Time-of-use (TOU) electricity rates charge you different prices depending on when you use electricity — typically 30-50% less during off-peak hours (nights and weekends) and 50-100% more during peak hours (weekday afternoons). If you can shift even a portion of your heavy electricity use to off-peak times, TOU plans can save you 15-25% on your electric bill without reducing your total consumption.
TOU plans are especially powerful for EV owners, solar panel owners, and households with flexible schedules. They're the fastest-growing rate structure in the US, with many utilities now making TOU the default plan for new customers.
How Time-of-Use Rates Work
On a flat-rate plan, you pay the same price per kWh whether you use electricity at 3 PM or 3 AM. On a TOU plan, the price varies by time period to reflect the actual cost of generating and delivering electricity throughout the day.
Why Prices Vary by Time of Day
Electricity demand peaks on weekday afternoons when businesses are running, people come home and crank up the AC, and everyone starts cooking dinner. To meet this peak demand, utilities must fire up expensive "peaker" plants that only run a few hours per day. Off-peak hours (nights, early mornings, weekends) require only efficient baseload generation.
TOU rates pass these real cost differences on to you, rewarding you for using electricity when it's cheapest to produce.
Typical TOU Rate Structure
| Period | Typical Hours | Rate vs. Flat Rate | Example Rate |
|---|---|---|---|
| Off-Peak | 9 PM - 7 AM + weekends | 30-50% lower | $0.08-$0.12/kWh |
| Mid-Peak (if applicable) | 7 AM - 2 PM, 7 PM - 9 PM | Similar to flat rate | $0.14-$0.18/kWh |
| On-Peak | 2 PM - 7 PM weekdays | 50-100% higher | $0.25-$0.50/kWh |
| Super Off-Peak (if available) | 12 AM - 6 AM | 50-70% lower | $0.05-$0.08/kWh |
Peak hours and rate structures vary significantly by utility. Always check your specific utility's TOU schedule before making decisions. Some utilities define peak as 1 PM - 9 PM, others as 4 PM - 9 PM. Some have two peak periods (morning and evening). Seasonal changes are common too — summer peak hours may be longer than winter.
TOU Rate Examples From Major Utilities (2026)
| Utility | Off-Peak Rate | On-Peak Rate | Peak Hours | Peak/Off-Peak Ratio |
|---|---|---|---|---|
| SCE (Southern CA) | $0.14/kWh | $0.47/kWh | 4-9 PM weekdays | 3.4x |
| PG&E (Northern CA) | $0.13/kWh | $0.49/kWh | 4-9 PM weekdays | 3.8x |
| APS (Arizona) | $0.08/kWh | $0.24/kWh | 3-8 PM weekdays | 3.0x |
| ComEd (Illinois) | $0.03/kWh | $0.12/kWh | 2-7 PM weekdays (summer) | 4.0x |
| Duke Energy (NC) | $0.09/kWh | $0.22/kWh | 1-6 PM weekdays (summer) | 2.4x |
| Georgia Power | $0.06/kWh | $0.20/kWh | 2-7 PM weekdays (summer) | 3.3x |
Who Saves the Most on TOU Plans
TOU plans don't save everyone money. Your savings depend on how much electricity you can shift away from peak hours.
Best Candidates for TOU Plans
| Profile | Why TOU Works | Expected Savings |
|---|---|---|
| EV owners | Can schedule charging overnight | 20-40% on EV costs |
| Solar panel owners | Export during peak, use grid off-peak | 15-30% overall |
| Work-from-home | Flexible schedule for laundry, cooking | 10-20% |
| Night shift workers | Naturally heavy off-peak usage | 15-25% |
| Pool owners | Schedule pump for off-peak hours | 25-40% on pool costs |
| Battery storage owners | Charge batteries off-peak, use during peak | 20-35% |
| Retirees with flexibility | Can shift most discretionary loads | 15-25% |
Worst Candidates for TOU Plans
| Profile | Why TOU May Not Work | Risk |
|---|---|---|
| Large families home all day | High peak-hour consumption from cooking, AC, electronics | Could pay MORE |
| Home daycare providers | Must run HVAC and appliances during peak | Higher bills |
| People who can't shift loads | Fixed schedules, medical equipment | No savings |
| Very small electric bills | Savings too small to matter | Not worth the effort |
Before switching to a TOU plan, request a shadow bill from your utility. Many utilities will calculate what your last 12 months of bills would have been under TOU rates so you can see whether you'd save before committing.
