Time-of-use electricity rates: are they worth switching to?

A time-of-use rate plan charges different prices depending on the hour of the day. Most plans define three windows: peak (typically 4-9pm weekdays), off-peak (overnight and early morning), and sometimes a mid-peak shoulder. A flat rate plan charges the same cents per kWh around the clock.

The peak-to-off-peak spread varies by utility. A common structure is about 12¢/kWh off-peak and 22-24¢/kWh at peak, roughly a 2× multiplier. Some utilities go wider. PG&E's EV2-A plan runs about 16¢ off-peak versus 31¢ on-peak. ConEd in New York prices overnight EV rates around 8¢ and peak summer rates above 30¢.

In California, most investor-owned utilities now default new residential customers onto TOU plans unless they opt out. Elsewhere, TOU is usually optional and you have to ask for it. A few deregulated markets in Texas sell "free nights" plans that price specific off-peak hours at zero cents as a stronger version of the same idea.

A US household averages about 900 kWh a month. At a flat rate of 16.5¢/kWh, the electricity supply portion of the bill comes out to $148.50.

On a representative TOU plan of 12¢ off-peak and 24¢ peak:

• 50% off-peak, 50% peak: 450 kWh × 12¢ + 450 kWh × 24¢ = $162. About $13 more than the flat plan.
• 60% off-peak, 40% peak: 540 × 12¢ + 360 × 24¢ = $151. Roughly flat.
• 70% off-peak, 30% peak: 630 × 12¢ + 270 × 24¢ = $140. Saves $8.50.
• 80% off-peak, 20% peak: 720 × 12¢ + 180 × 24¢ = $130. Saves $18.50, or about 12%.

The crossover point on this rate structure is right around the 60-65% off-peak mark. Below that, TOU costs more than the flat plan. Above it, savings grow roughly linearly with every percentage point shifted.

A wider spread changes the slope. On a 16¢/31¢ EV rate, the break-even sits closer to 55% off-peak, and every additional 10% shifted is worth about $27 a month. The utility's rate sheet is the only document that matters. Marketing pages round aggressively.

Peak-concentrated usage patterns lose on TOU. The clearest cases:

• Central AC running heavily during summer afternoons in a hot state. A 3,500-watt central AC cycling 60% of the time from 2-9pm pulls about 15 kWh in peak hours every summer day. Over a month that's 450 kWh at peak rates, most of your bill.
• Work-from-home during peak hours. A home office running a computer, monitors, lights, and climate control 9am-6pm produces usage that cannot be shifted.
• Electric cooking during dinner hours. Ovens and ranges are the single densest peak-hour draw in most kitchens. A 3,000-watt oven run 45 minutes at 6pm adds meaningful cost on TOU.
• Households with predictable late-afternoon showers using electric water heaters. Heating 40 gallons during peak hours is the same kWh as overnight, but billed at the higher rate.

If three of the above describe your household, TOU will likely raise the bill. The savings scenarios typically involve overnight-heavy loads and a willingness to run discretionary appliances off-peak.

Not all shifting is equal. Some actions are pure upside. Others require effort and barely move the needle. Ranked by dollar impact per month of effort:

• EV charging after 9pm.A Level 2 charger pulls 7-11 kW. Shifting a 10 kWh nightly top-up from peak to off-peak saves roughly $35-60 a month on a 2× spread. Schedule it once in the car's app and the savings accrue automatically. See EV home charging cost for the full breakdown.
• Pre-cool before peak. Drop the thermostat to 70°F from 2-4pm, then let it drift up to 76-78°F during peak. The house holds the cool thanks to thermal mass, and the AC mostly coasts during the expensive hours. Summer savings in hot states can hit $40-80 a month.
• Dishwasher and laundry on delay timers.Most modern machines have a "start in X hours" button. Setting dishwasher to run at midnight and dryer to finish at 5am saves $4-8 a month at typical usage. Small per-load, but it's free.
• Water heater timer or heat-pump water heater with scheduling. A 50-gallon electric water heater can be programmed to heat mostly overnight and coast through peak. Savings of $5-15 a month depending on household size.
• Oven timing. Cooking large items (roasts, casseroles, bread) before 4pm or after 9pm. Marginal for most households, but worth $2-5 if you cook daily.

The EV and pre-cool actions do most of the work in any real TOU analysis. Everything else is rounding error. If you don't have an EV and your house runs central AC through summer peak, TOU probably isn't your lever.

Plug your biggest peak-hour appliance into the calculator and see what an hour of peak usage versus off-peak costs on your state's rate:

Log into your utility's customer portal and look for the rate schedule or rate comparison tool. Most major utilities now offer a TOU calculator that pulls your last 12 months of usage by hour and shows what each rate plan would have cost. This is the single most useful document in this decision. If the utility doesn't offer one, ask for hourly usage data in CSV and run it against the rate sheet yourself.

For context on what your bill is actually made of before you shop plans, the reading your electric bill guide breaks down which line items the rate plan affects versus the fees that stay fixed regardless.

Most utilities let you revert from TOU back to a flat rate once every 12 months. Some have shorter windows. California's investor-owned utilities give new default-TOU customers a one-year bill-protection period during which you pay the lower of the two plans, so there is effectively no downside to the trial.

Two months of real bills is enough to see if the shifting is working. If the first TOU bill comes in higher than the same month on the flat plan would have been, and you haven't meaningfully changed behavior, the plan is wrong for your usage pattern. Switch back and revisit when something material changes (new EV, new AC, move to a different house).

TOU rewards usage patterns that can tolerate late-night scheduling and can coast through the 4-9pm window without heavy loads. For most EV owners it's an easy win. For most summer-AC-heavy households in hot states it's a net loss. For everyone else, it depends on whether 60-65% of kWh already falls outside peak hours. The utility's own rate comparison tool answers the question in about five minutes.