Unlike a standard electricity plan where you pay the same rate for electricity regardless of the time of day, Time of Use (TOU) plans vary the cost of electricity throughout the day.
Peak hours occur on weekday evenings, when electricity demand is highest, and off-peak times occur at night and at midday, when electricity demand is relatively low. Under TOU plans, utilities charge more for electricity during peak hours and less during off-peak hours.
If you sign up for a TOU plan, you can save money by reducing your use of electricity during peak times and shifting more of your usage to off-peak hours. Solar panels and batteries can help by creating excess energy during the day that is stored for use in the evening.
Let's take a deeper look at peak and off-peak electricity hours, and how you can use TOU plans to save money.
Key takeaways
- Time of Use rates are a type of electricity billing that varies the price of electricity based on the time of day it is being used.
- ‘Peak electricity hours’ refers to the specific time of day at which electrical consumption is at its highest, and electricity rates are their most expensive. They usually occur on weekday afternoons and evenings.
- Off-peak hours are when electricity demand is at its lowest, and electricity prices are at their cheapest. They usually occur overnight and at midday on weekdays, and all day on weekends and holidays.
- Changing your usage patterns by shifting your electricity use to off-peak hours is a great way to save money using TOU rates.
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What are peak electricity hours?
Peak electricity hours are a certain time of day at which energy consumption is at its highest. The specific hours that qualify the peak hours are not the same everywhere; they can vary depending on where you live, and the time of year.
Peak electricity hours are also when the cost of electricity is at its highest. During these hours you will experience what is known as ‘peak pricing.’ Peak pricing is where customers pay an additional fee during periods of high demand.
The premium you pay for using electricity during peak hours will depend on your utility company, and the specific rate plan you have opted for.
Timings: When are peak electricity hours?
Estimating the peak electricity hours in your area can be as easy as looking at your own usage patterns. Energy usage patterns among a community are usually pretty consistent. When you’re using the most electricity, it’s likely that your neighbors are as well.
As a reference, here are the standard peak periods in different time zones.
| Time zone | Hours |
|---|---|
| Eastern | 2 PM - 6 PM |
| Central | 1 PM - 5 PM |
| Mountain | 8 PM - 11 PM |
| Pacific | 5 PM - 9 PM |
| Time zone | Hours |
|---|---|
| Eastern - Peak 1 | 6 AM - 10 AM |
| Eastern - Peak 2 | 6 PM - 10 PM |
| Central - Peak 1 | 5 AM - 9 AM |
| Central - Peak 2 | 5 PM - 9 PM |
| Mountain | 7 PM - 10 PM |
| Pacific - Peak 1 | 6 AM - 10 AM |
| Pacific - Peak 2 | 5 PM - 8 PM |
Remember, these are the standard time periods. To find out your exact peak electricity hours for your Time of Use plan, you should contact your utility company.
What are off-peak electricity hours?
In contrast to peak (or ‘on-peak’) electricity hours, off-peak hours are when electricity demand and consumption are at their lowest. With that, off-peak hours are also when electricity prices are the cheapest.
Off-peak rate and hours can vary depending on your location and utility. Although, off-peak hours will often be when homeowners and occupants are out of the house, whether that be at work or school.
Timings: When are off-peak electricity hours?
Similar to finding out your region’s peak electricity hours, to find out the off-peak hours you need only look at your own routine. This is due to both working hours and school hours being very similar amongst households. With both working and school hours usually ranging between 8 a.m. and 5 p.m., between these times will be when electricity demand is at its lowest.
Here are the standard off-peak electricity hours for different time zones. These off-peak hours are only relevant for weekdays, as energy usage patterns tend to be very different on weekends.
| Time zone | Hours |
|---|---|
| Eastern | 6 PM - 2 PM |
| Central | 5 PM - 1 PM |
| Mountain | 11 PM - 8 PM |
| Pacific | 9 PM - 5 PM |
| Time zone | Hours |
|---|---|
| Eastern- Off-peak 1 | 10 AM - 6 AM |
| Eastern - Off-peak 2 | 10 PM - 6 AM |
| Central- Off-peak 1 | 9 AM - 5 PM |
| Central - Off-peak 2 | 10 PM - 5 PM |
| Mountain | 10 PM - 7 AM |
| Pacific- Off-peak 1 | 10 AM - 5 PM |
| Pacific - Off-peak 2 | 8 PM - 5 AM |
Why utilities are switching to Time of Use rates and peak hours
What are Time of Use rates?
Time of Use rates - otherwise known as TOU rates - are a type of electricity billing that varies electricity costs based on the time of day it is being used. TOU rate plans are offered to residential customers and used to push a higher rate for electricity when in high demand (peak hours) and a lower rate during hours of low demand (off-peak hours).
Why do utility companies use Time of Use rates?
While there are varying prices for consumers using electricity, there are also varying prices for utilities producing electricity. Traditionally, during peak hours, it will cost the utility more to produce electricity. This is why utility companies introduced time of use rates.
Using Time of Use rate plans reduces electricity usage during periods of high demand as well as allows utility companies to increase electricity rates in alignment with production costs.
To learn more, visit: What are Time of Use rates – and when is electricity cheapest?
Cost of peak vs off-peak electricity prices
A question that is likely to be on everyone’s mind, is what is the difference in pricing between peak and off-peak hours? Well, the reality is that prices will vary across different utilities and seasons.
Here is an example of two Time of Use rate plans offered by California electric utility PG&E.
Plan 1: E-TOU-C
Summer costs
Off-peak electricity: 33-42 cents per kilowatt-hour (kWh)
Peak electricity: 40-49 cents per kWh
Winter costs
Off-peak electricity: 28-37 cents per kWh
Peak electricity: 30-39 cents per kWh
Plan 2: E-TOU-D
Summer costs
Off-peak electricity: 34 cents per kWh
Peak electricity: 47 cents per kWh
Winter costs
Off-peak electricity: 34 cents per kWh
Peak electricity: 38 cents per kWh
Image source: PG&E
In the TOU rates plans, we see that the cost difference between off-peak and peak is pretty large in summer (7-13 cents per kWh) but relatively small in winter (2-4 cents per kWh).
Ways to save using Time of Use rates
1. Use more electricity during off-peak hours
If you’re on a TOU plan, then strategically changing your energy use during off-peak time periods could provide you with money and energy savings. Running energy-hungry appliances such as the washer, air conditioner, or electric vehicle charger when electricity prices are at their lowest, could have a big impact on your electric bill.
2. Utilize home battery solutions
Another way to save with Time of Use rates is by adding a home battery solution. By charging your home battery during off-peak times, and using that power during peak hours of the day, you could completely avoid the higher energy costs. Using a home battery solution could also provide you with protection from outages and blackouts.
3. Install solar plus storage
The best way to avoid Time of Use rates - and even wipe out your bill altogether - is by installing solar + battery storage. With a well-designed system, your solar panels will generate plenty of solar power during the day, and the excess power is stored in a solar battery. During evening peak hours, you can rely on your battery to meet all of your energy needs, meaning you never need to buy expensive peak-hour electricity from your utility. This can result in substantial savings.
