. Because meter tampering is against the law, the transmission and distribution utility (TDU) can place a switch-hold on their account. The hold stays in place until the company fixes the meter and recovers any missing payments and meter repair costs.
How Does a Switch-Hold Work?
Below is a step-by-step summary of how a switch-hold process typically unfolds:
- The electricity company or utility notices that a consumer has unpaid bills or that they have tampered with their electric meter.
- In case of unpaid bills, the company reaches out to the customer and offers a deferred payment plan. If you agree to pay the unpaid bills using such a plan, you must agree to have a switch-hold on your account. In case of meter tampering, the company will notify the consumer and immediately place a switch-hold on their account.
- Once you pay your outstanding bills, the light company removes the switch-hold. In case of meter tampering, the utility removes the hold after it checks the meter, fixes it and recovers any penalty or meter repair costs.
Implications of a Switch-Hold for Consumers
A switch-hold prevents you from switching your electric provider. You can’t sign up for a plan with a new provider until the switch-hold is removed. Below are answers to common questions that residents have about switch-holds.
Can I switch electricity companies with a switch hold?
You cannot switch electricity companies when under a switch-hold. The switch-hold allows your existing provider to recover any pending bills or your TDU to check and fix a tampered meter.
How to get electric service with a switch hold?
A switch-hold is not a service disconnection. The provider does not turn off the electricity service. However, you cannot choose another electric company in Texas until you pay off your pending bills or until the utility fixes a tampered meter.
Can I get prepaid electricity with a switch hold?
You cannot get prepaid electricity if you’re currently under a switch-hold. Regardless of what kind of new plan you wish to switch to, you must first resolve the switch-hold with your existing company.
What if I am a new occupant facing a switch-hold?
Sometimes, a switch-hold on an electric service can be in place because of a previous resident. If you just moved into a new place and notice a switch-hold, you can remove the switch-hold by submitting a New Occupant Statement (NOS).
Every company provides an NOS form, which you can download from their website or request from the company over the phone. You will also need to submit most or all of the following documents with your NOS form:
- A recent utility bill
- Certificate of occupancy
- Closing documents
- Notarized affidavit of landlord
- Signed lease
Understanding Deferred Payment Plans
The PUCT requires electric companies to offer easier payment options to customers who cannot pay their electric bills on time. You are eligible for a deferred payment plan if:
- You are officially designated as a Critical Care or Chronic Condition Residential Customer.
- You expressed an inability to pay and have not been disconnected during the preceding 12 months.
- You did not make more than two payments over the previous 12 months that had insufficient funds available.
- You received service from the light company for less than three months, and you lack the required credit score or payment history for service from a previous light company.
When entering into a deferred payment plan, the energy company cannot require you to pay more than 50% of your pending amount as the first payment. The remaining amounts are then paid in several equal installments.
The Role of Transmission and Distribution Utilities (TDUs)
Your transmission and distribution utility (TDU) places any switch-hold on your account. In the case of unpaid bills, the electricity company will coordinate the placing and removing of a switch-hold on your account. When dealing with meter tampering, the utility company will identify a tampered meter and place a switch-hold without waiting for instructions from the electricity company.
Benefits of Agreeing To a Switch-Hold
Agreeing to a switch-hold can help you manage your debt by paying your outstanding bills through a deferred payment plan. Switch-holds also prevent the possibility of a service disconnection.
Process of Removing a Switch-Hold
The process of removing a switch-hold depends on the reason for your account’s hold. When a switch-hold is placed because of unpaid bills, you can remove it by paying off your pending bills. If you have opted for a deferred payment plan, your light company will remove the switch-hold after the last installment of your payment plan.
If the hold is in place because of meter tampering, the utility company will remove it only after repairing the meter and recovering any associated charges or penalties. Typically, a switch-hold can take up to 72 hours to be removed.
If a switch-hold is in place for neither of the above reasons, it may be because of a technical error. In that case, contact PUCT to dispute the switch-hold and have it removed.
Consumer Rights and Protections Related to Switch-Holds
The PUCT specifies certain consumer rights for customers agreeing to a switch-hold, which you can read below.
- REPs cannot charge an additional deposit when entering into a deferred payment plan.
- REPs cannot refuse a deferred payment plan if you meet its eligibility criteria.
- REPs can include a one-time penalty for unpaid bills but cannot levy a finance charge for deferred payments.
- REPs cannot discriminate against customers on a switch-hold in providing services or pricing products. A customer on a switch-hold is eligible for all services and products generally available to the provider’s other customers.
