It is 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. TOU plans are different: the cost of electricity in a TOU plan depends on the time the energy is drawn from the grid which is developed into a schedule of peak hours, off-peak hours and sometimes even partial-peak hours.
Key Takeaways
- Under a TOU plan, customers pay different prices for their electricity based on the time of day and year.
- On and off peak electricity hours refer to when electricity prices shift based on demand.
- Many power companies choose to charge off-peak use rates during holidays and weekends.
- To save money on your electricity bill you should be aware of when your electricity rates are cheapest and schedule your energy usage with your TOU rates in mind.
- Want to further lower your electricity bill? Check out the EnergySage Marketplace to compare quotes for solar-plus-storage systems.
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 off-peak electricity hours?
Under TOU rate plans, utility customers are charged more for electricity used during afternoon “peak” hours when the demand for electricity is higher. The cheapest electricity can be found during “off-peak” hours when demand is lower. For example, on the East Coast, summer off-peak hours might be from 6pm until 2pm the following day because 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 nighttime but depend on your utility’s specific 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 residential customers to opt into it, but this isn’t always the case. California is the first state to require that everyone who installs a solar panel system has to switch to a TOU rate plan under their net metering 2.0 program. Time-of-use electricity pricing is a common option for commercial buildings as well, especially if tenants have flexibility in when they can use the most electricity.
Questions to ask 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 are the peak hours for electricity, and how much extra will I be charged?
Peak hours will always be the most expensive time of day to use electricity. The exact hours, and the premium you pay for electricity, will vary depending on the utility company and the rate you’re opting into.
When electricity is cheapest depends primarily on your location and the off-peak periods utilities operate. For the East Coast, it’s hottest after 2pm, necessitating air conditioning during the summer time. 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. In the wintertime, however, 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 ask yourself “Is energy cheaper at night?” and the answer, according to the data, is that yes it usually is, regardless of region or time of year.
On-peak hours for top 10 states by solar power usage
Off and on-peak electricity hours depend on not only the state, but also the energy provider. Before you adjust your habits to save on your electricity based on time of use rates, make sure to check with your provider about their specific off and on-peak hours as well as what holidays are considered off-peak.
| State | On-peak summer hours | On-peak winter hours |
|---|---|---|
| Massachussetts | 8 a.m. to 9 p.m., Monday-Friday | 8 a.m. to 9 p.m., Monday-Friday |
| New York | 2 p.m. to 7 p.m., Monday-Friday | 2 p.m. to 7 p.m., Monday-Friday |
| North Carolina | 1 p.m. to 7 p.m., Monday-Friday (June 1 to September 30) | 7 a.m. to 12 noon, Monday-Friday (October 1 to May 31) |
| Georgia | 2 p.m. to 7 p.m., Monday-Friday (June-September) | N/A |
| California | 4 p.m. to 9 p.m. (June-September) | 4 p.m. to 9 p.m. (October-February) |
| Texas | 1 p.m. to 7 p.m | 1 p.m. to 7 p.m |
| Florida | 12 p.m. to 6 p.m., Monday-Friday (May 1-September 30) | 6 a.m. to 10 a.m., 6 p.m. to 10 p.m., Monday-Friday (October 1–April 30) |
| Arizona | 2 p.m. to 8 p.m., Monday-Friday (May-October) | 5 a.m. to 9 a.m. and 5 p.m. to 9 p.m., Monday-Friday (November-April) |
| Nevada | 1:01 p.m. to 7 p.m., Monday-Friday (June 1-September 30) | N/A |
| New Jersey | 8 a.m. to midnight (June 1-September 30) | N/A |
Many utility companies offer more than one time-of-use policies. 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 that you’re using electricity, but also 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 the time of day when most people are using electricity. Generally, you can expect peak hours to start sometime in the afternoon and go into the evening, when people are returning home after a day of work and using more lights and appliances.
Do peak hours change during holidays and weekends?
Many power companies choose to charge off-peak use rates during holidays and weekends, such as Christmas Eve and Christmas Day, or other major holidays. 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. For those on a Standard Use plan this may not be an issue, but for those who use a TOU rate, it’s helpful to know what happens during holidays and weekends.
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.
When can I get cheap electricity with TOU rates?
Electricity is often cheaper late at night or early in the morning, so those will be the times when you can save money on your electric bill. This is because 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 decrease your electricity use during peak hours? This might seem difficult for homeowners who leave the house everyday 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 a peak time. 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.
You can also simply 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 of these actions help to 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 both supply and delivery, to what the rates are 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.
Are utilities changing peak hours due to COVID-19?
The COVID-19 pandemic may have changed standard off-peak hours for some providers as much of the workforce adapted to working from home. This change may have necessitated a different schedule of electricity hours, changing rate plans.
Other steps you can take to get the cheapest electricity with TOU billing
Even if you adjust your habits so that you’re using more electricity during off-peak hours, it’s unfeasible to expect that you’ll never be using electricity during the other hours of the day. There are other measures you can take to ensure that your bills are as low as possible under a time-of-use plan beyond just developing an energy schedule.
Consider installing a battery
Many homeowners are considering installing energy storage for their home not only as a source of backup power during grid outages, but also 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 that has been 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
Solar panels can lead to thousands of dollars in electricity savings over the course of 30 years, because you’re generating your own 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 are producing lots of electricity at peak hours, you’ll receive credits at the peak hour rate, which you can use later on. However, that also means that you’ll be credited at the lower rate for 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. Because of this, 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 investigate 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 a variety of installers in your local market. Alternatively, if you want to start investigating solar with some estimates of what it may cost and save you in electricity bills overtime, check out our Solar Calculator.
