What is a time-of-use electricity rate?

For most of the last century, residential electricity was sold the way gasoline is sold: one price, and the meter counted how much you took. A time-of-use tariff — often shortened to TOU — breaks that. It splits the day into named periods, gives each one its own price, and leaves it to you to notice.

The reason has nothing to do with your household. Electricity cannot be stored cheaply at grid scale, so supply has to match demand second by second. At six in the evening, when air conditioners, ovens and returning commuters all land at once, the grid falls back on its most expensive generators. At three in the morning it does not. Time-of-use pricing is the utility passing that difference through to you instead of averaging it away.

How the periods are usually named

Utilities are not consistent about vocabulary, but almost every time-of-use tariff uses some version of three tiers:

• Peak (sometimes “on-peak”) — the expensive window. Typically somewhere between 3pm and 9pm on weekdays, and frequently narrower in winter than in summer.
• Mid-peak or partial-peak — a shoulder period on either side of the peak. Many tariffs skip it entirely.
• Off-peak — everything else. Overnight, most of the morning, and on a great many tariffs, all day at weekends.

Two details trip people up. First, the peak window often moves with the season: a plan that charges peak prices from 4pm to 9pm in July may shift to 5pm to 8pm in January, or drop the winter peak altogether. Second, the boundary is a hard edge, not a ramp — a dryer that finishes at 3:58pm and one that finishes at 4:02pm are billed differently.

How big is the gap, really?

This is where general explanations stop being useful, because the answer varies enormously. We priced every time-of-use plan in our index by comparing its highest and lowest energy rate:

A 2.6× median means the average time-of-use household is looking at a real but manageable difference. The tail is where it gets interesting. These are the six steepest we found:

Notice how many of these are explicitly aimed at electric vehicles or at customers with solar. That is deliberate on the utility’s part: a very cheap overnight rate is only affordable to offer if the customers taking it up are the ones who can actually move their consumption there.

What it means for your bill

The mistake worth avoiding is treating a wide gap as a saving. It is not — it is a lever, and a lever does nothing until something moves. If your evenings look like most people’s evenings, a steep time-of-use plan can easily cost more than the flat rate you left.

The arithmetic is simple enough to do on the back of an envelope. Take the peak and off-peak prices from any of our utility pages, subtract one from the other, and multiply by the kilowatt-hours you could genuinely relocate. A dishwasher cycle is roughly 1.5 kWh. A clothes dryer is 3 to 4. Charging an electric car for an average commute is 8 to 12 — which is why EV owners are the one group for whom the answer is almost always yes.

To put a number on it: on Southern California Edison Co’s Time-of-use Tiered Domestic (NEM 2.0): TOU-D-A-CPP, the steepest plan in our index by this measure, every single kilowatt-hour a day you move out of the expensive window is worth about $532 a year. Move a car charge and you are into the hundreds.

Is a time-of-use plan mandatory?

Increasingly, in some places, yes — by default. California moved most residential customers onto time-of-use rates as the standard offering, with an opt-out rather than an opt-in. Several other states have followed for customers with smart meters. Elsewhere it remains entirely voluntary, and in 296 of the plans we track there is no hourly pricing at all.

If you do not know which you are on, your bill will say. Look for a line that breaks usage into periods rather than a single kWh total, or for a plan name containing “TOU”, “time of use”, or “time of day”. Then find your utility in our index to see the exact hours and prices from the filed tariff rather than a summary.