Is a time-of-use rate right for you? Test it with your hourly data

Time-of-use pricing charges different amounts for the same kilowatt-hour depending on when you use it. That makes the familiar question “is it cheaper?” impossible to answer in general. The answer lives in your own meter data: how much of your usage already lands in the expensive window, and how much you could move out of it. This guide shows how to run that test yourself, with any utility, before you change plans.

How time-of-use pricing actually works

A TOU rate divides the day into price periods. The most expensive period, usually called on-peak, typically covers late afternoon and evening, when demand on the grid is highest. Some rates add a middle tier (often called partial-peak, mid-peak or shoulder), and the cheapest hours are off-peak. Many rates also change by season and treat weekends and holidays differently.

The details vary a lot. As one example, PG&E describes its EV2-A home charging rate as off-peak from midnight to 3 p.m., peak from 4 to 9 p.m., and partial-peak from 3 to 4 p.m. and 9 p.m. to midnight, and it tells customers to look at their whole-home usage profile before enrolling (PG&E’s electric vehicle rate plan page). Arizona Public Service, by contrast, offers a plan whose on-peak window is 4 to 7 p.m. on weekdays and that adds a separate charge based on your highest on-peak hour (APS’s time-of-use plan with a demand charge). Those are two very different products sharing the same label, so never assume the hours or rules from a neighbor’s utility apply to you.

Why do utilities price this way at all? The cost of producing and delivering electricity is not constant; it rises when demand peaks and more expensive generation has to run, and it differs by season and region (U.S. Energy Information Administration on factors affecting electricity prices). A TOU rate passes part of that pattern through to you. That is good news if your usage is light in the evening, and bad news if it is not.

Step-by-step: test a TOU rate against your current plan

1. Identify your current rate and the TOU options you qualify for. Your bill names your rate schedule. Your utility’s rate pages or customer service can list the TOU or EV-specific options open to you; the U.S. Department of Energy notes that many utilities offer such rates and suggests contacting yours to learn what is available (DOE Alternative Fuels Data Center on charging at home).
2. Download at least 12 months of interval data. Most smart-meter utilities let you export hourly or 15-minute usage from the online account, often as a spreadsheet file. A full year matters because a TOU rate that wins in spring can lose badly in summer or winter.
3. Write down every price period. For each season, note the on-peak, mid-peak and off-peak hours, which days count as weekends or holidays, and the price per kWh in each period.
4. Use all-in prices, not just the headline. Per-kWh delivery charges, riders and taxes may also differ by period or may be flat. Compare the full per-kWh cost under each plan, and list fixed monthly charges separately.
5. Total your kWh by period. In a spreadsheet, tag each interval with its price period and sum the kWh. Divide on-peak kWh by total kWh to get your peak share.
6. Price the same year of usage both ways. Multiply each period’s kWh by its price, add fixed charges, and compare annual totals. This is your “do nothing differently” result.
7. Model only the shifting you would really do. List specific loads you can move (dishwasher, laundry, EV charging, pool pump, pre-cooling) and estimate their kWh. Recalculate with those kWh moved to off-peak.
8. Check plan rules before deciding. Ask about minimum enrollment periods, how often you can change rates, and whether any demand or capacity charge applies. Then decide and put a review date on your calendar three months out.

The break-even calculation, with a worked example

For a simple two-period energy rate, this formula applies only when total usage and fixed charges are identical, with no demand charge or other fee difference. Under those conditions, the break-even peak share is:

break-even peak share = (flat price − off-peak price) ÷ (peak price − off-peak price)

If your actual peak share is below that number, the TOU rate wins on the same usage. Here is a hypothetical household. All prices below are invented for illustration and are not any utility’s actual rates.

The household uses 900 kWh in a month. Its current flat rate is an all-in $0.30 per kWh. The TOU option charges $0.45 per kWh on-peak and $0.25 per kWh at all other hours. Break-even = (0.30 − 0.25) ÷ (0.45 − 0.25) = 0.05 ÷ 0.20 = 25%.

Shifting changes the picture. Every kWh moved from peak to off-peak in this example saves $0.20. If the 30%-peak household starts running the dishwasher and two laundry loads a week after 9 p.m. and moves 60 kWh a month, its peak share drops to about 23% (210 of 900 kWh) and the TOU total falls to $267.00, now $3.00 below flat. That is a modest gain, which is the honest lesson: TOU savings usually come from big, movable loads, not from small habits.

Run this per season. A home that is 18% on-peak in April might be 35% on-peak in August when air conditioning runs into the evening.

Who tends to benefit, and who should be cautious

Mistakes and exceptions that change the answer

• Comparing one month. Seasonal prices and seasonal usage both swing. Use a year.
• Ignoring the middle tier. A 9 p.m. to midnight partial-peak period, like the one PG&E lists for EV2-A, means “after dinner” is not automatically off-peak.
• Missing a demand component. Some TOU plans add a kW-based charge. On those, one hour of overlapping appliances can cost more than a whole week of careful energy shifting.
• Assuming peak hours never change. Utilities can revise peak windows through rate cases. Reprogram EV, thermostat and appliance timers whenever your utility announces new hours.
• Confusing retail plans with utility rates. In Texas’s competitive areas, time-based pricing usually comes as a retail plan, such as free-nights offers, rather than a utility tariff. The same test applies.
• Default enrollment. Some utilities move customers to TOU by default. If yours did, run this test anyway; you may be allowed to choose a different rate.

Questions to ask your utility before switching

• Which TOU rates am I eligible for, and what are the exact on-peak, mid-peak and off-peak hours in each season, including weekends and holidays?
• Do delivery charges, riders or taxes also change by time period, or only the energy charge?
• Is there a demand charge, minimum bill or different fixed charge on this rate?
• Do you offer a rate comparison based on my own interval data, and does it include my past 12 months?
• If the new rate costs more, how soon and how often can I switch back, and is there any first-year bill protection?
• If I am in a supplier or community-choice program, which part of my bill does the TOU rate affect?

Rules differ by state and utility

For investor-owned utilities, TOU rates and their terms are generally approved by the state utility commission; municipal utilities and cooperatives usually set rates through their own boards. That means eligibility, default enrollment, switching limits and any bill protection depend on your utility’s tariff, not on a national rule. If you believe you were moved to a rate without the notice your utility’s rules require, or the utility will not explain the hours that apply to you, ask for a supervisor and a written explanation, then contact your state utility commission’s consumer office. Keep your spreadsheet: a clear before-and-after calculation is the most persuasive thing you can bring to that conversation.