Many people switch to a time-of-use plan expecting a lower bill, then find it went up. Time-of-use (TOU) electricity charges a different price per kWh depending on the time of day, with higher prices at peak demand and lower prices off-peak. It rewards you for moving power use to cheap hours, and it costs more if most of your use falls in the expensive ones.
Quick answer
Time-of-use electricity prices each kWh by the hour. Peak hours, often 4pm to 9pm, cost the most. Overnight hours cost the least. You save when enough of your use moves to cheap hours.
- Best for EV owners: charge overnight at low rates
- Best for battery owners: charge cheap, use at peak
- TOU pricing changes the rate by time of day, and sometimes by season or weekday versus weekend.
- The break-even point depends on the price gap. With 12c off-peak, 30c peak and a 20c flat rate, you need about 56% of your use off-peak.
- EVs, water heaters, dryers and pool pumps are the easiest loads to shift.
- You need a smart or interval meter so the utility can record when you use power.
- Check your bill and your utility’s rate page before you accept or keep a TOU plan.
- What Is Time of Use Electricity?
- What Is a Time-of-Use Plan or Tariff?
- What Are Peak, Off-Peak and Shoulder Hours?
- Why Do Utilities Charge Different Prices at Different Times?
- How Much Can I Save (or Lose) on a TOU Plan?
- How Does TOU Differ From Other Rate Types?
- Which Appliances Should I Run Off-Peak?
- How Do TOU Plans Work With Solar, Batteries and EVs?
- Is a Time-of-Use Plan Right for Me?
- How Do I Find Out Whether I’m on a TOU Plan?
- What Do Owners Say?
- Frequently Asked Questions
What Is Time of Use Electricity?
Time-of-use electricity is a pricing method where the cost of a kWh depends on when you use it. A kWh at 7pm costs more than the same kWh at 2am.
Here is a simple example. Your neighbor runs the dryer at 6pm and pays 30 cents per kWh. You run yours at 10pm and pay 12 cents. Same dryer, same load, very different cost. The U.S. Energy Information Administration and the Department of Energy describe TOU as one type of time-based rate, alongside real-time pricing and critical peak pricing.
What Is a Time-of-Use Plan or Tariff, and How Is It Different From a Flat Rate?
A time-of-use plan, also called a TOU tariff or rate schedule, is the set of prices and hours your utility applies to your account. A flat-rate plan charges one price all day, such as 20 cents per kWh. A TOU plan splits the day into price periods.
The words plan, rate and tariff mean nearly the same thing here. A tariff is the formal rate document your utility files with its regulator. Your bill will list the periods and the kWh used in each.
Flat rates are simple and predictable. TOU rates are cheaper for some households and more expensive for others. That is why the switch is not automatic savings.
What Are Peak, Off-Peak and Shoulder Hours?
Peak hours are when the grid is busiest and power costs the most. Off-peak hours are the quiet, cheap times. Shoulder hours sit in between. Typical US residential peak windows run from late afternoon into the evening, often around 4pm to 9pm.
- Peak: after-work hours, when homes cook, cool and light up. Highest price.
- Shoulder (or partial-peak): the hours just before and after peak. Middle price.
- Off-peak: overnight, and often midday in some areas. Lowest price.
- Super off-peak: an extra-cheap window offered by some utilities, often in the small hours.
Many plans also change by season. Summer peak prices are often higher than winter ones. Some plans treat weekends as all off-peak. Others do not. Read your own schedule, because no two utilities match exactly.
California’s major investor-owned utilities have made TOU the default residential rate structure, with peak commonly set at 4pm to 9pm. If you live elsewhere, your utility’s rules may differ, so confirm with them.
Why Do Utilities Charge Different Prices at Different Times?
Because it costs more to deliver power when everyone wants it at once. Utilities must have enough generation and wire capacity to cover the highest-demand hour of the year. Those extra plants and lines sit idle most of the time, and the last units of power are often the most expensive to produce.
Solar adds a twist. Midday has plenty of solar power on many grids. Then the sun drops just as people get home and switch everything on. Grid planners call the shape of this daily demand the duck curve. Higher evening prices push customers to use less power in that steep ramp-up.