How to Maximize TOU Savings
The Big Loads to Shift
Focus on shifting your heaviest electricity consumers to off-peak hours. Small loads (phone charging, LED lights) make negligible difference.
| Load | kWh per Use | Peak Cost | Off-Peak Cost | Savings per Use |
|---|---|---|---|---|
| EV charging (full charge) | 40-60 kWh | $12-$29 | $3-$7 | $5-$22 |
| Clothes dryer (1 load) | 3-5 kWh | $0.90-$2.45 | $0.24-$0.60 | $0.30-$1.85 |
| Dishwasher (1 cycle) | 1.8 kWh | $0.54-$0.88 | $0.14-$0.22 | $0.32-$0.66 |
| Clothes washer (hot water) | 2-3 kWh | $0.60-$1.47 | $0.16-$0.36 | $0.24-$1.11 |
| Pool pump (8 hours) | 12 kWh | $3.60-$5.88 | $0.96-$1.44 | $2.16-$4.44 |
| Electric water heater | 4-6 kWh/day | $1.20-$2.94 | $0.32-$0.72 | $0.48-$2.22 |
| Pre-cool/pre-heat home | 5-10 kWh | Avoided at peak | $0.40-$1.20 | Eliminates peak AC |
Strategy 1: Program Your EV to Charge Off-Peak
If you drive an EV and charge at home, this single change can save $100-$250/month compared to peak charging. Every major EV and most Level 2 chargers support scheduled charging. Set it to start after your off-peak period begins (typically 9 PM) and finish before it ends (typically 7 AM).
Strategy 2: Use Timers on Major Appliances
Set your dishwasher's delay start to run at 9 PM or later. Do laundry in the evening or on weekends. If your water heater has a timer or smart controller, heat water during off-peak hours (the tank stores hot water for use during peak).
Strategy 3: Pre-Cool Your Home Before Peak
During summer, cool your home to 72-73 degrees F before the peak period starts (e.g., by 2 PM). Then raise the thermostat to 77-78 degrees F during peak hours. The thermal mass of your home maintains reasonable comfort for 3-5 hours while your AC runs minimally during the most expensive period.
Many smart thermostats (Ecobee, Nest, Honeywell) have TOU-aware features that automate this pre-cooling strategy.
Strategy 4: Battery Storage Arbitrage
If you have a home battery (Tesla Powerwall, Enphase IQ, etc.), charge it during off-peak hours at $0.08-$0.12/kWh, then discharge during peak hours instead of buying grid electricity at $0.25-$0.50/kWh. The spread can be $0.15-$0.40/kWh, yielding $100-$300/month in savings for heavy users.
Strategy 5: Solar + TOU Optimization
Solar panels produce maximum output during midday hours. Under TOU rates, export your excess solar during peak hours (when you receive the highest credit) and consume grid power during cheap off-peak hours. This maximizes the financial value of every kWh your panels produce.
Calculating Your TOU Savings
Step-by-Step Calculation
Step 1: Get your hourly usage data from your utility portal (smart meter required).
Step 2: Categorize each hour as on-peak, mid-peak, or off-peak according to your utility's TOU schedule.
Step 3: Calculate what you'd pay under TOU vs. flat rate.
Example Calculation
A household using 900 kWh/month in Southern California:
| Time Period | Hours/Month | kWh Used | Flat Rate Cost | TOU Rate | TOU Cost |
|---|---|---|---|---|---|
| Off-Peak (9 PM - 4 PM) | 570 | 540 | $97.20 | $0.14 | $75.60 |
| On-Peak (4 PM - 9 PM) | 150 | 280 | $50.40 | $0.47 | $131.60 |
| Weekends (all day) | Included above | 80 | $14.40 | $0.14 | $11.20 |
| Total | 900 | $162.00 | $218.40 |
Without any load shifting, this household would actually pay MORE on TOU. But if they shift 150 kWh from peak to off-peak (EV charging, laundry, dishwasher, pool pump):
| Period | kWh | TOU Cost |
|---|---|---|
| Off-Peak | 690 | $96.60 |
| On-Peak | 130 | $61.10 |
| Weekends | 80 | $11.20 |
| Total | 900 | $168.90 |
After load shifting: $168.90 vs. $162.00 flat — still slightly more. This household needs aggressive pre-cooling and more load shifting to benefit. The math changes dramatically with solar panels, where peak exports earn high credits.
