Time-of-Use Electricity Rates: When Power Is Cheapest and How to Save
Learn how time-of-use (TOU) electricity rates work, when peak and off-peak hours are, and how to shift your usage to save 15–40% on your electric bill.
Time-of-Use Electricity Rates: When Power Is Cheapest and How to Save
If your electric utility has offered you a “time-of-use” rate plan, you might be wondering whether it’s a good deal. The short answer: it depends entirely on when you use electricity. If you can shift most of your usage to off-peak hours, TOU rates can save you 15–40%. If you can’t, you might pay more.
This guide explains how TOU rates work, what the typical peak and off-peak windows are, and gives you a practical plan to maximize savings.
Table of Contents
- What is time-of-use pricing?
- Typical peak and off-peak hours
- How much can you save?
- Appliance-by-appliance shifting guide
- Is TOU right for you?
- How to switch to a TOU plan
- FAQ
What is time-of-use pricing?
Time-of-use (TOU) is a rate structure where the price you pay for electricity changes based on the time of day. During periods of high demand (peak), electricity is more expensive. During periods of low demand (off-peak), it’s cheaper.
Why does the price change? Electricity can’t be stored in large quantities on the grid. During peak demand — hot summer afternoons when everyone runs AC, or cold winter mornings when heaters kick on — utilities have to fire up expensive “peaker” power plants to meet demand. TOU pricing passes those real-time costs to consumers, incentivizing you to use less during expensive periods.
The three TOU periods
Most utilities use three tiers:
| Period | When | Why It’s Priced That Way |
|---|---|---|
| Off-peak | Nights, early mornings, weekends | Low demand, cheap baseload power |
| Mid-peak | Shoulders of the day | Moderate demand |
| On-peak | Afternoon/evening, weekdays | High demand, expensive peaker plants |
Some utilities use just two tiers (peak and off-peak). A few add a fourth “super-peak” tier for the most extreme demand hours.
Typical peak and off-peak hours
Every utility sets its own schedule, but here are the most common patterns:
Summer schedule (May–October)
| Period | Typical Hours | Rate vs. Baseline |
|---|---|---|
| Off-peak | 9 PM – 12 PM | Lowest (baseline) |
| Mid-peak | 12 PM – 2 PM, 7 PM – 9 PM | Moderate |
| On-peak | 2 PM – 7 PM | Highest (2–4× off-peak) |
Why: Summer peak is driven by air conditioning demand in the afternoon and early evening.
Winter schedule (November–April)
| Period | Typical Hours | Rate vs. Baseline |
|---|---|---|
| Off-peak | 9 PM – 6 AM | Lowest |
| Mid-peak | 6 AM – 8 AM, 10 AM – 5 PM | Moderate |
| On-peak | 8 AM – 10 AM, 5 PM – 9 PM | Highest |
Why: Winter peak is driven by heating demand in the morning (people waking up and turning up heat) and evening (people returning home).
Weekend and holidays
Most TOU plans charge off-peak rates all day on weekends and holidays. This makes weekends ideal for running major appliances.
Major utility examples
| Utility | Summer On-Peak | Summer Off-Peak | Peak/Off-Peak Ratio |
|---|---|---|---|
| PG&E (California) | 4 PM – 9 PM | 12 AM – 3 PM | ~3:1 |
| SCE (California) | 4 PM – 9 PM | 9 PM – 4 PM | ~3:1 |
| ComEd (Illinois) | 1 PM – 7 PM (summer) | 10 PM – 6 AM | ~2:1 |
| ConEd (New York) | 12 PM – 8 PM (summer) | 12 AM – 8 AM | ~2.5:1 |
| Duke Energy (Carolinas) | 1 PM – 6 PM | 9 PM – 10 AM | ~2:1 |
Always check your specific utility’s schedule — the exact hours vary significantly.
How much can you save?
The savings from TOU depend on three factors:
- The peak-to-off-peak price ratio — How much more expensive is peak power?
- Your shiftable load — What percentage of your usage can you move to off-peak?
- Your baseline usage pattern — How much do you already use during off-peak?
Example calculation
Scenario: Average household using 900 kWh/month on a TOU plan.
| Period | Rate | Usage | Cost |
|---|---|---|---|
| Off-peak | $0.12/kWh | 500 kWh (55%) | $60.00 |
| Mid-peak | $0.18/kWh | 200 kWh (22%) | $36.00 |
| On-peak | $0.32/kWh | 200 kWh (22%) | $64.00 |
| Total | 900 kWh | $160.00 |
If you shift 150 kWh from on-peak to off-peak:
| Period | Rate | Usage | Cost |
|---|---|---|---|
| Off-peak | $0.12/kWh | 650 kWh | $78.00 |
| Mid-peak | $0.18/kWh | 200 kWh | $36.00 |
| On-peak | $0.32/kWh | 50 kWh | $16.00 |
| Total | 900 kWh | $130.00 |
Savings: $30/month ($360/year) — with zero reduction in total usage.
