Time-of-Use Electric Rates: Are You Leaving Money On the Table?
Seb Frey · Home Wizard ·
Table of Contents
Key Takeaways
- TOU rates reward shifting usage away from peak hours. Time-of-use pricing charges different rates by time of day, typically 2–3x more during peak evening hours (4–9pm) and 30–50% less during off-peak periods. Savings only materialize if you move flexible loads like EV charging or laundry out o
- EV owners see the strongest case for switching. Electric vehicle charging is the largest shiftable home load, often 20–40 kWh per charge, and can be scheduled entirely during off-peak hours with no lifestyle change. This single flexibility often justifies the switch to TOU rates.
- Realistic savings range from 10–20% with behavior changes. HomeWiz estimates 10–20% bill reductions conditional on shifting usage. Households that don't shift usage may see bills increase 30% or more. Savings depend entirely on how much demand a household can realistically move into off-peak window
- Programmable appliances and smart thermostats enable passive. Delay-start dishwashers, washers, dryers, and pre-cooling strategies using smart thermostats allow 5–15 kWh shifts per cycle without changing daily routines, making TOU benefits more sustainable than manual behavior changes.
- Check utility website for TOU eligibility and enrollment ter. Search your utility's website for "time-of-use," "TOU," or "time-varying rate" plans. Confirm whether TOU is optional or mandatory, the exact peak-hour window, and whether you can revert within a trial period if switching doesn't work out.
- Homes with inflexible peak usage may not benefit. Households home all day running AC through peak hours with no ability to pre-cool or reschedule usage may see higher bills on TOU. The strategy only works for homes with genuinely shiftable loads.
What a time-of-use rate actually is
Most homeowners pay a flat rate for electricity. You use a kilowatt-hour at 3pm or 3am, it costs the same. A time-of-use (TOU) rate changes that. Your utility charges a different price depending on when you use power, usually broken into three bands: off-peak, mid-peak, and on-peak.
On-peak hours are typically late afternoon into early evening, something like 4pm to 9pm on weekdays, when everyone gets home, turns on the AC, starts cooking, and charges the car at the same time. That's when the grid is under the most strain, so the utility charges more, sometimes 2 to 3 times the off-peak rate. Off-peak hours, often overnight and midday, can be priced 30% to 50% below the flat rate you're used to.
The idea isn't that TOU rates are cheaper across the board. It's that they reward you for moving flexible usage out of the expensive window. If you can do that consistently, you come out ahead. If you can't, or your household's usage is locked into peak hours (you're home all afternoon running the AC, for example), a TOU plan can actually cost you more.
Why this matters for your electric bill specifically
Here's the plain-language version of the eligibility rule HomeWiz uses to flag this play: it applies when your utility offers a TOU rate plan and you are not currently enrolled in one. Both conditions have to be true. If your utility doesn't offer TOU pricing, there's nothing to switch to. If you're already on a TOU plan, this play is already in motion for you, the question becomes whether you're using it well, not whether you should switch.
That eligibility check comes from two pieces of data: your utility provider and your current rate plan. Your provider determines whether TOU is even an option (not every utility offers it, and some make it mandatory for certain customer classes). Your current rate plan tells us whether you're on flat-rate pricing or already time-varying.
There's a third factor that matters a lot here even though it's not part of the eligibility gate: whether you have an EV. Electric vehicle charging is one of the single biggest, most shiftable loads in a home, often 20 to 40 kWh for a full charge, and it happens on a schedule you control completely. If your property has an EV, the case for TOU gets a lot stronger, because you have an easy way to capture the off-peak discount without changing your lifestyle at all. You just tell the car to charge at 1am instead of 7pm.
The savings math: how we estimate 10% to 20%
HomeWiz estimates savings from switching to TOU rates at roughly 10% to 20% of your electric bill, conditional on having shiftable usage. That range isn't arbitrary, it comes from how TOU rate structures are typically built and how much load a normal household can realistically move.
Here's the logic, worked through with numbers.
Say your utility's flat rate is $0.16 per kWh. A typical TOU structure might look like:
- Off-peak (11pm to 7am, plus midday): $0.10/kWh
- Mid-peak (7am to 4pm, 9pm to 11pm): $0.16/kWh
- On-peak (4pm to 9pm weekdays): $0.32/kWh
Now take a household using 900 kWh a month, split roughly 40% peak, 35% mid-peak, 25% off-peak, which is close to how an average home behaves without any effort to shift usage.
Cost on flat rate: 900 kWh x $0.16 = $144/month
Cost on TOU with no behavior change:
- Peak: 360 kWh x $0.32 = $115.20
- Mid-peak: 315 kWh x $0.16 = $50.40
- Off-peak: 225 kWh x $0.10 = $22.50
- Total: $188.10
That's worse. This is the trap: switching to TOU without shifting anything can raise your bill 30% or more. The savings only show up once you move usage out of the peak window.
