Time-of-Use Electricity Plans: Save Money

What Is a Time-of-Use Electricity Plan?

A time-of-use plan prices electricity based on demand levels throughout the day. During peak hours when electricity demand is highest — typically late afternoon to early evening — rates are significantly higher. During off-peak hours when demand is low — typically late night to early morning — rates are much lower. Some plans also include a "super off-peak" period with the lowest rates.

The rationale is simple: electricity is more expensive to produce during peak demand because utilities must activate expensive peaker plants. By charging higher rates during peak hours, utilities encourage customers to shift usage to off-peak times, reducing strain on the grid and lowering overall costs.

How TOU Rate Structures Work

TOU plans divide the day into two or three rate periods. Here is the most common structure:

Compared to a flat rate of $0.16/kWh, off-peak rates can be 40-50% cheaper, while peak rates are 75-150% more expensive. The key to saving money on a TOU plan is shifting as much consumption as possible to off-peak and super off-peak hours.

TOU Plans by Major Utility (2026)

TOU plan structures vary by utility. Here are examples from major U.S. utilities:

How Much Can You Save with a TOU Plan?

Your savings depend on how much energy you can shift to off-peak hours. Here is what different shift scenarios look like for a household using 900 kWh per month at a flat rate of $0.16/kWh ($144/month):

As the table shows, a TOU plan only saves money if you actively shift at least 20% of your usage to off-peak hours. Without any behavioral changes, a TOU plan can actually increase your bill. The more you shift, the more you save — with maximum shift scenarios saving $50+ per month.

Strategies to Shift Energy Usage to Off-Peak Hours

1. Shift Laundry to Off-Peak Hours

Washing machines and dryers are among the most energy-hungry appliances. Running them during off-peak hours saves $0.30-$0.50 per load compared to peak hours.

Many modern washers, dryers, and dishwashers have delay-start features that let you load the machine during the day and set it to run during off-peak hours automatically.

2. Charge Your EV at Night

If you drive an electric vehicle, charging during super off-peak hours is the single biggest TOU savings opportunity. A typical EV uses 30-40 kWh per charge, costing $8.40-$11.20 at peak rates versus $2.10-$2.80 at super off-peak rates — saving $6-$8 per charge or $180-$240 per month for daily drivers.

Set your EV charger to start at 11 PM or midnight and finish before 6 AM. Most EVs and smart chargers allow you to schedule charging times through a mobile app.

3. Pre-Heat or Pre-Cool Your Home

Use your HVAC system during off-peak hours to pre-condition your home before the peak period begins. In summer, cool your home to 72°F between 10 AM and 2 PM (off-peak), then let the thermostat rise to 78°F during peak hours. The thermal mass of your home will keep it comfortable for 4-6 hours without running the AC during expensive peak hours.

In winter, heat your home to 72°F in the morning before peak hours, then set the thermostat to 66°F during peak. This strategy saves $30-$60 per month on a TOU plan.

4. Use Smart Appliances and Timers

Smart appliances can automatically schedule operation during the cheapest rate periods:

• Smart dishwasher: Schedule to run at 11 PM
• Smart washing machine: Set delay start to run at midnight
• Smart dryer: Connect to washer and run after wash completes
• Smart water heater: Heat water during super off-peak, store for use throughout the day
• Smart EV charger: Automatically starts at the cheapest rate time
• Pool pump: Run during off-peak hours (saves $30-$50/month)
• Smart plugs: Schedule devices like dehumidifiers and space heaters to off-peak hours

5. Shift Cooking to Off-Peak

Electric ovens and stovetops are significant energy consumers. If your peak period starts at 4 PM, prepare dinner before 2 PM and reheat, or use smaller appliances like air fryers and microwaves that use less energy during peak hours. Slow cookers can be started in the morning during off-peak hours and run throughout the day.

Tools to Maximize TOU Savings

Smart Thermostats

Smart thermostats like Nest, Ecobee, and Honeywell can integrate with your utility's TOU schedule and automatically pre-heat or pre-cool your home before peak hours. Some utilities even offer free smart thermostats to customers who enroll in TOU plans or demand response programs.

