Mastering Time-of-Use Rate Plans

3 min

Mastering Time-of-Use Rate Plans

Have you ever wondered how your electricity bills are calculated?Traditionally, it's pretty straightforward. Your energy usage is tallied in kilowatt-hours (kWh), and you're billed accordingly each month. Typically, the more energy you consume, the more you shell out. But what if there was a way to tweak this equation to your advantage? Enter the time-of-use (TOU) rate plan—a concept that offers a smarter way to use electricity and save money, particularly if you're a solar or solar-battery system user.

The Time-of-Use (TOU) Rate Plan Decoded

So, what exactly is a TOU rate plan? Simply put, this is an alternative to the traditional flat-rate electricity billing. Under a TOU plan, electricity rates aren't static. Instead, they vary based on three main parameters: the day of the week, time of day, and season.

Here's where it gets interesting. During periods of high demand, often evenings, weekends, and holidays when most households are consuming more electricity, you'll be charged a higher rate. Conversely, during low-demand periods, your per kWh cost drops. The logic behind this is to promote a more evenly distributed electricity load, incentivize renewable energy sources, and provide financial benefits to electricity providers.

But what does this mean for you, the user? Essentially, a TOU plan lets you adjust your electricity usage based on the prevailing rates, allowing you to lower your bill by shifting high-consumption activities to off-peak periods.

A typical TOU rate structure might look something like this:

PeriodPeak (High Demand)Off-Peak (Moderate Demand)Super Off-Peak (Low Demand)
Typical Hours5 PM - 9 PM8 AM - 5 PM, 9 PM - 11 PM11 PM - 8 AM
Day of WeekWeekdaysWeekdays + WeekendsWeekdays + Weekends
SeasonSummer & WinterAll SeasonsAll Seasons

The Win-Win Situation for Solar Customers

If you're a solar energy user, a TOU rate plan can be a game-changer. Here's why. Solar panels produce energy during daylight hours—precisely when most people are busy at work. This surplus power can either be sold back to the grid or stored for later use in a home battery.

But, under a TOU plan, the rates that the electricity provider pays for your surplus energy can fluctuate, similar to consumption rates. This means that surplus solar electricity generated during off-peak hours is bought at lower rates.

Many of us see our energy consumption peak in the evening hours. This is when we return from work, turn on the AC, cook dinner, illuminate our homes, and power up our devices. If you're a solar-battery system user, you can use the surplus power stored up during the day during these high-need, high-cost periods, translating into significant cost savings.

But what if you don't own a battery? Fear not, a TOU plan can still prove beneficial. Especially for those who don't adhere to the traditional 9-5 work routine or work from home. Simply adjust your energy consumption patterns to capitalize on off-peak hours. Add a solar system to the mix, and you've got a recipe for even bigger savings.

To sum up, time-of-use rate plans are an innovative solution to managing your electricity costs more effectively. They offer a way to turn the tables in your favor, whether you're harnessing solar power or not. By understanding the ebb and flow of electricity demand and strategically planning your usage, you can leverage these plans to realize significant reductions in your electricity bills. All it requires is a shift in thinking and a little planning.

Get a free quote
and EnergyPal offers.

Call (800) 990-3725 or complete the questions and an EnergyPal Advisor will contact you with comparative quotes.

Thanks for your interest in EnergyPal! By clicking below, you agree EnergyPal may call and text you about the products and services of up to four solar installers at the number provided even if on a "do not call" list, using either pre-recorded messages or automated means. Msg and data rates may apply. Your consent is not required to make a purchase.

We use cookies on our website. To learn more about cookies and how we use them view our Privacy Policy.