title: Time-of-Use Rates Explained description: How TOU electricity pricing works, when peak hours hit, and strategies to save money by shifting energy usage. summary: How TOU electricity pricing works, when peak hours hit, and strategies to save money by shifting energy usage. category: grid difficulty: Intro updated: 2026-02-09 tags: ["TOU", "rates", "electricity", "grid", "savings", "peak hours"] relatedTools: ["/tools/rate-plan-optimizer", "/tools/bill-decoder"] faqs:

• question: What is a time-of-use rate? answer: A time-of-use (TOU) rate is an electricity pricing structure where the cost per kWh changes based on the time of day. Electricity is most expensive during "peak" hours (typically 4-9 PM) when demand is highest, and cheapest during "off-peak" hours (usually overnight). The price difference can be 2-3x between peak and off-peak.
• question: What are typical peak hours? answer: Peak hours vary by utility but are most commonly 4 PM to 9 PM on weekdays. Some utilities also have a "mid-peak" or "partial-peak" period. Weekends and holidays are often off-peak all day. Check your specific utility's rate schedule for exact times.
• question: Can I save money on a TOU plan? answer: Yes, if you can shift flexible loads to off-peak hours. Running your dishwasher, laundry, EV charger, and pool pump during off-peak hours can save 20-40% on those loads. Homeowners with solar+battery can save even more by using stored solar during peak hours instead of buying expensive grid power.
• question: Is TOU mandatory? answer: It depends on your state and utility. California requires TOU for new solar customers. Many other utilities offer TOU as an optional rate plan. Some states are moving toward default TOU with an opt-out option. Check with your utility to see what plans are available.
• question: How do TOU rates affect solar panel savings? answer: TOU rates change the value of solar based on when your panels produce vs. when you use power. Solar produces most midday (often an off-peak period), while you use most in the evening (peak). Without a battery, solar may be less valuable under TOU than flat rates. With a battery, you can store midday solar and use it during expensive peak hours — potentially saving more than with flat rates.

Time-of-Use Rates Explained

Time-of-use (TOU) rates charge different prices for electricity depending on when you use it. They're becoming the default in many states, and understanding them is essential for maximizing solar and battery savings.

How TOU Pricing Works

Instead of a single flat rate for all electricity (e.g., 16¢/kWh 24/7), TOU plans have multiple price tiers tied to the time of day:

| Period | Typical Hours | Typical Price | Why | |--------|-------------|---------------|-----| | Off-peak | 12 AM – 4 PM, 9 PM – 12 AM | 10–15¢/kWh | Low demand; renewables supplying the grid | | Mid-peak | 4 PM – 5 PM, 8 PM – 9 PM | 15–25¢/kWh | Transitional periods | | Peak | 4 PM – 9 PM | 30–55¢/kWh | Everyone comes home; AC cranks up; solar drops off |

The exact times and prices vary by utility. Some plans also distinguish between summer (higher prices, wider peak) and winter (lower prices, narrower peak).

Why Utilities Use TOU

The grid's fundamental challenge: everyone wants power at the same time. Between 4–9 PM:

• Workers arrive home and turn on AC, ovens, TVs, lights
• Solar production drops off as the sun sets
• The grid must fire up expensive "peaker" natural gas plants

TOU pricing sends a price signal that encourages consumers to shift usage away from peak, reducing the need for those expensive, polluting peaker plants.

Who Should Consider TOU

TOU rates tend to benefit:

• Solar homeowners — especially with battery storage
• EV owners — charging overnight at off-peak rates saves significantly
• Work-from-home households — heavier daytime usage is off-peak
• Anyone with flexible loads — pool pumps, water heaters, dishwashers, laundry

TOU rates may not benefit:

• Households that can't shift evening cooking and AC usage
• Retirees home all day who already use most power during off-peak
• Small apartments with minimal flexible load

Strategies to Save on TOU

1. Shift Flexible Loads

Move discretionary electricity use to off-peak hours:

• Dishwasher & laundry → run overnight or early morning
• EV charging → set a timer for 12 AM–6 AM
• Pool pump → schedule for 10 AM–2 PM
• Water heater → use a timer or smart controller to pre-heat during off-peak

2. Add Battery Storage

A battery charged by solar (midday, off-peak) can power your home during peak hours — avoiding 30–55¢/kWh grid prices entirely. This is the single biggest TOU optimization.

3. Smart Thermostat Pre-Cooling

Pre-cool your home to 70°F before peak starts at 4 PM, then let the temperature drift up to 76°F during peak. You avoid running AC during the most expensive hours.

4. Monitor and Adjust

Most utilities offer an online portal or app showing your hourly usage. Review it monthly to identify peak-hour habits you could shift.

TOU and Solar: The Duck Curve Problem

There's a tension between TOU rates and solar:

• Solar panels produce the most between 10 AM–2 PM
• TOU rates are cheapest during that same window (lots of solar on the grid)
• TOU rates are highest from 4–9 PM, right when solar production drops

This creates the famous "duck curve" — and it means solar alone may not save as much under TOU as under flat rates. The solution is battery storage to time-shift your solar production.

How to Check Your Options

1. Log into your utility's website and look for "rate plans" or "pricing options"
2. Most utilities let you compare your bill under different rate plans using your actual usage data
3. Ask specifically: "What is your TOU rate schedule?" and "Can I do a shadow bill comparison?"