Home Energy Management Systems (HEMS)

HEMS platforms connect all your smart devices and automatically optimize their operation based on real-time electricity prices. They can shift water heating, EV charging, appliance operation, and HVAC schedules to minimize costs without requiring manual intervention. Popular options include Span Panel, Lumin, and Sense.

Battery Storage

Home battery systems like the Tesla Powerwall can charge during super off-peak hours and discharge during peak hours, effectively allowing you to buy electricity at $0.07/kWh and use it when it would cost $0.35/kWh. A 13.5 kWh battery can save $3-$5 per day on a TOU plan, or $90-$150 per month. With battery costs of $8,000-$14,000, the payback period is 5-8 years purely from TOU arbitrage.

Assumes peak rate of $0.35/kWh, off-peak rate of $0.07/kWh, one full cycle per day.

TOU Plans and Solar Panels

If you have rooftop solar, TOU plans create additional savings opportunities. Solar panels typically produce the most energy during mid-day (10 AM - 3 PM), which overlaps with off-peak or mid-peak hours in many TOU plans. You can use this solar production to power your home cheaply during the day, then draw from the grid at off-peak rates at night.

In states with net billing (like California's NEM 3.0), TOU plans are especially valuable because the electricity you export to the grid during peak hours is credited at the peak rate. A battery system can store excess solar production and discharge it during peak hours, maximizing the value of every kWh you produce.

Is a TOU Plan Right for You?

TOU plans are not for everyone. Here is how to determine if a TOU plan will save you money:

TOU Plans Work Best If:

• You charge an EV at home and can schedule overnight charging
• You have flexible schedules and can run appliances at night
• You have smart appliances with delay-start features
• You have solar panels or battery storage
• You are away from home during peak afternoon hours
• You live in a state with large peak/off-peak rate differentials (California, Texas, Arizona)

TOU Plans May Not Work If:

• You work from home and need AC during peak afternoon hours
• You have young children or elderly family members who need climate control all day
• You cannot easily shift appliance usage to nighttime
• Your utility's peak/off-peak rate differential is small (less than 2:1)
• You live in a cold climate where heating must run continuously during winter afternoons

How to Switch to a TOU Plan

1. Check availability: Contact your utility or visit their website to see if TOU plans are offered in your area.
2. Compare rate structures: Ask for the specific peak, off-peak, and super off-peak hours and rates.
3. Analyze your usage pattern: Review your hourly electricity usage (available from smart meter data) to see how much you currently use during peak hours.
4. Calculate potential savings: Apply TOU rates to your usage pattern to estimate monthly costs. Many utilities offer online calculators for this.
5. Start with smart appliances: Before switching, ensure your appliances have delay-start features or invest in smart plugs.
6. Switch and monitor: Most utilities allow you to switch plans at no cost. Monitor your first 2-3 bills to verify savings and adjust usage patterns as needed.
7. You can usually switch back: If a TOU plan is not working for you, most utilities allow you to return to a flat-rate plan after a billing cycle or two.

Common TOU Plan Mistakes to Avoid

• Forgetting about peak hours on weekends: Some plans have different weekend schedules. Check your plan details.
• Running the AC at full blast during peak: This is the most expensive time to cool. Pre-cool before peak hours instead.
• Not using delay-start features: If your appliances have timers, use them consistently.
• Charging devices during peak: Phones, laptops, and tablets should be charged overnight, not during evening peak hours.
• Ignoring seasonal rate changes: Many TOU plans have different summer and winter schedules. Know when the schedule changes.
• Underestimating the impact of small shifts: Even shifting 2-3 loads of laundry and one dishwasher cycle per week to off-peak can save $15-$25 per month.

The Future of Time-of-Use Pricing

As renewable energy penetration increases and smart grid technology improves, TOU pricing is becoming more dynamic. Some utilities are introducing real-time pricing (RTP) plans where rates change hourly based on wholesale market prices. These plans offer even greater savings potential for flexible households but require more active management.

Additionally, many states are mandating default TOU enrollment for new customers, meaning TOU plans will become the standard rather than the option. Learning to manage your electricity usage around TOU rate structures now will prepare you for the future of electricity pricing and help you save money from day one.