TOU pricing is a signal. Use power when it is plentiful and cheap, and the grid needs less costly equipment. In theory, that keeps rates lower for everyone.
How Much Can I Save (or Lose) on a TOU Plan?
It depends on how much of your use lands off-peak. The break-even math is simple. Say the flat rate is 20c, the TOU off-peak rate is 12c and the peak rate is 30c. Let x be the share of use that is off-peak.
12x + 30(1 − x) = 20
30 − 18x = 20
x = 10 ÷ 18 ≈ 0.556
You need about 56% of your use off-peak just to break even. Below that, TOU costs you more. Above it, you save.
Here is a household using 900 kWh a month. The flat bill is 900 × $0.20 = $180.
| Off-peak share | Off-peak kWh at 12c | Peak kWh at 30c | Monthly bill | Vs. flat $180 |
|---|---|---|---|---|
| 20% | 180 kWh = $21.60 | 720 kWh = $216.00 | $237.60 | +$57.60 |
| 40% | 360 kWh = $43.20 | 540 kWh = $162.00 | $205.20 | +$25.20 |
| 56% (break-even) | 500 kWh = $60.00 | 400 kWh = $120.00 | $180.00 | $0 |
| 60% | 540 kWh = $64.80 | 360 kWh = $108.00 | $172.80 | −$7.20 |
Assumptions: 900 kWh a month, flat 20c, TOU 12c off-peak and 30c peak, no shoulder period, no fixed fees. Swap in your own numbers to redo it. The US national average is near 17c per kWh, and state averages range from roughly 12c to 40c, so your own rates may differ.
How Does TOU Differ From Tiered Rates, Demand Charges and Real-Time Pricing?
These are often mixed up, but they work differently. TOU changes the price by the clock on a fixed schedule. The others charge by how much you use, how hard you pull, or what the market is doing.
| Rate type | How price changes | Best suited to | Risk level |
|---|---|---|---|
| Flat rate | One price all day | Homes that cannot shift use | Low |
| Time of use | Fixed prices by hour, season or day | EV, solar, battery and flexible homes | Medium |
| Tiered rate | Price rises as monthly kWh rises, regardless of time | Low-use homes | Medium for big users |
| Demand charge | Fee based on your highest kW draw in a period | Homes that can spread out loads | Medium to high |
| Real-time pricing | Price follows wholesale market, hour by hour | Very flexible, tech-savvy homes | High |
| Critical peak pricing | Very high price on a few event days | Homes that can cut use on short notice | Medium to high |
Some plans combine them. A TOU plan with a demand charge is possible. Always read the full rate sheet.
Which Appliances Should I Run Off-Peak?
Run anything flexible that uses a lot of power: EV charging, the dryer, the dishwasher, water heating and the pool pump. Skip shifting tiny loads, because the saving is pennies.
The table uses typical figures and a 18c gap between peak (30c) and off-peak (12c). Check your appliance label or manual for real numbers.
| Appliance | Approx. kWh per use | Saving per use if moved off-peak |
|---|---|---|
| EV Level 2 charge (7.2 kW, 4 hours) | about 29 kWh | about $5.18 |
| Pool pump (1.5 kW, 8 hours) | about 12 kWh | about $2.16 |
| Electric dryer, one load | about 3 kWh | about $0.54 |
| Dishwasher, one cycle | about 1.2 kWh | about $0.22 |
| Washing machine, one load | about 0.5 kWh | about $0.09 |
Use the delay-start button on your dishwasher and washer. Many electric water heaters and EV chargers also have timers or apps. Pool pumps often have simple built-in schedules.
How Do TOU Plans Work With Solar, Batteries and EV Charging?
They can work very well together, if the rate schedule suits your setup. The three pieces solve different parts of the peak problem.
EVs: Charging is flexible, so it is the easiest big load to shift. Say you drive 1,000 miles a month at 3.5 miles per kWh. That is about 286 kWh. At 30c, it costs about $86. At 12c, it costs about $34. That saves roughly $51 a month. This ignores charging losses.
