Time of use (TOU) electricity pricing charges different rates at different times of day. Peak hours cost more; off peak cost less. This guide covers how TOU works, when to switch, and how to save meaningful money by shifting load.
How TOU works
Utility divides the day into time periods (typically 2 to 4). Each period has a different rate per kWh. Peak periods (often evening) cost 2 to 5 times off peak. Consumers who can shift discretionary loads (dishwasher, laundry, EV charging) to off peak save meaningfully.
Typical TOU periods
| Period | Typical hours | Rate multiplier |
|---|---|---|
| Peak | 4 PM to 9 PM weekdays | 1.5 to 3x standard |
| Off peak | 10 PM to 8 AM | 0.4 to 0.7x standard |
| Shoulder or mid peak | 8 AM to 4 PM weekdays | Around standard |
| Weekend | All hours | Off peak all day (some plans) |
Why utilities offer TOU
- Signals real cost of electricity by time.
- Reduces peak demand, deferring capacity investment.
- Aligns consumption with renewable generation.
- Reduces need for peak generation.
- Grid stability benefits.
- Regulatory requirement in some states.
How much can you save
Who benefits most
- EV owners charging overnight.
- Households with programmable appliances.
- Homes with battery storage (auto shifts).
- Homes with heat pumps (pre heat/cool).
- Households not home during peak.
- Solar owners with net metering.
Who might lose money
How to decide if TOU makes sense
- Look at your utility TOU rates.
- Estimate what portion of your consumption is during peak hours.
- Assess flexibility to shift (schedules, appliances).
- Consider automated devices (smart thermostats, EV chargers).
- Compare estimated TOU bill to current flat rate bill.
- Ask utility for consumption analysis if available.
Load shifting strategies
Big load shifts
- EV charging: schedule for overnight off peak.
- Water heating: heat pump with timer.
- Heating and cooling: pre condition space before peak.
- Pool pumps: run overnight.
- Dishwasher and laundry: delay start to off peak.
Small load shifts
- Cook meals in slow cooker (starts off peak).
- Charge devices overnight.
- Use natural light during shoulder hours.
Smart home coordination
Smart thermostats, smart plugs, and home energy management systems can automatically shift loads. Modern EV chargers coordinate with utility TOU schedules. Home batteries automatically charge off peak and discharge peak.
Critical peak pricing
Some utilities add "critical peak" events where a very high rate applies during system emergencies. Advance notice typically 1 day. Small number of hours per year. Can be very lucrative to shed load during these events.
Real time and dynamic pricing
Beyond TOU, some utilities offer real time pricing (hourly wholesale price) or dynamic pricing (adjusts based on system conditions). More complex but potentially more rewarding. Requires more sophisticated home management.
Mandatory TOU
California moved most residential customers to TOU by default. Similar mandates growing. Understand your default rate schedule and whether alternatives exist.
EV integration
EV owners are the biggest TOU beneficiaries. Overnight charging at off peak rates dramatically reduces total electricity cost. Some utilities offer EV specific rates (super off peak overnight).
Solar integration
Solar plus TOU can be complex. Under net metering, exports credit at retail rate. Under net billing (California NEM 3), exports credit at wholesale rate. Solar plus battery plus TOU can maximise value by discharging battery during peak.
Global adoption
UK Time of Use tariffs (Octopus Agile, Economy 7) widely available. Australian TOU standard. European TOU expanding. Growing role in smart meter deployment globally.
How to switch
Call utility or use online enrolment. Some plans have no penalty for switching back if it does not work. Try for 60 to 90 days before deciding.
Where TOU is going
- Continued mandatory rollout in more states.
- Smart meter deployment enabling.
- Dynamic pricing pilots.
- EV rate integration.
- Home energy management automation.
- Solar plus storage plus TOU optimisation.
Frequently asked questions
Will TOU save me money?
Only if you can shift consumption to off peak.
What are typical peak hours?
4 PM to 9 PM weekdays.
How much can I save?
10 to 25 percent with meaningful shift. 5 to 10 percent typical.
Do I need a smart meter?
Yes for TOU rates.
Can I switch back?
Usually yes.
What about EV charging?
Excellent TOU fit. Schedule overnight.
Does solar work with TOU?
Yes but math depends on export tariff.
What is critical peak?
Very high rate during system emergency events.
Are there penalties?
Not usually for switching. Consumption during peak costs more.
Where can I read more?
Utility website, state PUC, energy management resources.
Summary
Time of use electricity pricing charges different rates by time of day. Peak periods cost 2 to 5x more than off peak. Consumers who can shift discretionary loads (EV charging, laundry, dishwasher) save 10 to 25 percent. Smart home automation makes shifting easier. Not everyone benefits (fixed consumption patterns may lose money). Growing role in smart meter enabled markets. Consider carefully before enrolling.
Next reading
See the assets in this article
Explore 177,000+ utility infrastructure sites
Locations, capacity, operators, and permits across 24 sectors: the same records our writers pull from.
Start browsingOperations guides from the UtilityRadar team.