The short answer
Time-of-use (TOU) pricing rewards shifting electricity to off-peak hours (typically 9 PM-7 AM) at 30-60% off peak rates. TOU saves money if you can shift 30%+ of usage to off-peak. Best load profiles: EV owners, daytime-empty households, programmable HVAC + appliances. Worst: WFH households with heavy 4-9 PM use.
Time-of-use (TOU) electricity pricing charges different rates at different times of day — typically 20-40¢/kWh during peak hours (4-9 PM) and 5-12¢/kWh during off-peak hours (9 PM - 7 AM). The premise is structural: wholesale electricity is cheaper to produce at off-peak hours and more expensive at peak. Whether TOU saves you money or costs you more depends entirely on how much of your usage you can shift to off-peak hours. This guide walks the break-even math.
How TOU pricing actually works
A TOU rate splits the day into 2-4 pricing windows. The most common 3-window structure: peak (4-9 PM), mid-peak (7 AM - 4 PM and 9 PM - midnight), and off-peak (midnight - 7 AM).
The peak rate runs 2-4x the off-peak rate. On a typical California TOU plan: 36¢/kWh peak vs 11¢/kWh off-peak — about 3.3x. On a typical Texas TOU plan: 18¢/kWh peak vs 6¢/kWh off-peak — about 3x.
TOU rates are revenue-neutral by design. State PUCs require utilities to set TOU rates so an "average" household pays the same total as on a flat rate. Customers who shift load to off-peak save; customers who concentrate load in peak hours pay more.
The break-even math
TOU saves money if you shift more than ~30% of your usage to off-peak hours. Below that threshold, TOU breaks even at best.
Easy off-peak shifts: dishwasher (run after 9 PM), clothes dryer (run after 9 PM or before 7 AM), EV charging (overnight on smart timer), pool pump (program for off-peak), water heater (resistive heaters can be timed). The how-to-shift-electricity-usage-off-peak guide walks the automation.
Hard to shift: HVAC (when you need cooling, you need cooling), cooking (you eat dinner at dinner time), TV / lighting (active hours match peak hours). For a typical household, the practical shiftable share is 25-50% of total usage.
Infographic
Daily load profile — typical US household before and after TOU shift
Who wins on TOU
EV owners: TOU almost always wins. Overnight EV charging at off-peak rates is the single biggest savings opportunity. Annual savings: $200-$400 per EV. The ev-home-charging-rate-plan-guide walks EV-specific rate plans.
WFH households: depends. If you can shift dishwasher/dryer/EV charging to off-peak and accept higher peak HVAC cost, TOU often wins. If everyone is home running everything 4-9 PM, TOU loses.
Empty-during-day households: TOU usually wins. Daytime usage is light, evening usage shifts to post-9 PM dinner cleanup which can run dishwasher / dryer at off-peak. Set-it-and-forget-it: TOU loses.
Recap
Bottom line
Time-of-use rate plans are an excellent fit for households that can shift 30 percent or more of their electricity usage to off-peak hours, and a poor fit for households whose load profile is concentrated in the 4 to 9 PM peak window. The math is mechanical: pull your smart-meter interval data, apply the TOU rate schedule, compare total to current flat-rate bill, and decide.
EV owners almost always win on TOU because overnight charging is a large, easily-shifted load. Empty-during-day households often win because the off-peak window aligns with arrival home and dinner cleanup. Work-from-home households with heavy 4 to 9 PM use often lose. The how-to-shift-electricity-usage-off-peak guide covers the practical automation that makes TOU work for most households.
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