Texas Regulations on Switch-Holds
Besides the rules above that protect electricity customers, the PUCT also specifies other important regulations related to how switch-holds and deferred payment plans must be processed. Here are a few important points from the regulation document:
- Light companies must provide you with a copy of the deferred payment plan and clearly include all the terms and conditions of the plan, such as:
- The possibility of service disconnection
- Length of time covered by the plan
- Total amount to be paid under the plan
- The specific amount of each installment.
- The provider shall allocate a partial payment by the customer first to the oldest balance due for electric service, followed by the current amount due for electric service.
- When a single provider offers multiple services, it cannot disconnect electric services for non-payment of other services.
New Electricity Service and Switch-Holds
Some customers may find that their new electricity service already has a switch-hold on the account due to an unfulfilled obligation from a previous resident of that address. You can request a removal of the switch-hold by completing a new occupancy statement and submitting the required documents.
Assistance Paying Your Energy Bill
The following payment assistance programs are available for Texans struggling to pay their energy bills:
- Senate Bill 1976: Customers on the Supplemental Nutrition Assistance Program (SNAP) or Medicaid can receive low-income benefits from their provider, assuming it participates in this program.
- Deposit waiver for victims of family violence: Victims of family violence are exempt from the deposit requirement when they sign up for a new electric plan.
- Weatherization Assistance Program: The Texas Department of Housing and Community Affairs offers a free energy audit or a review of the home’s energy efficiency and installation of weatherization measures to increase your home’s energy efficiency. To qualify, your household income must be at or below 200 percent of the federal poverty guidelines.
Alternatives to Switch-Holds for Managing Energy Debt
There are not many alternatives to switch-holds when it comes to managing your unpaid bills. However, you can always contact your provider and work out a payment program that does not involve a switch-hold. The provider may be willing to make such an arrangement in a few cases. However, this will depend on the electric company and its policies. The PUCT allows companies to implement a switch-hold, and most providers will implement one before the debt is paid off.
Tips for Avoiding Switch-Holds
The simplest way to avoid a switch hold is to pay your bills on time. Customers should also avoid tampering with their meters, which can incur switch-holds and unnecessary expenses.
If you find paying your bills on time difficult, use one of the payment assistance programs mentioned above. You can also contact the provider and enquire about alternative payment arrangements. Some providers may allow you to pay your bill after your due date but before the next billing cycle’s due date.
If your bills fluctuate frequently, inquire about average billing options. These options allow you to pay bills of similar amounts each month, making budgeting for your energy expenses easier.
Lastly, we recommend exploring ways to reduce your energy bills if you find it hard to pay them on time. Many basic energy-saving measures, such as using LED bulbs or investing in a smart thermostat, can help you better manage your energy costs.
It also helps to ensure that your electricity plan suits your energy usage levels and patterns. Signing up for the wrong plan can also lead to high bills. You can use our Texas electricity rates marketplace to find a plan that best suits your needs.
The Impact of Switch-Holds on the Texas Energy Market
In the past, some customers switched providers with pending energy bills. Electric companies recovered these losses through rate increases that affected other customers. Noting this, the PUCT amended its regulations to offer deferred payment options to those who have unpaid bills.
This acts as a win-win for all. The customer avoids a disconnection and poor payment history, the provider recovers lost revenue and other customers are spared from higher rates that compensate for a few customers’ unpaid bills.
Frequently Asked Questions About Switch-Holds
How long does a switch-hold typically last?
There is no standard duration for a switch-hold. Typically, the switch-hold lasts until you pay your unpaid bills or until the utility company repairs the tampered meter.
What should I do if I can’t pay my electricity bill and want to avoid a switch-hold?
If you cannot pay your bills on time but want to avoid a switch-hold, you can check if you are eligible for payment assistance programs. We also recommend reducing your energy bills through energy efficiency measures or switching to an electric plan that suits your energy usage better and thus results in lower bills.
Can a switch-hold be placed on my account without my knowledge?
Your provider or utility company will notify you of the switch-hold before placing it. In cases where you are moving into a new residence, the switch-hold may be placed before you moved in, which means you may be unaware of the switch-hold when it was placed.
What happens if I move while I have a switch-hold on my account?
Every switch-hold is based on the ESI ID of an account, which is tied to the billing meter of a certain address. This means that when you move while having a switch-hold, the switch-hold will remain on that account. Anyone moving to that address will have to request the switch-hold’s removal.
