Time-of-Use Rates: How to Save by Shifting Electricity Usage

What Are Time-of-Use Electricity Rates?

A time-of-use rate plan charges different prices per kilowatt-hour depending on when you use electricity. Instead of paying a flat rate of, say, $0.16/kWh around the clock, you might pay $0.09/kWh at 2 AM and $0.42/kWh at 6 PM on a Tuesday. The same electrons — wildly different prices.

The rationale comes directly from grid economics. The electricity system is sized for its peak demand moment — typically a hot summer weekday evening when millions of households simultaneously run air conditioners, cook dinner, and charge devices. Building and maintaining enough power plants and transmission lines to serve that single-hour peak is expensive. TOU rates create a price signal that pushes flexible loads out of that window, flattening demand and reducing the need for expensive peaker plants.

The DOE's Office of Electricity estimates that demand response programs — of which TOU is the residential version — can reduce peak demand by 10 to 15 percent nationally, which translates to billions in deferred infrastructure spending. For consumers, that same price signal creates a direct opportunity to reduce bills by changing when (not how much) they use power.

How TOU Pricing Works: The Three-Tier Structure

Most TOU plans divide the day into two or three pricing tiers:

• Peak (On-Peak): The most expensive window. Typically afternoon to early evening on weekdays — 4–9 PM is the most common range nationally, though some utilities use 3–8 PM or 5–9 PM. Some utilities add summer weekday "super-peak" windows of 1–2 hours at an even higher rate. Avoid running high-draw appliances here.
• Off-Peak: The cheapest window. Overnight and early morning — typically midnight to 6 AM or 7 AM. Weekends and holidays are usually treated as all-day off-peak in most plans. This is the golden window for EV charging, water heating, and laundry.
• Shoulder (Mid-Peak or Partial-Peak): An intermediate rate during the transition periods — typically 7 AM to 4 PM and 9 PM to midnight on weekdays. Not as cheap as off-peak, but meaningfully less expensive than peak. Many California utilities use a three-tier structure; simpler two-tier plans (peak + off-peak only) are more common in other states.

Some utilities also distinguish between summer and winter rate schedules, with more aggressive peak pricing in summer months when AC demand spikes. California's major utilities, for example, apply their highest peak rates June through September.

Real TOU Rate Examples by State and Utility

The price spread between peak and off-peak varies dramatically by utility. Here is what real TOU plans look like in 2026 across major markets:

Sources: SCE, PECO, Xcel Energy, SDG&E, Seattle City Light published rate schedules, 2026. Rates include delivery charges; exact values vary by plan tier and season.

The California numbers are extreme — a 6.7× spread between peak and off-peak is almost incomprehensible to customers in flat-rate states. But even the more moderate 2.7× spread at Xcel in Colorado represents a meaningful opportunity: running your EV charger at 6 PM costs 2.7× what it costs at midnight. On a 75 kWh battery EV charged 4 nights per week, that difference is over $500/year at Colorado rates alone.

Peak Hours by Region: When to Avoid the Grid

While exact peak windows vary by utility, regional patterns hold:

The universal rule: midnight to 6 AM is cheapest in virtually every TOU market. If there is one change to make, it is scheduling EV charging to start after midnight via your car's built-in scheduler or smart charger app.

Who Benefits Most from TOU — and Who Doesn't

TOU is not universally beneficial. Whether it saves or costs you money depends almost entirely on your household's schedule and flexibility.

TOU Works Well For:

• EV owners — Overnight charging is the biggest single opportunity. If you can delay plugging in until midnight, TOU almost always pays off.
• Households with flexible laundry and dishwasher schedules — Both appliances have delayed-start features on most modern models. Running them after 9 PM takes 30 seconds of setup.
• Work-from-home or retired households — If you can run the washing machine at 10 AM instead of 5 PM, you capture mid-day off-peak or shoulder rates.
• Homes with solar panels — Especially with battery storage. Solar + TOU + battery is the trifecta (more on this below).
• Homes with smart water heaters — A water heater with a time-delay function heats overnight and stores it for the day, shifting 3–5 kWh/day to the cheapest window.

TOU Is Risky For:

• Households with unavoidable peak usage — If you cook a large dinner at 6 PM every night and run the AC throughout the evening, TOU will likely increase your bill.
• Medical equipment users — Oxygen concentrators, CPAP machines, and dialysis equipment cannot be rescheduled. Check with your utility about medical baseline rates.
• Large families with fixed afternoon/evening routines — Kids coming home from school triggering HVAC, cooking, entertainment systems, and laundry all in the 3–8 PM window is the worst TOU scenario.

