Time-of-use rates: do they save money in 2026?

How TOU pricing actually works

A TOU tariff replaces your single per-kWh supply rate with three or four time-bucketed rates: peak, mid-peak, off-peak, and sometimes super-off-peak. Peak hours are typically 4 pm to 9 pm on weekdays. Off-peak covers nights and weekends. The supplier publishes the schedule and the rate per bucket.

The peak-to-off-peak ratio varies by utility. PG&E in California runs roughly 4:1 peak vs off-peak. ConEd in New York runs 3:1. SCE in southern California runs as high as 6:1 during summer super-peak windows. The wider the ratio, the bigger the swing your behaviour can move on your bill.

Who saves on TOU — the profile analysis

EV owners are the cleanest TOU winners. A typical home EV charge uses 20 to 40 kWh and runs overnight. Off-peak rates of 8 to 12 cents per kWh vs peak rates of 35 to 45 cents per kWh means EV charging at home costs $2 to $5 a night on TOU vs $7 to $18 on flat. Annual savings on the charge portion alone runs $400 to $1,200.

Remote workers with flexible schedules save 8 to 15 percent because they can do laundry and dishwashing in mid-peak or off-peak hours. Households with battery storage can fully arbitrage peak-to-off-peak. Snowbird households who travel half the year see modest savings because they are off-peak by default.

Who loses on TOU — the profile analysis

Stay-at-home families with kids and central AC are the cleanest TOU losers. AC runs hardest 1 pm to 8 pm — which overlaps the peak window almost exactly. Add dinner cooking, dishwasher, and TV during the same block and the peak kWh share spikes. Net loss vs flat tariff runs 4 to 9 percent on a typical bill.

Households with electric resistance water heaters that run during dinner-prep hours also tend to lose. Same with all-electric homes in cooling-dominated climates where the AC dominates the peak window.

TOU pilots — most US utilities run a 12-month no-penalty trial

Most US deregulated utilities offer a 12-month opt-in TOU pilot with no penalty if you switch back. You enroll, your meter tracks bucketed usage, and if you ended up paying more than you would have on flat, the utility refunds the difference.

Check your utility's residential rates page for the current TOU pilot terms. Most pilots run on a roll-on roll-off basis. The pilot is the right way to test TOU because it removes the risk of being wrong about your load profile.

The 4-question TOU decision tree

Question one: do you own an EV and charge it at home overnight? If yes, TOU is almost certainly a win. Move on.

Question two: is anyone in the household home and using AC during the 4-9 pm peak window? If yes, model the math carefully — TOU may still work if you can pre-cool before 4 pm and ride the deadband through 9 pm.

Question three: are you in a cooling-dominated climate (zones 1, 2, 3)? If yes, the peak window costs land squarely on your highest-load hours. Be conservative on the savings projection.

Question four: does your utility offer a 12-month no-penalty pilot? If yes, enroll. If you save, stay. If you lose, opt out at the 12-month mark.