It’s becoming increasingly popular for utilities to offer time-of-use (TOU) plans to their residential customers. In a standard electricity plan, you pay the same rate for your electricity regardless of the time of day. However, with TOU plans, the rate you pay for electricity depends on the time energy is drawn from the grid. So, you’ll pay different amounts based on a schedule developed by your utility company of peak hours, off-peak hours, and in some cases, super off-peak or partial-peak hours. We discuss what this means for you and how it impacts your electric bill.
- Under a TOU plan, you pay different prices for your electricity based on the time of day and year.
- On and off-peak electricity hours are when utilities shift electricity prices based on demand.
- Many power companies charge off-peak use rates during holidays and weekends.
- To save money on your electric bill, be aware of when your electricity rates are cheapest and schedule your energy usage with your TOU rates in mind.
- If you want to lower your electricity bill even more, you can go solar. Check out the EnergySage Marketplace to compare solar quotes.
What you’ll learn about in this article
- What are off-peak electricity hours?
- Questions to ask before signing up for TOU electricity rates
- How to get the cheapest electricity with TOU billing
What are peak vs. off-peak electricity hours?
Your electric bill is based on a charge per kilowatt-hour (kWh), so you’re billed for actual electricity pulled from the grid. Under TOU rate plans, your utility charges you more for electricity usage during afternoon “peak” hours when the electricity demand is higher, also known as peak demand. When demand is lower, the cheapest electricity can be found during “off-peak” hours. For example, on the East Coast, summer off-peak hours might be from 6 pm to 2 am when temperatures are lower and fewer people need to cool their living space, creating less demand for electricity.
If you have TOU rates, you can lower your electric bills by waiting for the cheapest time of day to use electricity. For example, you can schedule when you run a clothes dryer, start the dishwasher, or charge your electric car around these times. These off-peak hours are usually at night but depend on your utility’s specific time-of-use rate plan. Utilities offer TOU plans to reduce demand on the electric grid by motivating their customers to reduce electricity use during peak hours.
Many utility companies offering TOU rates allow you to opt into it as a residential customer, but this isn’t always the case. California is the first state to require everyone installing a solar panel system to switch to a TOU rate plan under their net metering 2.0 program. Time-of-use electricity pricing is also a common option for commercial buildings, especially if tenants have flexibility in when they can use the most electricity.
What to consider before signing up for time-of-use electricity rates
In some cases, TOU rate plans can cost you more in the long term, but they also offer significant opportunities to save money. Before you opt into a TOU plan, ask yourself the following questions:
What electricity rate plans does your electricity provider offer?
Many utilities have various residential rate plans, including:
- Time-of-use rate plans: vary based on the time of day and season; peak and off-peak hours determine the exact price you pay.
- Tiered rate plans: some utilities charge you a higher electricity rate if you’re regularly using extremely high amounts of energy, using a baseline to determine if your rate is higher. Sometimes these rates work with TOU plans as well.
- Solar rate plans: if you install or already have solar panels, there may be a specific plan available with your utility that takes into account the time you’re using energy as well as net metering (net metering is getting a credit for energy your solar panels produce that you don’t use).
- Other utility-specific special rates: some utilities have special programs if you’re charging an electric vehicle (EV) on off-peak hours or reducing energy consumption a certain number of days each year. Check with your utility company to see what might be available. These are usually incorporated into any existing TOU rate plan.
The best way to determine the optimal electricity plan with your utility is to review your options on their website. If you have solar, an EV charger, or a battery, these will all be important to consider when determining which plan is best for you.
What are the electricity peak hours?
During specific time periods known as peak hours, your cost of electricity will always be higher. The exact hours and the premium you pay for electricity during peak hours will vary depending on the utility company and the specific rate plan you’re opting into.
When electricity is cheapest depends primarily on your location and the off-peak periods utilities operate. On the East Coast, it’s hottest after 2 pm, so you’ll usually need air conditioning during the summer. As such, it isn’t surprising that the peak hours for this region are often from 2 in the afternoon until around 6 in the evening.
However, in the wintertime, peak hours change to the early morning as homeowners and businesses turn up the heat so that living and work spaces are comfortable. You may be wondering if energy is cheaper at night and the answer, according to the data, is usually yes, regardless of region or time of year. In most cases, you’ll pay higher rates on weekdays during certain hours depending on the season and where you live.
On-peak hours for top 10 states by solar power usage
|STATE||UTILITY COMPANY||ON-PEAK SUMMER HOURS||ON-PEAK WINTER HOURS|
|Massachussetts||National Grid||8 a.m. to 9 p.m., Monday-Friday||8 a.m. to 9 p.m., Monday-Friday|
|Massachussetts||Eversource||Noon to 8 p.m., Monday - Friday||Noon to 8 p.m., Monday - Friday|
|New York||National Grid||11 a.m. to 5 p.m., Monday-Friday (June - August)||5 p.m. to 8 p.m., Monday-Friday (December - February)|
|New York||conEdison||Noon to 8 p.m., Monday-Friday (June 1 to September 30)||Noon to 8 p.m., Monday-Friday|
|North Carolina||Duke Energy||1 p.m. to 6 p.m., Monday-Friday (April - September)||6 a.m. to 9 a.m., Monday-Friday (October - March)|
|Georgia||Georgia Power||2 p.m. to 7 p.m., Monday-Friday (June-September)||N/A|
|California||SCE||4 p.m. to 9 p.m. or 5 p.m. to 8 p.m., Monday-Friday||4 p.m. to 9 p.m. or 5 p.m. to 8 p.m., Monday-Friday|
|California||PG&E||4 p.m. to 9 p.m. or 5 p.m. to 8 p.m., Monday-Friday||4 p.m. to 9 p.m. or 5 p.m. to 8 p.m., Monday-Friday|
|Texas||Xcel Energy||1 p.m. to 7 p.m., Monday-Friday (June - September)||N/A|
|Florida||FPL||Noon to 9 p.m., Monday-Friday (April 1 - October 31)||6 a.m. to 10 a.m. and 6 p.m. to 10 p.m., Monday-Friday (November 1 - March 31)|
|Arizona||APS||4 p.m. to 7 p.m., Monday-Friday||4 p.m. to 7 p.m., Monday-Friday|
|Nevada||NV Energy||1:01 p.m. to 7 p.m., Monday-Friday (June 1 - September 30)||N/A|
|New Jersey||JCP&L||8 a.m. to 8 p.m. EST, Monday - Friday||9 a.m. to 9 p.m. EST, Monday - Friday|
Note: check with your utility company, as rates are subject to change.
