Time-of-Use Electricity Rates: How to Tell If You're Losing Money

Time-of-use (TOU) rate plans charge different prices depending on the hour of day, usually cheaper overnight and more expensive during a defined "peak" window (commonly late afternoon into evening, when overall grid demand is highest). Whether this saves you money depends entirely on when your household actually uses electricity — a fact that's easy to assume rather than check.

How the rate structure typically works

| Period | Typical timing | Typical relative price | |---|---|---| | Off-peak | Late night to early morning | Lowest | | Mid-peak (some utilities) | Daytime, non-peak hours | Middle | | Peak | Late afternoon to evening (varies by utility and season) | Highest |

Exact windows and price ratios vary significantly by utility — some peak periods are 3–4 hours, others longer, and summer/winter schedules sometimes differ.

The households TOU rates favor

• Homes that can shift laundry, dishwasher, and EV charging to off-peak hours
• Homes with solar and/or battery storage that can avoid drawing from the grid during peak hours
• Households where occupants are away from home during the peak window (e.g., typical 9-to-5 commuters)

The households TOU rates can quietly cost more

• Households home and actively using appliances, HVAC, and electronics during the peak window, with limited ability to shift usage (e.g., families with young children on a fixed evening routine)
• Homes running window AC units heavily during hot summer evenings that fall inside peak hours
• Anyone who switched to a TOU plan for an advertised "average savings" without checking their own hourly usage pattern

How to actually check if you're winning or losing

Most utilities provide hourly usage data through an online account portal. Compare your usage during your specific peak window against your specific TOU peak rate versus what you'd have paid on a flat rate for that same usage — this is the only reliable way to know, since "average savings" marketing figures describe an average household's pattern, not necessarily yours.

FAQ

Can I switch back to a flat rate if TOU isn't working for me? In most cases yes, though some utilities have restrictions on how often you can switch rate plans — check your specific utility's policy before assuming an easy reversal.

Does having solar change whether TOU rates make sense? Often yes, and often favorably — solar production during the day can offset daytime usage, and if your peak window is in the evening after solar production drops, pairing solar with a battery becomes more valuable under a TOU structure than under a flat rate. See our net metering vs. net billing article for how export compensation interacts with this.

Are TOU rates mandatory in some states? Some utilities have moved toward TOU as the default rate structure, sometimes with an opt-out available and sometimes not — check with your specific utility for current policy, since this varies by state and provider and has been changing in recent years.

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