Time-of-Use Electricity Plans Explained

What is time-of-use pricing?

With a standard flat-rate plan, you pay the same price per kilowatt-hour no matter when you use electricity. Time-of-use pricing changes that. Utilities divide the day into pricing periods based on demand on the grid: electricity costs more during peak hours when everyone is home and using power, and less during off-peak hours when demand is low.

Peak periods are typically in the late afternoon and evening, when people return home, run appliances, and cool or heat their homes. Off-peak periods cover overnight hours and early mornings. Some utilities also define a shoulder period in between, priced somewhere in the middle. Use our Bill Breakdown Calculator to understand your current rate structure and see how much of your bill is driven by the hours you use the most power.

How peak, off-peak, and shoulder rates work

Rate differentials vary by utility, but peak rates are often two to three times higher than off-peak rates. In some high-demand markets during summer months, the gap is even wider. Seasonal variation is common: many utilities have separate summer and winter TOU schedules because air conditioning shifts when peak demand occurs.

To find your utility's exact TOU schedule, log into your online account, look for a rate comparison tool, or search your utility's name alongside “time-of-use rate schedule.” Most utilities publish their tariff tables publicly. Typical pricing windows look like this:

• Peak: 4 pm to 9 pm on weekdays (highest rate, often 2–3x off-peak)
• Shoulder: 9 am to 4 pm and 9 pm to midnight (mid-range rate)
• Off-peak: Midnight to 9 am and all day on weekends (lowest rate)

Where to start: establishing your usage baseline first

Before running TOU savings scenarios, it is worth understanding what you are currently spending and where that energy is going. Two situations call for a baseline step first:

• You are not sure what is driving your bill. If your electricity costs feel high but you do not know which loads are responsible, start with the Bill Breakdown Calculator to see how your current charges are structured — fixed fees, energy charges, and any demand or seasonal components. Once you know which hours and loads drive costs, TOU savings scenarios will be much more accurate.
• You are planning a major electrification upgrade (heat pump, EV, induction range). Adding a large new load changes your TOU economics significantly. Use the Home Energy Calculator to map your whole-home consumption first, then model how the new load fits into your peak vs off-peak pattern before committing to a TOU plan.

If you already know your usage is concentrated in off-peak hours or you have a clear flexibility advantage (overnight EV charging, for example), you can go directly to the TOU Savings Calculator to model your potential savings.

TOU and whole-home energy use

For most households, the TOU question is not just about one device — it is about the aggregate peak-hour load across all systems running at the same time. A home with a heat pump running in the evening, laundry going after dinner, and a working TV and lighting load during peak hours accumulates costs faster on a TOU plan than on flat-rate pricing, even if each individual appliance seems manageable on its own.

The households that benefit most from TOU on a whole-home basis are those where the dominant loads — HVAC runtime, water heating, large appliances — can be shifted to off-peak hours without major lifestyle changes. Pre-cooling or pre-heating the home before 4 pm, running the dishwasher overnight, and scheduling laundry on weekends are low-friction shifts that together can move 30–50% of a household's total consumption out of the peak window.

If your whole-home usage is dominated by always-on loads that cannot be shifted — server equipment, medical devices, or commercial refrigeration — TOU is unlikely to produce significant savings. Start with the Home Energy Calculator to see what share of your usage is actually shiftable before modeling TOU scenarios.

TOU and electric vehicle charging

EV charging is the clearest TOU win for most households. A typical Level 2 home charger draws 7–11 kW, and a full overnight charge from a depleted battery can add 40–70 kWh to your bill. At peak TOU rates, that single session can cost as much as running your refrigerator for three weeks. At off-peak rates, the same session costs two to three times less.

Most modern EVs have built-in scheduled charging. Setting the car to start charging at midnight and finish before your morning commute is the single highest-impact TOU shift available to most households — it requires no ongoing effort and the savings repeat every night.

