- TOU plans charge more during peak periods, typically late afternoon and evening, and less off-peak, especially overnight.
- Whether you win depends on one number: the share of your use that falls in peak hours.
- Big, flexible loads such as EV charging, water heating, laundry and dishwashing are the easiest to shift.
- Many utilities now default new solar, EV or smart-meter customers onto TOU plans, so it pays to understand yours.
How TOU rates are structured
Every TOU plan defines time windows and a price for each. Common features include:
- Peak: the most expensive window, often a few hours in the late afternoon and evening when demand is highest and solar output is fading.
- Off-peak: cheaper hours, usually overnight and sometimes midday.
- Super off-peak: on some plans, very cheap overnight or midday hours aimed at EV charging and storage.
- Shoulder or partial peak: intermediate hours on either side of the peak.
- Seasons and weekends: peak prices often differ between summer and winter, and weekends may be priced entirely off-peak.
Look up your exact schedule on your utility's website. The window times matter as much as the prices.
The break-even test
To see if TOU beats a flat rate, find the share of your usage in peak hours at which the two cost the same. Using illustrative rates:
- Flat rate: 18¢ per kWh
- TOU peak: 38¢ per kWh
- TOU off-peak: 15¢ per kWh
Break-even happens when 0.18 = p × 0.38 + (1 − p) × 0.15, where p is your peak share. Rearranging: 0.03 = 0.23p, so p ≈ 13%.
If less than about 13% of your electricity is used in the peak window, this TOU plan saves money. If more, it costs more. Your utility's actual rates will give a different break-even point, but the method is the same.
Worked example: a 900 kWh household
A household uses 900 kWh a month. On the flat rate above, its bill (energy charges only) is 900 × $0.18 = $162.00.
| Scenario | Peak kWh | Off-peak kWh | Monthly energy cost |
|---|---|---|---|
| Flat rate | 900 at 18¢ | $162.00 | |
| TOU, no changes (25% peak) | 225 × $0.38 = $85.50 | 675 × $0.15 = $101.25 | $186.75 |
| TOU, some shifting (15% peak) | 135 × $0.38 = $51.30 | 765 × $0.15 = $114.75 | $166.05 |
| TOU, strong shifting (8% peak) | 72 × $0.38 = $27.36 | 828 × $0.15 = $124.20 | $151.56 |
Switching to TOU without changing habits costs this household about $25 more a month. Moving dishwashing, laundry and water heating out of the peak window brings it close to break-even. Moving most flexible use and avoiding peak-hour cooling surges saves about $10 a month compared with the flat rate.
The loads worth shifting
| Load | Easy to shift? | How |
|---|---|---|
| EV charging | Very easy | Schedule in the car or charger to start after peak ends |
| Electric water heater | Easy | Timer or smart controller to heat off-peak; heat pump water heaters often have scheduling built in |
| Dishwasher | Easy | Delay-start button |
| Clothes washer and dryer | Easy | Delay start, or run on weekends if they are off-peak |
| Pool pump | Easy | Timer set to off-peak or midday |
| Air conditioning or heat pump | Moderate | Pre-cool or pre-heat before peak, then let temperature drift a few degrees |
| Cooking, lighting, TV | Hard | Reduce rather than shift: efficient lighting, induction or microwave instead of oven |
Use our appliance running cost calculator to see how much each appliance costs per hour at peak versus off-peak prices.
A quick EV illustration
An EV driven 1,000 miles a month at an assumed 3.5 miles per kWh uses about 1,000 ÷ 3.5 ≈ 286 kWh. Charged during the illustrative peak, that is 286 × $0.38 = $108.68. Charged off-peak, it is 286 × $0.15 = $42.90, a difference of roughly $66 a month. Our EV home charging guide covers scheduling and equipment.
Pre-cooling and pre-heating
Heating and cooling are often the largest peak loads. A smart or programmable thermostat can run your system harder just before the peak, then let the temperature drift during it. The building acts as a thermal battery. Well-insulated, airtight homes hold temperature longer, which is one reason insulation and air sealing pair well with TOU. See also our smart thermostat guide.
TOU with solar and batteries
For solar owners, TOU changes the value of each kWh. Solar output peaks at midday, often an off-peak window, while the expensive peak arrives as output falls. That makes:
- West-facing panels relatively more valuable, since they produce more in late afternoon.
- Batteries more attractive, because they can store cheap midday solar for expensive evening hours. Our battery guide shows the arithmetic.
- Export rules critical. Check how your utility values exports at each time; our net metering guide explains the options.
How to decide and switch
- Download 12 months of hourly or interval data from your utility account if available. Many utilities also offer a rate comparison tool.
- Calculate your current peak share for each season.
- Run the break-even test using your utility's actual rates.
- List which loads you would realistically shift and re-run the numbers.
- Check whether there is a trial period or bill protection when you switch, and how often you can change plans.
For background on how US electricity prices are set and how they vary across the country, see the EIA's explainer on electricity prices.
Frequently asked questions
Are time-of-use rates worth it?
They are worth it if you can keep a small share of your use in peak hours, typically by shifting EV charging, water heating and laundry. Households with heavy unavoidable evening use often pay more on TOU than on a flat rate.
What hours are peak on a time-of-use plan?
It depends on your utility. Peak windows are commonly a few hours in the late afternoon and evening on weekdays, and they can change by season. Check your utility's rate schedule for the exact hours.
Can I switch back from a time-of-use plan?
Many utilities allow it, sometimes once a year or after a trial period. Some now require TOU for certain customers, such as new solar owners. Check the rules before switching.
Do smart appliances help on time-of-use rates?
Yes. Delay-start functions, smart thermostats, programmable water heater controls and scheduled EV charging make it much easier to keep usage out of the peak window automatically.
Run your own numbers
Plug your bill, prices and climate into our free appliance energy cost calculator — every assumption is editable.
This guide is general information, not financial, tax or engineering advice. Prices and incentives change — confirm with qualified local professionals and official program sources. See our methodology and disclosures.