TOU plans are not automatically cheaper. You must actively shift loads to benefit. If you can't shift at least 30-40% of your peak consumption to off-peak hours, a flat rate may be better. Always request a shadow bill analysis before switching.
Real-World TOU Savings Examples
Example 1: EV Owner in Arizona
Profile: 2,200 sq ft home, 1,100 kWh/month, Tesla Model Y driven 1,200 miles/month. Flat rate: $0.142/kWh ($156/month). TOU plan: Off-peak $0.08/kWh, On-peak $0.24/kWh.
EV charging shifted to midnight (off-peak): 343 kWh x $0.08 = $27.44 (was $48.71). Other loads partially shifted. Monthly TOU bill: $122. Savings: $34/month ($408/year).
Example 2: Solar + Battery Home in California
Profile: 6 kW solar array, 13.5 kWh Tesla Powerwall, SCE TOU plan. Solar produces 800 kWh/month. Home uses 750 kWh/month.
Solar exports during peak (4-9 PM): 200 kWh x $0.47 credit = $94 credit. Battery covers evening peak demand. Off-peak grid use: 150 kWh x $0.14 = $21. Monthly bill: -$73 (net credit). Without TOU: flat rate would yield only $26 net credit. TOU advantage: $47/month ($564/year).
Example 3: Retired Couple in North Carolina
Profile: 1,800 sq ft home, 850 kWh/month, flexible schedule. Duke Energy TOU plan.
Shifted laundry, dishwasher, and cooking to off-peak. Pre-cool home before summer peak. Monthly savings: $18-$28/month ($216-$336/year). Minimal lifestyle disruption — just timing changes.
Example 4: Family That Lost Money on TOU
Profile: Family of five, 1,400 kWh/month, both parents work from home, kids home from school by 3 PM. Heavy peak-hour usage from cooking, homework electronics, and AC.
Unable to significantly shift loads from the 2-7 PM peak window. After 3 months on TOU, bills were $25-$40/month higher. Switched back to flat rate. Lesson: TOU plans require load flexibility.
TOU Plans and Smart Home Automation
Smart home technology makes TOU optimization nearly effortless:
| Device | TOU Feature | Cost |
|---|---|---|
| Smart Thermostat (Ecobee, Nest) | Auto pre-cool/pre-heat before peak | $130-$250 |
| EV Charger (ChargePoint, Wallbox) | Scheduled off-peak charging | $400-$700 |
| Smart Plug / Smart Power Strip | Schedule devices for off-peak | $15-$40 |
| Smart Water Heater Controller | Heat water during off-peak only | $100-$200 |
| Home Battery (Powerwall, IQ) | Automated peak shaving | $8,000-$15,000 |
| Smart Pool Pump Timer | Schedule for off-peak | $50-$200 |
A smart thermostat alone typically captures 40-60% of the TOU savings available to a household.
How to Switch to a TOU Plan
Step 1: Check if your utility offers TOU plans. Visit your utility's website or call customer service. Most large utilities in CA, AZ, IL, GA, NC, TX, and other states offer at least one TOU option.
Step 2: Request a shadow bill analysis. Ask the utility to calculate what your last 12 months of bills would have been on TOU vs. your current plan.
Step 3: Review the peak/off-peak schedule carefully. Make sure peak hours don't align with your heaviest, non-shiftable usage.
Step 4: Set up automation. Program your thermostat, EV charger, and major appliances for off-peak operation before switching.
Step 5: Switch and monitor. Most utilities allow you to switch back to a flat rate if TOU doesn't work for you (sometimes with a waiting period).
Key Takeaways:
- TOU rates charge less off-peak (nights/weekends) and more during peak (weekday afternoons)
- Typical savings: 15-25% for households that actively shift loads
- Best for: EV owners, solar homes, flexible schedules, pool owners
- Not ideal for: families with heavy fixed peak-hour usage
- Biggest impact loads to shift: EV charging, laundry, dishwasher, pool pump
- Pre-cooling your home before peak hours is a powerful strategy
- Always request a shadow bill before switching
- Smart home devices automate TOU optimization
Frequently Asked Questions
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