Cost on TOU after shifting half your peak usage to off-peak:
- Peak: 180 kWh x $0.32 = $57.60
- Mid-peak: 315 kWh x $0.16 = $50.40
- Off-peak: 405 kWh x $0.10 = $40.50
- Total: $148.50
Still slightly above flat rate. Now shift more aggressively, say 70% of peak usage moves to off-peak (laundry, dishwasher, EV charging, pool pump, thermostat pre-cooling):
- Peak: 108 kWh x $0.32 = $34.56
- Mid-peak: 315 kWh x $0.16 = $50.40
- Off-peak: 477 kWh x $0.10 = $47.70
- Total: $132.66
Compared to the $144 flat-rate bill, that's an 8% reduction. Push shifting further, or add a big off-peak load like EV charging that wasn't in the original 900 kWh at all (which increases total usage but at the cheapest rate), and savings in the 10% to 20% range become realistic for households with real flexibility: a dishwasher and laundry on delayed start, a smart thermostat pulling cooling load into the midday off-peak window, and especially an EV charging overnight instead of at 6pm.
The households that see the low end of that range, or nothing, are the ones with rigid schedules: someone home all day running the AC through peak hours with no ability to pre-cool or delay it. If that's your household, TOU may not be worth the switch, and that's a legitimate outcome, not a failure of the strategy.
Who benefits most from switching
Based on the math above, TOU rates tend to pay off for:
EV owners. Charging is the single largest shiftable load most homes have. A car that needs 30 kWh can charge entirely in a 6 to 8 hour off-peak window while you sleep. If your property has an EV flag in your HomeWiz profile, this is usually the strongest single reason to look at TOU.
Households with programmable habits. Dishwashers, washers, and dryers with delay-start settings let you shift 5 to 15 kWh per load into off-peak hours with zero change to your routine, just push a button before bed instead of after dinner.
Homes with smart thermostats. Pre-cooling a house between 1pm and 4pm (mid-peak or off-peak, depending on your utility's schedule) so it coasts through the 4pm to 9pm peak window on stored cool air can meaningfully cut peak-hour AC runtime. If you haven't already looked at this, the smart thermostat post walks through how much control you actually get over that kind of scheduling.
Homes that are already tight. If your house holds temperature well, pre-cooling and pre-heating strategies work better, because the house doesn't bleed heat or cold back in during peak hours. A home energy audit will tell you where you stand, and if the audit flags gaps, the air sealing and insulation post covers the fixes that make pre-cooling and pre-heating actually hold.
Who doesn't benefit as much: households that are home and drawing power steadily through the 4-9pm window with no flexibility, and anyone whose usage is dominated by things you can't reschedule, like medical equipment or a home office running through the afternoon.
 |
Talk to the wizard and get all your questions answered. |
How to check if your utility offers TOU rates
This part is straightforward but easy to put off. Your utility's website usually has a rate plans or pricing page. Look for terms like "time-of-use," "TOU," "peak pricing," or "time-varying rate." Some utilities also list it under "rate options" or "billing plans" in your online account.
A few things to note when you're looking:
- Is it optional or mandatory? Some utilities have moved all residential customers to TOU by default, others offer it as an opt-in alternative to a standard flat rate.
- What are the exact peak hours? These vary by utility and sometimes by season. A summer peak window might be 4pm to 9pm, while winter peak could shift to a morning window instead.
- Is there a minimum enrollment period? Some utilities let you switch back to flat rate within 90 days if TOU doesn't work out, others lock you in for a year.
- Are there seasonal rate differences? Summer on-peak rates are often higher than winter ones, since the grid is more stressed by AC demand than heating demand in most regions.
If your utility doesn't offer TOU at all, this play doesn't apply to you right now, and no amount of behavior change will unlock it. That's worth confirming early so you're not chasing a rate structure that doesn't exist for your account.
What to weigh before switching
TOU rates are a bet on your own behavior, not a guaranteed discount. Before switching, it helps to weigh a few things honestly:
Your actual flexibility. Look at when your house draws the most power. If you have smart meter data or an app from your utility, check your hourly usage pattern for the last month. If a large share already falls in off-peak hours, you're closer to net savings from day one. If most of it clusters in the 4-9pm window, you have more work to do before switching pays off.
The size of the peak penalty versus the off-peak discount. Utilities structure these differently. Some have a modest peak premium and a modest off-peak discount, which makes the whole system low-stakes either way. Others have a steep peak premium, like the 2x example above, which makes shifting behavior far more rewarding, but also makes it more costly if you don't shift.
Whether you can actually automate the shift. The households that benefit most aren't remembering to run the dishwasher at 11pm every single night. They're using delay-start settings, smart plugs, EV charging schedules, and thermostat programs that do the shifting automatically. If shifting requires you to manually change your daily routine indefinitely, the savings tend to erode over time as the novelty wears off.
The enrollment terms. Check whether you can revert to your old rate plan if it doesn't work out, and by when.
None of this is a reason to avoid TOU rates. It's a reason to go in with realistic expectations about what your household can actually shift, since that's the entire mechanism the savings depend on.
Where HomeWiz fits into this
This is exactly the kind of decision that depends on details specific to your house: your provider, whether TOU is even offered to you, whether you're already enrolled, and whether you have an EV that makes the switch a near-automatic win. HomeWiz pulls those details together and checks the eligibility rule for you, TOU available and not enrolled, so you're not stuck guessing whether this play applies to your address at all.
Your free HomeWiz Home Savings Report scores your home against this play and others, and where it applies, it shows a dollar-quantified estimate of what switching could be worth for your actual usage, not a generic percentage. If TOU isn't offered by your utility, or you're already enrolled, the report will tell you that too, so you can spend your time on the moves that actually apply to your house.