What are time-of-use rates?
Energy companies may offer electricity plans with time-of-use (TOU) rates (rates change throughout the day based on demand). During peak hours, electricity prices are higher because energy demand is high. For example, some rate structures have the highest rates from 5 p.m. to 9 p.m. During this time, many people come home from work and use electricity to make dinner, do chores, and watch television. In the summer, the early evening is often the hottest time of the day inside.
When demand is low, during off-peak hours, electricity costs less. Off-peak hours usually include times during the night or early in the morning when people may be asleep and using less energy. TOU rates aim to reduce the likelihood of blackouts and strain on the energy grid by encouraging customers to use electricity during off-peak times.
TOU rates vs. standard rates
Calculating a standard-rate structured energy bill is straightforward. To determine the total, multiply the electricity rate (cents per kWh) by your monthly energy usage (recorded in kWh). A TOU bill is more complex because you have to multiply the amount of energy consumed by the rate for each utility time frame. To get the total, you add the cost of energy usage for each time frame together.
By understanding how TOU rates work, you can lower your monthly electricity bill and reduce strain on the energy grid. A TOU rate plan canalso benefit consumers who have an EV or use solar energy during the day.
Energy demand and solar panels
Some energy companies require solar system owners to have TOU plans, such as in California. Solar panels generate the most power when the sun is at its peak. Peak sun hours and demand hours vary by location. Peak hours for electricity demand are later in the day, usually from 4 p.m. to 9 p.m. The time of year can also have an impact on demand. For example, rates can be higher during the summer due to increased demand for air conditioning.
Energy companies may charge higher prices for homeowners with solar panels due to less energy usage during peak sun hours. Solar batteriescan provide additional electricity if you do not want to rely on the grid for energy during peak hours. Excess energy generated from the solar system is stored to power your home when the sun is less available, like at night and during the winter.
How to save money with TOU rates
Saving money on electricity bills with TOU rates can require watching your energy usage and reducing consumption. Use the tools below to gain energy usage insights and to plan usage during off-peak hours.
- Energy monitors: Keep track of energy usage in your home with tools like the Emporia Energy Monitor. Energy monitors connect to your home’s circuit breaker to measure energy output and usage from appliances. The Emporia Energy mobile app displays real-time use and tips for lowering your electricity bills.
- Energy-efficient appliances: Reduce your electricity bill and your carbon footprint by choosing ENERGY STAR-certified appliances. They use less energy than traditional appliances and are helpful to lower costs if you have to use an appliance during peak TOU hours.
- Net-metering: A net-metering agreement enables solar owners to receive credits for excess solar energy sent to the grid. You can use these credits when your energy consumption is higher than your generation, typically during peak TOU winter hours.
- Energy tracking smartphone apps: Connect your monitoring device to a mobile app to help you control and learn about your energy usage. Energy tracking apps provide convenient access to learn how to save energy at home.
- Smart thermostats: Remotely control and automate the temperature in your home to save on energy bills. Smart thermostats can learn your schedule and integrate with other smart home products to increase efficiency and reduce costs.
- Energy usage calculator: The SaveOnEnergy energy usage calculator is a free online tool to calculate the consumption of appliances in your home. Lowering energy usage from appliances leads to lower energy bills.
Money-saving tips
TOU rates vary based on your utility but are usually cheaper early in the morning and overnight. Energy demand peaks in the evening, leading to higher rates from 5–9 p.m. Check with your energy provider for the exact hours. In addition to utilizing tools, there are many ways to take advantage of off-peak hours and incorporate them into your daily routine.
- Charge electric vehicles before 4 p.m. or after 9 p.m.
- Do laundry in the morning or mid-day.
- Run your dishwasher overnight.
- Charge devices in the morning or overnight.
- Plug gaming consoles, printers, and other devices into power strips and turn the switch off when not in use.
- Program your thermostat around peak hours.
- Install solar panels to power your home with solar energy.
Tracking and planning energy usage is important to ensure you get the best rates on TOU energy plans. Enter your ZIP code to explore energy plans near you, and check the Electricity Facts Label for specific details.