Traditionally, utility service has been extended on credit, remained connected until a serious delinquency occurred, and would not be disconnected during severe weather or where elderly or sick individuals were in the household. Pre-paid meters are now being introduced in several states, including Texas, and require cash up front to obtain and maintain service. When the pre-paid amount is depleted, disconnection is automatic.
Utility companies that use pre-paid meters effectively avoid state utility commission regulations. Such consumer protections as notice before disconnection and discretion to allow utility service to continue for elderly or sick residents disappear. Lower-income households are typically the users of pre-paid meters, and severe pressure may be put onto families to find cash to feed the meter. The situation can cause such families to become victims of predatory small lenders and even loan sharks.