Off-Peak Hours: Everything You Need to Know About the Cheapest Time to Use Electricity

Electricity is one of the most expensive utilities in your home. That’s why utility companies like PG&E who provide services to residential customers, are implementing innovative rate structures like time-of-use (TOU) plans to encourage customers to consume energy during times when the cost of energy is less expensive.

In a standard electricity plan, you pay the same rate per kilowatt-hour of energy regardless of the time of day. Time-of-use (TOU) plans are different. In a TOU rate plan, the cost of electricity depends on when it’s drawn from the grid. 

What Are Off-Peak Electricity Hours?

Under time-of-use (TOU) rate plans, utility customers are charged more for electricity used during afternoon “peak” hours when the demand is highest. The lowest electricity rates are typically offered during “off-peak” hours when demand is at its lowest.

If you have time-of-use rates, your electric bill will be lower if you use more energy during the hours when electricity is cheaper. For example, you can set your clothes dryer to run or your dishwasher to start at these times so that electricity rates are cheaper. Utilities offer TOU plans to reduce demand on the electric grid, which motivates customers to use less energy during peak hours.

Many utility companies let residential customers opt into TOU rates, but this isn’t always the case. California is the first state that requires homeowners who install a solar panel system to switch to a time-of-use rate plan under Net Metering program. Time-of-use electricity pricing can also be an appealing option for commercial buildings, especially if tenants have flexibility in when they use the most power.

Need more energy saving strategies for your home? We’ve got 15 energy-saving tips to help you maximize your utility bill savings.

Questions to Ask Before Signing Up for Time-of-Use Electricity Rates

There are cases where TOU rate plans can cost you more in the long term, but they also offer opportunities to save money. Before you opt into a time-of-use plan, here are some questions to ask yourself beforehand:

What Are the Peak Hours for Electricity and How Much Extra Will I Be Charged?

The most expensive time of day to use electricity will always be during peak hours. The exact hours and the premium price you pay for electricity will vary depending on which utility company provides service to your area and the rate you’re opting into.

The time of day when electricity is cheapest depends on where you live and when your utility company’s off-peak periods are. Before adjusting your habits to save on electricity based on TOU, check with your provider about their specific off- and on-peak hours and which holidays are considered off-peak.

For example, California’s PG&E peak hours are the same year-round:

Weekday Hours

• PG&E’s Weekday Peak Hours: 4 p.m. to 9 p.m.
• PG&E’s Weekday Off-Peak Hours: 12 a.m. to 4 p.m. and 9 p.m. to 11:59 p.m.

 

Weekend Hours

• PG&E’s Weekend Off-Peak Hours: 12 a.m. to 11:59 p.m.

Many utility companies offer multiple types of time-of-use policies. These TOU rate plans may classify different hours as peak or might include some “partial-peak” hours, which charge less than peak rates but more than off-peak ones.

Most rate plans will vary not only on the hours you’re using electricity, but also by what season it is. Because of energy-intensive air conditioning systems, summer rates are often higher than winter rates. Your rate plan could also have lower peak rates, or fewer peak hours, available on the weekends.

Peak electricity use times tend to be when you expect them because they’re hours when most people use electricity to power their home. Generally, peak hours start in the afternoon and roll over into the evening when people get home from work and use more lights and appliances.

Every utility company has different plans, so be sure to check the specifics and consider how peak hours for electricity might impact your rate plan. If you currently use most appliances in your home during off-peak hours, switching to a time-of-use electricity plan could potentially save you money.

When Can I Get Cheap Electricity with TOU Rates?

Electricity is often less expensive late at night or early in the morning, so you can save money on your electric bill if you use your home appliances during those times. Energy usage is low during these off-peak periods because many people aren’t using electricity.

Should I Change My Habits to Use Electricity During Off-Peak Hours?

Even if you currently don’t use much electricity during off-peak hours, there may be a few things you can do to reduce your electricity usage during peak hours. This might be difficult for homeowners who work regular 9-5 hours and return in the evening when electricity rates are here, but there are still steps you can take to save money with time-of-use rates and scheduling energy usage outside peak times.

For example, many appliances like dishwashers, washing machines and dryers have scheduling capabilities and can be set to run ahead of time. You should consider charging your electric car at night during off-peak hours.

You can also wake up earlier to do household chores that require a lot of electricity, wait until it’s late at night to charge appliances, and overall be more conscious about when you use electricity. All of these actions can help you use less energy during peak hours, cut back on energy use and save money.

Are There Other Ways Switching to TOU Rates Will Impact Your Bill?

When considering a time-of-use plan, it’s important to compare the current rate you pay for electricity, including both supply and delivery costs, to what these costs would be under a time-of-use plan. Is off-peak pricing a lower rate than your current rate plan? If the rates are comparable, you may not save much money by switching to a time-of-use plan, even if you make changes to your energy consumption behaviors.

Other Steps You Can Take to Get the Cheapest Electricity with TOU Billing

While it may be possible to alter your habits so that you consume more electricity during off-peak hours, it’s unlikely that even the most conscientious energy user will never use any power at all during peak periods. In addition to developing an energy schedule, there are other measures you can take to ensure that your bills are as low as possible under a time-of-use plan:

Consider Installing a Home Battery

Many homeowners are interested in installing an energy storage system not only to make sure they have backup power during a grid outage, but also to offset time-of-use electricity rates during peak hours.

By charging your solar home battery during off-peak hours, when electricity rates are cheapest, and then discharging it so that you can use the stored energy during peak hours (when rates are highest), you can save money on utility bills. In addition to enjoying a lower TOU rate, you can also receive incentives and rebates that will help make investing in energy storage for your home more affordable.

Think About Going Solar

Solar panels can save you thousands of dollars in energy bill savings over the course of 30 years because you can generate your own power from your panels instead of purchasing it from your utility. If your current electricity bill is based on time-of-use rates, the credits you get for sending excess solar electricity back to the grid will depend on the time of day.

If your solar panels produce more electricity during peak hours, you’ll receive credits for the extra energy at its peak-hour rate to use at a later time. However, you’ll be credited at the lower rate for electricity that you send back during off-peak hours.

In the Northern Hemisphere, solar panels on western-facing roofs will generate the most electricity during peak hours. Panels installed on south-facing roofs are likely to produce more power overall. Because of this, it’s best to discuss the best orientation and angle for solar panels on your rooftop with your solar installer to maximize your utility bill savings under your time-of-use plan.

Conclusion

Whether or not you choose to sign up for a time-of-use plan, going solar will help lower your electricity bills. If you’re ready to save money and power your home with clean, reliable energy, contact us today for a free customized solar quote.