Off and on-peak electricity hours depend on the state you live in and your energy provider. Before you adjust your habits to save on your electricity based on time-of-use rates, check with your electric utility about their specific off and on-peak hours and what holidays are considered off-peak.
Some utility companies offer more than one time-of-use rate plan or option to select between. These TOU rate plans may have different hours classified as peak hours or may even include some “partial-peak” hours that charge less than peak rates but more than off-peak rates. Many rate plans will depend not only on the hour you’re using electricity but also on the season. Summer rates are often higher than winter rates because of energy-intensive air conditioning systems running during hot days. You might also have a rate plan that has lower peak rates, or fewer peak hours, on the weekends.
Peak hours for electricity tend to be when you expect them because it’s when most people use electricity. Generally, you can expect peak hours to start sometime in the afternoon and go into the evening when people return home after work and use more lights and appliances.
Every utility plan is different, so be sure to check the specifics and consider how the peak hours for electricity will impact you personally on your rate plan. If you’re already using most appliances in your home during the hours specified as off-peak, you could potentially save money by switching into a time-of-use electricity plan.
Do peak hours change during holidays and weekends?
Usually, power companies charge off-peak use rates during holidays and weekends, such as Memorial Day, the 4th of July, Labor Day, Thanksgiving, Christmas Day, and New Year’s Day. If you’re on a TOU plan, there may also be a demand charge based on the highest amount of energy used, regardless of if it’s during peak or off-peak hours.
When can I get cheap electricity with TOU rates?
Electricity is often cheaper late at night or early in the morning, so if you run your heaviest loads during those times, you’ll be able to save on your electric bill. These are typical off-peak hours when not as many people are using electricity.
Can I change my habits to use electricity during off-peak hours?
Even if you don’t currently use much electricity during off-peak hours, do you have the flexibility to change everyday habits and take energy-saving steps during peak hours? This might seem difficult for homeowners who leave the house every day for work and return in the evening when electricity rates will be higher, but there are still steps you can take to save money using time-of-use and schedule your energy usage outside of peak times.
For example, many appliances – including dishwashers, washing machines, and dryers – have scheduling functions so that you can set the time for them to run ahead of time. If you own an electric car, you can plan to charge it at night during off-peak hours. Also, keeping your air conditioner set to 78 degrees or above can help reduce costs, especially during peak demand hours.You can also wake up earlier to start household chores that require a good amount of electricity, wait to charge appliances until it’s late at night, and generally try to be more conscious of when you’re using electricity. All these actions help minimize your use during peak hours and cut down on energy use.
Are there other ways that switching to TOU rates will impact your bill?
It’s a good idea to compare the current rate you’re paying for electricity, including supply and delivery, to the rates under a time-of-use plan. Is off-peak pricing a significantly cheaper rate than you’re paying on your current rate plan? If the rates are similar, you may not save much by opting into a time-of-use plan, even if you change your behavior.
Other steps you can take to get the cheapest electricity with TOU billing
Even if you adjust your habits so you’re using more electricity during off-peak hours, it’s not feasible to expect you to eliminate using electricity during the other hours of the day. There are other measures to ensure that your bills are as low as possible under a time-of-use plan, such as developing an energy schedule or using a smart thermostat to adjust temperatures during peak hours.
Consider installing a battery
Many homeowners are considering installing energy storage as a backup power source during power grid outages and to combat time-of-use electricity rates during peak hours. With a backup battery, you can charge your battery during off-peak hours when electricity rates are at their cheapest and then discharge and use electricity stored in the battery during peak hours. In addition to taking advantage of a lower TOU rate, you can also get incentives and rebates to make investing in energy storage for your home more affordable.
Think about going solar
Using clean energy can help you reduce energy costs. Solar panels can lead to thousands of dollars in electricity savings over 30 years because you’re generating your power instead of buying it all from your utility. If you have time-of-use rates with your current rate plan, the credits you get for sending excess solar electricity back to the grid will depend on the time of day. If your solar panels produce lots of electricity at peak hours, you’ll receive credits at the peak hour rate, which you can use later. However, that also means you’ll be credited at a lower rate for the electricity you send back during off-peak hours.
In the Northern Hemisphere, while south-facing roofs are typically where solar panels will generate the highest amount of electricity, panels on western-facing roofs will generate the most during peak hours. So, it’s a good idea to talk to your solar installer about the best design for your system so that you maximize your solar savings under your TOU plan.
See what electricity costs near you
The more expensive your electricity is, the more time-of-use rates and off-peak electricity hours impact you. Curious how much electricity costs near you? Click on your state to learn more:
Use EnergySage to explore your solar options
Whether you’re considering time-of-use plans or not, going solar will help you save money on electricity. The EnergySage Marketplace makes it as easy as possible to compare solar pricing from various installers near you. Many homeowners can substantially reduce their energy costs by going solar. If you want to see estimates of what it may cost and save you in electricity bills over time, you can also check out our Solar Calculator.