The Load-Shifting Playbook: What to Move and When

Here is a practical breakdown of the highest-impact loads to reschedule, their typical kWh draw, and how much you save by moving them off-peak in a market with a 3× rate spread:

*Savings estimate assumes shifting from peak ($0.30/kWh average) to off-peak ($0.10/kWh average) — a 3× spread representative of many U.S. TOU markets. California markets have larger spreads and higher absolute savings.

The practical approach: start with EV charging, which requires only a one-time setting change in your car's charging schedule or smart charger app. Then add dishwasher and dryer — both have built-in delay timers on most models made after 2018. Pool pumps on smart timers are the biggest single opportunity for pool owners. Water heater timers require a $20–$50 appliance timer or a smart water heater that supports scheduling.

Use our Electricity Cost Calculator to estimate your current peak-hour costs and model the savings from shifting specific loads.

EV Charging on TOU: The Biggest Opportunity

If there is a single reason TOU rates matter in 2026, it is electric vehicles. A mid-size EV with a 75 kWh battery and a 250-mile range uses about 30 kWh per 100 miles. At 12,000 miles/year, that is approximately 3,600 kWh of annual home charging.

The cost difference between peak and off-peak charging is striking:

• At SCE peak ($0.58/kWh): 3,600 kWh × $0.58 = $2,088/year
• At SCE off-peak ($0.11/kWh): 3,600 kWh × $0.11 = $396/year
• Annual savings from overnight charging: $1,692/year — for a setting you change once

Even in more moderate markets like Pennsylvania (PECO), the savings are substantial: charging at $0.32/kWh peak vs. $0.076/kWh off-peak saves approximately $875/year on the same EV. This is why many utilities offer EV-specific TOU plans with even lower overnight rates — utilities want EV charging at night because it balances load and better utilizes generation assets that sit idle overnight.

Most EVs — including all Tesla, GM, Ford, Hyundai, and Kia models — have built-in charging schedulers. Set your car to begin charging at 11 PM or midnight. Most Level 2 home chargers (JuiceBox, ChargePoint, Emporia) also support time-based scheduling through their apps.

For more on EV charging costs, see our Electric Vehicle Home Charging Costs guide with state-by-state rate comparisons.

Solar Panels + TOU: The Ideal Combination

Solar panels and TOU rates interact in two powerful ways — and understanding both determines how much value your solar system actually generates.

Export Value During Peak Hours

If your utility uses TOU rates for net metering export credits (not all do — check your specific net metering policy), solar panels generating electricity at 2 PM on a summer weekday export power at peak prices. In California, this means your excess solar is credited at $0.40–$0.58/kWh instead of the wholesale rate. This is a meaningful revenue source on sunny afternoons when solar production peaks just before the highest-demand hours.

California's NEM 3.0 policy changed this dynamic — it reduced export credit values significantly and shifted peak credit windows later into the evening. Under NEM 3.0, solar export is most valuable between 4–9 PM, which is exactly when production drops (sunset). This is the explicit policy design pushing solar owners toward battery storage.

Self-Consumption and Load Shifting

Even where export rates are low, solar reduces your consumption of peak-priced grid electricity during the day — particularly 10 AM to 4 PM, which is shoulder or off-peak in most markets. Running the dishwasher, laundry, and other high-draw loads during peak solar hours lets you use free or cheap self-generated electricity. Track this on our Solar Savings Calculator.

Battery Storage and TOU Arbitrage

Home battery systems — the Tesla Powerwall, Enphase IQ Battery, Franklin WH Home Battery, and others — can be programmed to charge from the grid at off-peak rates and discharge during peak hours, a practice called TOU arbitrage.

The math in high-spread markets is compelling:

• A 13.5 kWh Powerwall charged at $0.11/kWh (SCE off-peak) costs $1.49 to fully charge
• Discharging 10 kWh (usable capacity with buffer) during peak hours at $0.58/kWh displaces $5.80 of peak electricity
• Daily arbitrage profit (before battery degradation): $4.31/day = $1,573/year
• At $10,000 battery install cost, payback period: 6.3 years — viable in California markets

In lower-spread markets (2–3×), battery-only TOU arbitrage rarely pencils out on purchase price alone — the arbitrage revenue is too thin to justify the capital cost. Battery storage makes economic sense as a combination of TOU arbitrage, backup power, and solar self-consumption optimization, not arbitrage alone. Our Solar Battery Calculator can model this for your specific utility and rate plan.

How to Switch to a TOU Plan

Switching is simpler than most people expect. Here is the process:

Not sure which appliances use the most energy in your home? Our Appliance Calculator shows per-appliance annual kWh and cost at any rate — useful for identifying which loads matter most before you switch.

Frequently Asked Questions