The calculus changes if you frequently need midday top-ups or if your utility's off-peak window does not align with your parking schedule. Model your specific charging pattern — including the sessions you cannot shift — before assuming TOU will always be cheaper.

TOU and heat pumps

Heat pumps are one of the loads where TOU rate structure matters most, yet it is often overlooked in the buying decision. A heat pump's operating cost depends on two things: how much heating or cooling work it does (driven by climate and insulation quality) and what you pay per kilowatt-hour for that work. On a flat-rate plan, the per-kWh price is constant. On a TOU plan, any runtime during peak hours is priced at a significant premium.

For heat pumps, the peak-hour risk is real. In cold climates, your heating demand is highest in the early morning — often before peak hours begin. But in mild climates, HVAC runtime often overlaps directly with the evening peak window, especially in summer when air conditioning runs hardest between 3 pm and 8 pm. If your heat pump carries both heating and cooling loads and your climate puts most of that runtime inside the peak window, TOU can actually increase your annual operating cost compared to flat-rate pricing.

The effective strategy for heat pump households on TOU is thermal pre-conditioning: run the heat pump hard before peak hours begin to bring the home to the target temperature, then let it coast through the peak window with minimal runtime. A well-insulated home holds temperature long enough for this to work effectively. A poorly insulated home cannot hold the pre-conditioned temperature, so the heat pump runs regardless of the rate window.

Before modeling TOU scenarios for a heat pump home, calculate what your operating cost looks like under both rate structures. The interaction between your insulation quality, local climate, and rate window timing determines whether TOU saves or costs you money.

TOU and battery storage

Battery storage is TOU arbitrage in its purest form. The strategy is simple: charge the battery during off-peak hours (overnight, when rates are lowest) and discharge it during peak hours to avoid buying expensive electricity from the grid. In markets where peak rates are two to three times the off-peak rate, a properly sized battery can eliminate most of your peak-hour grid draw.

For solar households, the battery strategy shifts slightly. Rather than charging purely from overnight off-peak rates, solar-plus-storage systems often charge from midday solar generation (free energy during shoulder or off-peak hours) and discharge during the evening peak. This combination — solar charging during the day, discharge during peak — is particularly effective in markets that have reduced net-metering export rates, because it maximizes self-consumption of generated power rather than exporting at a low credit rate.

The economics of a battery for TOU arbitrage depend on the rate differential, daily cycling depth, and battery degradation over time. A 2:1 peak-to-off-peak ratio may not produce enough savings to justify the battery investment on TOU arbitrage alone — outage resilience or solar export optimization are usually stronger primary drivers for a battery purchase decision.

How to shift your usage

Shifting usage does not have to mean sacrificing convenience. Most of the highest-impact changes involve setting a timer or adjusting a schedule once, then letting automation handle the rest.

• Run your dishwasher and laundry after 9 pm or set a delay start for early morning
• Pre-cool or pre-heat your home before the peak window starts so your HVAC barely runs during expensive hours
• Set your EV charger to start after midnight and finish before your morning commute
• Put your electric water heater on a timer to heat water overnight rather than on demand during the day
• Batch high-energy cooking tasks on weekends when off-peak rates typically apply all day

Curious how much individual appliances cost to run at different times of day? The Appliance Cost Calculator lets you model the exact cost difference between running an appliance at peak versus off-peak rates.

TOU vs flat-rate: which saves more?

TOU is not a universal win. For some households, a flat-rate plan is actually cheaper. The right answer depends entirely on when you use electricity and how much flexibility you have.

A flat-rate plan tends to be better when your household has high, unavoidable peak-hour usage. If you work shifts that mean cooking, laundry, and TV all happen between 5 pm and 9 pm every night and you cannot change that, the premium TOU peak rates will cost you more than a flat rate would. Heat pump households in climates with significant evening HVAC runtime face the same risk.

TOU wins when you have genuine flexibility: an EV you charge overnight, solar with a battery that dispatches during peak hours, or a household that is largely empty during peak windows. The more of your heavy consumption you can push to off-peak, the larger your savings.