Energy · Explainer

Time-of-Use Electricity Rates: How They Work and Who Saves

📅 Sep 8, 2026 🏷️ Explainer · Evergreen 🕐 7 min read

By Luminesca · Updated Sep 8, 2026
Explainer written with AI-assisted drafting. See our editorial policy.

Under a flat electricity rate, a kilowatt-hour costs the same at 3 a.m. and at 7 p.m., even though the grid that produces it is under completely different amounts of stress. Time-of-use (TOU) rates break that fiction: the day is divided into pricing windows, and electricity consumed when the grid is strained costs more - sometimes several times more - than electricity consumed when it is not.

Why flat rates are giving way

Flat rates made sense when the cost of serving customers was roughly constant. Today it is not: wholesale electricity prices swing hour by hour, and the marginal cost of serving the evening peak - when expensive "peaker" plants fire up - is far above the cost of serving a mild afternoon. Most US consumers still pay rates based on seasonal average costs, so they never see this hour-by-hour variation; TOU customers do. The US Energy Information Administration tracks enrollment in time-based rate programs - including time-of-use, real-time and critical-peak pricing - through its Form EIA-861 data collection, and adoption has been climbing as smart meters make hourly billing practical.

The duck curve sets the windows

The reason peak windows fall where they do is visible in the "duck curve". As solar capacity has grown, net demand (demand minus solar generation) sags in the middle of the day and then ramps steeply in the evening as solar output collapses while people come home and switch everything on. The EIA's analysis of California's grid shows the midday dip deepening as solar builds, forcing conventional plants to ramp hard every evening. Batteries flatten the duck - California's battery fleet grew from 0.2 GW in 2018 to 4.9 GW by April 2023, storing midday solar for the evening ramp - but for now the evening peak remains the expensive window, and TOU windows are drawn around it.

How the windows actually work

A typical TOU plan has three blocks: a peak window (often late afternoon to early or mid evening on weekdays), an off-peak window (overnight and sometimes weekends), and sometimes a mid-peak shoulder between them. The exact hours, seasons and prices vary by utility, which is why the only reliable answer to "when is electricity cheapest for me" is your own utility's published tariff. It is also worth checking whether you are even on a TOU plan: in many territories the default residential rate is still flat, and TOU is opt-in - whether it saves you money depends on how much of your usage you can actually move.

Practical ways to shift load

The biggest flexible load in most homes is an EV: a car that plugs in at 6 p.m. but does not leave until 8 a.m. can charge entirely inside the cheapest window with scheduled charging - no sacrifice, just a different clock time for the same miles. Laundry, dishwashing and pool pumps move almost as easily. Thermostat pre-conditioning shifts cooling or heating into cheaper hours so the house coasts through the peak. And a home battery closes the loop: charge it overnight or from midday solar, discharge it through the evening peak. The pattern that wins under TOU is simple - run things when the grid is calm, and treat the peak window as the hours your bill punishes.

Frequently asked questions

What are time-of-use electricity rates?

They are rate structures that charge different prices for electricity depending on when it is used - typically a higher price during peak demand hours (often late afternoon and evening), a lower price overnight and on weekends, and sometimes a mid-priced shoulder period in between.

Will TOU automatically save me money?

No - it depends on your usage pattern. Households that can shift flexible loads (EV charging, laundry, dishwasher) into off-peak hours often come out ahead. Households that run heavy loads through the peak window can pay more on TOU than on a flat rate.

What are typical peak hours?

Many US utilities draw the weekday peak somewhere between late afternoon and 9 or 10 p.m., but the exact window varies by utility, season and region. Your utility's published tariff - on its website or your bill - is the only authoritative source.

What is the duck curve?

It is the shape of net electricity demand in high-solar grids: a midday dip as solar floods the grid, then a steep evening ramp as solar fades and demand rises. The pattern, first prominent in California, is what makes the evening peak expensive and gives TOU windows their shape.

How do I find out if I am on a TOU plan?

Check your bill or your utility account for the rate plan name, or search your utility's tariff schedule for "time-of-use". If your per-kWh price is the same around the clock, you are on a flat rate - and moving your dishwasher to 10 p.m. will not change your bill.