As homeowners in Northern California are dealing with rising PG&E utility rates, understanding Time-of-Use (TOU) plans is more important than ever. Unlike traditional flat-rate plans, TOU rates vary based on when electricity is used—dividing the day into peak, off-peak, and sometimes super off-peak hours. This structure can significantly impact your monthly electric bills, with big potential savings if you shift your energy use to cheaper, off-peak electricity hours. Let’s discuss what this means for you, your energy usage and how it impacts your electric bill.

What are Peak vs. Off-Peak Electricity Hours?

In California, your electricity bill reflects charges per kilowatt-hour (kWh), directly tied to your actual energy consumption from the grid. Under Time-of-Use (TOU) rate plans, utilities charge higher rates during “peak” hours—typically afternoon periods when electricity demand soars, often referred to as peak demand times. Conversely, “off-peak” hours, or when demand drops, is a chance to save on your utility bill. These off-peak periods often occur in the evening, but exact times depend on your PG&E time-of-use rate plan.

TOU rates also play a role in managing energy consumption more efficiently. In California, adopting a TOU rate plan is mandatory for all new solar panel installations under the net metering 2.0 program, highlighting the state’s proactive approach to energy management. This pricing model is also increasingly common for commercial buildings, offering businesses the flexibility to optimize their energy use and reduce costs.

What to Know Before You Sign Up for Time-of-Use Electricity Prices

Before you decide to switch to a TOU electricity rate plan, it’s important to know how they could impact your energy costs in the long run. While TOU plans offer significant potential for savings, they may not always be the most cost-effective choice for every household.

Here’s questions to ask yourself to make an informed decision:

What electricity rate plans does your utility company offer?

Your utility provider may offer a variety of rate plans, including:

• Time-of-Use Rate Plans: Prices vary depending on the time of day and season, with different rates for peak and off-peak hours.
• Tiered Rate Plans: Under these plans, using large amounts of energy can bump you into a higher price bracket based on a predetermined baseline. These rates sometimes also work with TOU plans.
• Solar Rate Plans: Tailored for homes with solar installations, these plans often incorporate net metering, allowing you to earn credits for excess energy produced that isn’t used.
• Other Utility-Specific Special Rates: Some utilities have special programs for EV owners who charge their electric vehicles during off-peak hours or for reducing energy usage on designated days throughout the year. Check with your utility company for availability, but these are usually included into existing TOU rate plans.

If you have solar panels, an EV charger, or a home battery system, these factors will play a crucial role in deciding which plan suits your needs. Visit PG&E’s website or contact their customer service for detailed information on available TOU plans and any special programs.

What are the electricity peak hours?

Known as “peak hours,” there are specific times when electricity costs more due to high demand. The duration and cost of these peak hours can vary widely based on your utility company and the specific rate plan you subscribe to.

Typically, peak hours occur during parts of the day when energy demand is at its highest. For instance, in California, peak times are from 4 to 9 p.m. since that’s when many residential customers get home from work and school and there’s usually an increased use of the air conditioner, household appliances, etc.

Conversely, off-peak hours are when electricity is generally cheaper, often during the night and early morning, regardless of the season or region. This is when the demand for electricity drops significantly, making it the ideal time to run appliances if you’re looking for energy-saving tips.

Each state and utility may have its own defined peak, off-peak, and sometimes “partial-peak” hours, which offer a rate between the peak and off-peak prices. These times can differ not just by the time of day but also by the season, with summer rates often being higher than winter rates due to the demand for cooling systems. 

Before adjusting your home energy usage habits according to TOU rates, it’s essential to consult with your energy provider about their specific peak and off-peak schedules, including any exceptions for holidays.

Can I change my habits to use electricity during off-peak hours?

In California, adjusting your daily electricity usage to off-peak hours can lead to substantial savings on your energy bills, even if your current habits align more with higher-rate periods. Many homeowners face the challenge of being away during the day and only being able to use electricity during the evening, when rates are typically higher. However, with some strategic adjustments and modern appliance features, you can still benefit from Time-of-Use (TOU) rate plans.

For example, most modern appliances, such as dishwashers, washing machines, and dryers, come equipped with delay timers that allow you to schedule operations during late-night hours and take advantage of lower electricity rates. If you have an electric vehicle, think about charging it overnight during off-peak hours to maximize cost-efficiency.

Additionally, setting your air conditioning to maintain a temperature of 78 degrees or higher during peak hours can significantly reduce your cooling costs. You might also consider shifting energy-intensive chores to early mornings or late evenings. Simple changes, like using more energy-efficient light bulbs and turning the TV off when you leave the room, can also make a difference.

Are there other ways that switching to TOU rates will impact your bill?

It’s a good idea to compare your current electricity rate against the potential savings offered by time-of-use plans. This involves examining both the supply and delivery charges on your existing plan versus the off-peak and peak pricing under a TOU plan.

Is the off-peak rate under a TOU plan substantially lower than what you’re currently paying? If the difference in rates is minimal, the financial benefits of switching to a TOU plan might be limited, even if you adjust your electricity usage habits. So before making a change, analyze the specific rates outlined in the TOU plan compared to your existing rates to see if the potential savings justify the switch.

Maximizing Savings with Time-of-Use (TOU) Billing

Adapting your electricity usage to off-peak hours under a Time-of-Use (TOU) plan is a smart move, but it’s often not enough to completely avoid using electricity during higher-cost periods. Here’s additional strategies to ensure your energy bills are as low as possible, even when you can’t shift all your usage to off-peak times:

Consider Installing Home Battery Storage

Installing a battery storage system offers dual benefits. It allows you to store energy during off-peak hours when electricity is cheaper and then use it during peak hours to avoid higher rates. This strategy is increasingly popular as it also provides a reliable backup during power outages. Additionally, many utility companies offer incentives and rebates that make investing in a home battery system more financially viable.

Explore Solar Energy Solutions

Investing in solar panels is an excellent way to reduce dependency on your utility provider, especially if you are on a TOU rate plan. Solar panels not only decrease your overall energy costs by generating your own electricity, but they also provide the opportunity to earn credits through net metering. Energy produced during peak hours may earn you higher credits, optimizing your savings.

When configuring your solar system, consider the placement of panels. In the Northern Hemisphere, while south-facing roofs typically capture the most sunlight, panels on western-facing roofs can produce a significant amount of energy during the lucrative peak hours. Consulting with a professional solar installer like Solar Technologies can help maximize your system’s output to align with your TOU plan’s peak pricing, enhancing your return on investment.

Start Saving With Solar + Battery Storage Today

Whether you’re on a time-of-use (TOU) plan or not, powering your home with solar + battery storage is a wise choice for California homeowners. Not only will it help you save money on electricity with renewable energy instead of fossil fuels like natural gas, you’ll enjoy peace of mind protection against blackouts, outages, and more.

If you’re ready to change the way you power your home and start saving more with solar and battery backup, contact us today for a free customized quote.