Time-of-Use Pricing: When Running Laundry at 3 PM Costs 3x More

A time-of-use (TOU) rate plan charges different prices per kWh depending on when you use electricity. The day is divided into 2-4 periods:

• Off-peak: lowest price, usually overnight (10 PM - 8 AM)
• Mid-peak / shoulder: middle price, late morning and early afternoon
• Peak: highest price, typically 4 PM - 9 PM weekdays (when grid demand is highest)
• Super-peak / critical peak: some plans add an even higher price during the hottest summer afternoons

Typical TOU rate spread on a major California utility:

• Off-peak: 28 cents/kWh
• Mid-peak: 38 cents/kWh
• Peak: 50 cents/kWh

The peak/off-peak ratio is roughly 1.8x in California, 2-3x in some plans elsewhere. Running a dryer for an hour during peak vs off-peak in California is the difference between paying about $1.50 vs $0.85 — a real but modest gap. Running an EV charger overnight vs during peak can be hundreds of dollars per month.

TOU rates favor households that can shift discretionary usage to off-peak hours. Best candidates:

• Households with EVs charged overnight — single biggest savings. EV charging is naturally an off-peak activity, and TOU plans give a discount for it.
• Households where occupants are out during peak hours (4-9 PM) — work commuters, school families. Less to shift because the consumption is already low during peak.
• Heat pump water heater on a timer — schedule heating during off-peak only.
• Pool pumps — schedule for off-peak hours (most pool controllers support this).
• Dryers and dishwashers — small individual savings, but easy to shift.
• Solar households — generation typically peaks midday, when TOU rates are mid-peak. Solar credits are valuable.

A household with an EV, solar, and the ability to shift discretionary loads can save $30-100/month on TOU vs flat rate.

TOU rates can hurt households that can't shift their usage:

• Households with people home during peak hours — retirees, work-from-home, families with stay-at-home parents and young children. Cooking dinner, running TV, lights, and AC during 4-9 PM is exactly when prices are highest.
• Households without flexible appliances — older homes without timers, smart appliances, or programmable controls.
• Hot climates with peak afternoon AC — Phoenix, Las Vegas, Houston. AC usage peaks exactly when TOU prices peak. Critical-peak pricing in these markets can hit $1-2/kWh during heat waves.
• Low-income households — less ability to invest in efficient appliances, smart devices, or solar that would help shift usage.

For households that can't shift usage, TOU plans can cost 10-30% more than flat-rate plans for the same total kWh.

California is the most aggressive state on TOU rollout. PG&E, SCE, and SDG&E have moved most residential customers to TOU plans by default. Customers can opt back to flat-rate ("Tiered") plans, but the default is TOU.

Patterns:

• Standard TOU: 4-9 PM peak, 9 PM-4 PM off-peak, no shoulder. Most common new default.
• EV TOU: deeper discount for off-peak (often 11 PM - 7 AM), with higher peak rates as the trade-off. Designed to encourage overnight EV charging.
• Critical Peak Pricing (CPP): 12-15 days per year of "event days" with super-peak rates (typically $1+/kWh). Customers receive day-ahead alerts.

California Public Utilities Commission requires the utilities to compare each customer's first-year bill on TOU to what it would have been on flat rate. If TOU is more expensive, the customer is automatically refunded the difference for the first 12 months. After that, the customer is responsible for choosing the best rate plan.

Three steps to know if TOU will save or cost you money:

1. Get your hourly usage data. Most utilities now provide hourly or 15-minute usage data via their website or via apps like ohmconnect. Look at when your kWh actually flow.
2. Calculate your usage during peak hours as a percentage of total usage. If more than 40% of your usage is during peak hours (4-9 PM), TOU will likely cost you money. If less than 30% is during peak, TOU will likely save you money.
3. Try the utility's rate comparison tool. Most utilities offer a free tool that takes your past 12 months of hourly data and projects bills under different rate plans. PG&E's "Rate Plan Comparison" is the most detailed.

Don't choose based on intuition. Many people assume they "use less during peak" but actual hourly data often shows otherwise. Real data beats guessing.

If you're on a TOU plan and want to save:

1. Pre-cool your home before peak. Turn AC down to 68-70°F at 3 PM, then let it drift up to 76-78°F during 4-9 PM peak. Saves 30-50% of AC kWh during peak hours.
2. Run dishwasher and laundry overnight or before 4 PM. Most modern appliances have delay-start timers — use them.
3. Charge EVs overnight. Most EVs and chargers support scheduled charging. Set them for 11 PM - 6 AM to capture lowest rates.
4. Use a smart thermostat. Nest, Ecobee, and similar can be programmed to know peak hours and pre-cool / pre-heat accordingly.
5. Shift discretionary cooking. Use slow cookers, microwaves, or toaster ovens during peak instead of full ovens. Cook once a week or batch on weekends.
6. Subscribe to OhmConnect or similar program if available. They pay you to reduce usage during specific high-grid-stress hours.