The Shift to Dynamic Utility Billing
Traditional utility plans charge a flat rate for every kilowatt-hour (kWh) of electricity consumed, regardless of the time of day. However, to reduce strain on the power grid during peak times, many utilities are transitioning to Time-of-Use (TOU) tariffs.
Under a TOU plan, the price of electricity changes based on grid demand. In this guide, we explore how TOU rates work and share actionable tips to help you schedule your appliance use to avoid expensive peak-hour surcharges.
How Time-of-Use (TOU) Rates Work
Utilities divide the day into different pricing periods based on historical grid demand:
* Off-Peak Hours (Low Demand): Usually late at night and early in the morning. Electricity is cheapest during these times. * On-Peak Hours (High Demand): Typically weekday afternoons and early evenings when businesses are open and households are running ACs and appliances. Electricity is most expensive during these times. * Super Off-Peak Hours: Offered by some utilities during times of high renewable generation (like sunny spring afternoons in California).
For example, a utility might charge $0.12 per kWh off-peak, but jump to $0.36 per kWh during summer peak hours (4 PM to 9 PM). Running appliances during peak times can quickly drive up your bills.
How to Shift Your Energy Use
By adjusting when you run high-power appliances, you can save money under a TOU plan:
1. Schedule Laundry and Dishwashers: Most modern washing machines and dishwashers have 'delay start' buttons. Set them to run after 11 PM or early in the morning. 2. Optimize EV Charging: Charging an electric vehicle can double a home's electricity consumption. Set your EV charger's built-in scheduler to draw power only during off-peak hours. 3. Pre-Cool Your Home: During hot summer months, lower your thermostat setting during the morning (off-peak). As peak hours approach, raise the thermostat setting to reduce AC runtime when rates are high.