Realistic savings range
- Easy shifts (dishwasher, laundry timing): 10–15% savings
- Moderate shifts (pre-cooling, scheduled EV charging, delayed appliance runs): 15–25%
- Aggressive shifts (manual load management, battery storage): 25–40%
Appliance-by-appliance shifting guide
Here’s every major household appliance ranked by how much you can save by shifting it to off-peak:
🏆 High-impact shifts
| Appliance | Typical Usage | Savings from Shifting | How to Shift |
|---|---|---|---|
| EV charger | 30–80 kWh/charge | $5–$20 per charge | Schedule charging for after 9 PM |
| Clothes dryer | 2–4 kWh/load | $0.40–$0.80/load | Run after 9 PM or on weekends |
| Dishwasher | 1–2 kWh/load | $0.20–$0.40/load | Use delay start for overnight |
| Water heater (electric) | 10–20 kWh/day | $2–$5/day | Timer or heat pump model |
| Pool pump | 3–8 kWh/day | $0.50–$2/day | Run overnight only |
⚡ Medium-impact shifts
| Appliance | Typical Usage | How to Shift |
|---|---|---|
| Washing machine | 0.5–1 kWh/load | Wash after 9 PM (cold water saves even more) |
| Oven/stove | 2–4 kWh/use | Use slow cooker or air fryer during peak |
| Space heaters | 1–2 kWh/hour | Pre-heat before peak, turn off during peak |
| Window AC units | 0.5–1.5 kWh/hour | Pre-cool before peak, use fan during peak |
💡 Pre-cooling strategy (summer)
The most effective summer technique:
- Before peak (12–2 PM): Set AC to 72°F. Cool your house aggressively.
- During peak (2–7 PM): Set AC to 78–80°F. The house will slowly warm but stay comfortable.
- After peak (7 PM+): Return to normal settings.
This avoids running AC during the most expensive hours while maintaining comfort.
Is TOU right for you?
TOU works well for:
- ✅ EV owners who charge overnight (huge savings)
- ✅ Night owls or early risers who naturally use power off-peak
- ✅ People away during the day (empty house = low peak usage)
- ✅ Households with smart appliances that can auto-schedule
- ✅ Solar + battery owners (use battery during peak, charge off-peak)
TOU may cost more for:
- ❌ Work-from-home households with heavy daytime usage
- ❌ Families with kids home after school (peak hours coincide)
- ❌ People who can’t shift usage (medical equipment, comfort needs)
- ❌ Homes without AC (no ability to pre-cool)
The 5-minute test
Look at your last 3 electric bills and estimate:
- What percentage of your usage happens between 2 PM and 8 PM on weekdays?
- If it’s under 25%, TOU will likely save you money.
- If it’s 25–40%, it’s a wash — check your utility’s specific rates.
- If it’s over 40%, you’ll likely pay more on TOU.
If your utility provides hourly usage data (smart meter dashboard), use that instead of estimating.
How to switch to a TOU plan
- Check availability — Not all utilities offer TOU plans. Check your utility’s website or call customer service.
- Compare rate schedules — Your utility may offer multiple TOU options (2-tier, 3-tier, seasonal variations).
- Run the numbers — Use your utility’s TOU calculator (most provide one) with your actual usage data.
- Start with a trial — Many utilities let you try TOU for 12 months and switch back if it costs more. Ask about this option.
- Set up automation — Smart plugs, appliance delay timers, and programmable thermostats make shifting effortless.
FAQ
What if my utility doesn’t offer TOU?
Not all utilities have implemented TOU yet. However, many are transitioning as they deploy smart meters. Check your state’s public utility commission for upcoming rate changes.
Does TOU work with solar panels?
Yes, and it can be very beneficial. If your solar production during peak hours exceeds your usage, you may earn credits at the higher peak rate. This is called “TOU arbitrage” and is one of the best ways to maximize solar ROI.
Can I switch back if TOU costs more?
Most utilities allow you to switch back to a flat-rate plan within the first 12 months. After that, some require you to stay on TOU for a minimum period. Ask about lock-in terms before switching.
What about critical peak pricing (CPP)?
Some TOU plans include “critical peak” events — a handful of days per year when rates spike to 5–10× normal. These are usually during extreme weather. If your plan includes CPP, the off-peak rates are typically lower to compensate, but you need to drastically reduce usage during CPP events.
Do smart meters cost extra?
Most utilities install smart meters at no charge when you switch to TOU. The meter is necessary for them to track when you use electricity. If there is a fee, it’s usually $2–$5/month added to your bill.
Related guides
- How to Read Your Electric Bill — Understand all the charges
- Why Is My Electric Bill So High? — Troubleshoot high electricity costs
- Understanding Your kWh Usage — Learn what drives your consumption
- Fixed vs Variable Utility Rates — Compare rate plan types
- How to Lower Utility Bills — Comprehensive savings strategies
Bottom line: If you can shift even 20% of your electricity usage from peak to off-peak hours, time-of-use rates will likely save you money. The easiest wins are scheduling your dishwasher, laundry, and EV charging for nighttime or weekends. Check your utility’s TOU plan details and run the numbers — many households save $200–$500/year with simple habit changes.
