What Are Time-of-Use Rates?
Time-of-use (TOU) pricing is a rate structure where electricity costs more during peak demand periods and less during off-peak periods. The logic: the electric grid has limited capacity, and the most expensive power plants (peaker plants) are only turned on during high-demand periods. By shifting load to off-peak hours, consumers help utilities avoid these expensive plants — and get rewarded with lower rates.
Typical Peak and Off-Peak Hours
Peak hours vary by utility, but the most common structure is:
- Peak (expensive): 4 PM – 9 PM on weekdays
- Off-peak (cheap): 9 PM – 8 AM, and all day weekends/holidays
- Mid-peak (intermediate): Some utilities have a third tier
The price difference can be substantial. California's TOU-C plan charges about 38¢/kWh during peak hours and 18¢/kWh off-peak — a 2:1 ratio. Some utilities have even wider spreads.
Which Utilities Offer TOU?
TOU plans are now available from most major investor-owned utilities across the country. In some states (California), TOU is now the default rate for residential customers. Utilities offering TOU include PG&E, SCE, Duke Energy, ConEdison, Xcel Energy, and hundreds of others. Check your utility's website or call to ask what TOU plans are available in your area.
How to Shift Your Usage
Laundry
Washing machines and dryers are among the easiest loads to shift. Run them after 9 PM or before 8 AM. A dryer cycle uses about 5 kWh — at a 20¢/kWh peak-to-off-peak spread, shifting one daily load saves about $365/year.
Dishwasher
Use your dishwasher's delay start function to run it overnight. Most modern dishwashers use 1–2 kWh per cycle — easy savings with a delay timer.
EV Charging
Electric vehicles are the biggest TOU opportunity. A full charge uses 50–100 kWh. Setting your EV to charge after midnight can save $5–$15 per charge compared to charging in the early evening peak. Many EVs and chargers have built-in scheduling features — use them.
Pool Pumps
Variable-speed pool pump controllers can be programmed to run primarily during off-peak hours. A pool pump running 8 hours off-peak instead of 8 hours on-peak can save $50–$100/month on TOU rates.
Smart Home Automation
Smart plugs, smart outlets, and home automation systems (Home Assistant, Google Home, SmartThings) can automate load shifting. Set smart plugs to cut power to entertainment devices during peak hours. Program smart thermostats to pre-cool the house before peak hours and coast through the peak period, avoiding AC during expensive hours.
Is TOU Right for You?
TOU works best if:
- You can shift most major loads to off-peak hours
- You charge an EV at home
- You have solar panels (solar production is mostly off-peak morning hours)
- You're flexible about when you run appliances
TOU may not be ideal if you're home all day using electricity continuously, or if your household has care needs that require consistent heating/cooling regardless of time.
Real Savings Potential
Customers who actively manage their usage on TOU plans typically save 10–30% compared to a flat rate, according to utility pilot programs. The savings are highest for households with EVs, pool pumps, or smart home automation. Without any behavior change, TOU plans may actually cost more — the savings require active management.