Solar: Panels produce the most around midday. A 6,000-watt system with 5 peak sun hours and 20% system losses makes about 6 × 5 × 0.80 = 24 kWh on an average day. But on many TOU plans, midday is not the pricey window. Evening is, and solar output has faded by then. How your utility credits exported power also matters. Under net billing, export credits can differ by hour and often differ from the retail rate. Ask your utility how exports are valued on its TOU plan.
Batteries: A battery lets you buy cheap and use at peak, which is called arbitrage. Take a 10 kWh usable battery with 90% round-trip efficiency. Charging it costs about 11.1 kWh × $0.12 = $1.33. Using that 10 kWh at peak avoids 10 × $0.30 = $3.00. The gain is about $1.67 a day, or roughly $50 a month. Installation cost decides whether that pays off, and only a licensed electrician should connect a battery or solar system.
Plug-in solar and microinverter rules vary by state and change quickly. Never bypass a microinverter’s grid shut-off. Confirm what is allowed with your utility first.
Is a Time-of-Use Plan Right for Me?
It is right if you can move a good chunk of your use out of peak hours. Answer these six questions:
- Do you own or plan to buy an EV that can charge at night?
- Can you run laundry and dishes after the peak window ends?
- Are you away from home between 4pm and 9pm on most days?
- Do you have solar panels?
- Do you have, or plan to add, a battery?
- Can you avoid heavy air conditioning or cooking in the evening peak?
If you said yes to three or more, TOU is worth a close look. If you said yes to one or none, a flat rate may be safer.
If you charge an EV at home: TOU is usually worth pricing out.
If you are home every evening with no flexibility: stay flat, or choose a TOU plan with a narrow price gap.
If you have solar plus a battery: compare the TOU export rules carefully.
If you were moved to TOU by default: run the break-even math before you decide to stay.
Remote workers, retirees and families with young children often find it hardest, since they use power during peak hours. A heat pump can be shifted a little by pre-heating or pre-cooling the home before peak, but comfort limits how far you can go.
How Do I Find Out Whether I’m on a TOU Plan?
Look at your bill or log in to your utility account. A TOU plan lists usage by period, such as peak, off-peak or partial-peak, and the plan name often has “TOU” in it. If you only see one price per kWh, you are likely on a flat or tiered rate.
TOU billing needs a meter that records usage by time period, usually a smart or interval meter. Your utility reads it remotely and bills each period at its own rate. Your online account may show hourly usage, which is the best data for testing a new plan.
Before you pick or keep a plan, ask your utility:
- What are the exact peak, shoulder and off-peak hours, by season?
- Do weekends and holidays have different rates?
- Is there a fixed monthly fee or a demand charge?
- How are solar exports credited?
- Can I switch back to a flat rate, and is there a trial or bill protection period?
If you were put on TOU by default, check whether you can opt out. Many utilities make TOU the standard plan for new or changed accounts, so do not assume you chose it.
What do owners say?
Owners like
- Cheap overnight rates make EV charging much less expensive
- Running the dishwasher, laundry and water heating off-peak saves money once habits are set
- Smart apps and timers make shifting nearly effortless
- Batteries that charge cheaply and discharge at peak work well with these plans
Common complaints
- Peak rates are punishing if you are home in the evening, and bills can rise after switching
- The hours and seasonal changes are hard to understand, and rates change between plans
- Households with young children, remote workers and retirees struggle to avoid peak use
- Default or mandatory enrolment surprises people who did not choose it
- Savings are smaller than advertised unless usage is heavily shifted
Summarised from owner reviews and long-term user reports; individual experiences vary.
Frequently Asked Questions
What is time of use electricity?
It is a way of pricing power where the cost per kWh changes by time of day. Peak hours cost more, and off-peak hours cost less. Some plans also change by season or by weekday and weekend.
What is time of use electricity plan?
A time-of-use electricity plan is a rate option that sets different prices for different hours. You pay the peak price for power used at busy times and the lower price at quiet times. It can save money if you shift enough use, and cost more if you cannot. Use the break-even math above to test it with your own rates.
What is time of use electricity tariff?
A time-of-use tariff is the official rate schedule behind a TOU plan. It lists the prices, the hours for each period, the seasons and any fixed fees. Your utility publishes it, and it is the best place to confirm your exact hours and rates.
