Time-of-Use Electricity Rates: Peak vs. Off-Peak and How Much Shifting Saves
October 29, 2026
Many utilities offer time-of-use (TOU) rates: electricity costs more during peak hours, typically late afternoon and early evening when demand is highest, and less at off-peak times, such as overnight. A household with a flat rate of $0.16 per kWh and usage of 900 kWh a month pays $144. On a TOU plan with $0.30 per kWh at peak and $0.10 off-peak, the bill depends on the share of usage at peak.
If 40% of the 900 kWh is used at peak (360 kWh) and 60% off-peak (540 kWh), the bill is 360 × $0.30 + 540 × $0.10 = $108 + $54 = $162, which is more than the flat-rate bill. If the household shifts usage so that only 20% is at peak (180 kWh peak, 720 off-peak): 180 × 0.30 + 720 × 0.10 = $54 + $72 = $126, saving $18 versus flat and $36 versus the unshifted TOU bill.
Skip the math and get your answer instantly:
Open the Savings Calculator →The Break-Even Peak Share
The TOU plan beats the flat rate when the average cost per kWh is below $0.16. With peak price P = $0.30 and off-peak price O = $0.10, the average is s × 0.30 + (1 − s) × 0.10 = 0.10 + 0.20s, where s is the peak share. Setting this equal to 0.16 gives s = 0.30. If less than 30% of your use occurs at peak, TOU saves money; above 30%, it costs more. Households with electric vehicles, who can charge overnight, are the best candidates, because charging a car can add 300 kWh or more per month off-peak.
Other pricing features: seasonal rates, demand charges, and fixed monthly fees. Add these to the comparison.
| Peak share of use | Monthly cost on TOU plan (900 kWh) | Flat rate ($0.16) | Difference |
|---|---|---|---|
| 10% | $108 | $144 | -$36 |
| 20% | $126 | $144 | -$18 |
| 30% | $144 | $144 | $0 |
| 40% | $162 | $144 | +$18 |
| 60% | $198 | $144 | +$54 |
What to Shift
Flexible, high-power loads are best: dishwashers, washing machines, dryers, EV charging, pool pumps, water heaters (with timers), and baking or cooking prep. A dryer load uses about 3 kWh, an EV charge of 40 kWh, a dishwasher 1.2 kWh. Moving a daily dryer load, a dishwasher cycle, and an EV charge (about 45 kWh a day, in total) from peak to off-peak saves 45 × $0.20 = $9 per day at the $0.20 price difference: $270 a month. Smart plugs, timers on appliances, and delayed-start settings make the shift easy. Pre-cooling a home before the peak period and letting the thermostat rise slightly during peak can also reduce costs.
Evaluating a Plan
Get a year of usage data, ideally hourly (smart meter data is often available online). Compute your current peak share and the bill under each plan, including fixed charges. Think about whether your schedule allows you to shift: a household at home during the day with air conditioning may have a high peak share. Many utilities allow a trial period or an easy switch back. Pay attention to the definitions: peak hours (e.g., 4 to 9 p.m. on weekdays) and holidays.
Broader Benefits
TOU pricing encourages use when electricity is cheapest and cleanest, reduces strain on the grid, and can lower overall system costs. Combining TOU with rooftop solar and a home battery lets you store solar energy for evening use and avoid peak prices. Check how exports are credited under your tariff.
Frequently Asked Questions
What is a time-of-use electricity rate?
A plan where the price per kWh varies by time of day, higher during peak hours and lower off-peak.
How do I know if TOU will save me money?
Compare your average cost per kWh under TOU, based on your peak share, with your flat rate.
What appliances should I shift?
Dishwashers, laundry, EV charging, pool pumps, and water heating.
Is TOU good for EV owners?
Often yes, because charging can be scheduled overnight at low rates.
Do TOU plans have other charges?
Some have fixed fees or demand charges, which should be included in the comparison.