No two families use energy in the same way. That’s why choosing the best plan for your household’s needs is important.
Why Time-of-Use Rates?
If you’re one of the thousands of homeowners who received notice that your electricity provider is moving you to a time-of-use rate, you must understand the impact this change will have on your energy bill.
A time-of-use (TOU) rate schedule adjusts rates by season and day of the week, aligning pricing with grid demands. Providers like Corpus Christi electric company TOU typically offer peak and off-peak hours, like a summer weekday afternoon peak window.
If you take advantage of peak and off-peak hours, you can lower your energy costs by shifting when you run appliances such as air conditioning and laundry, charge EVs, and use other devices. It’s a simple, cost-effective strategy that could significantly reduce your electricity bills. It’s also a good choice for anyone who wants to support clean energy and limit their carbon footprint. Some plans also offer a premium rate for customers who consume electricity from renewable sources such as wind and solar. This plan option is becoming increasingly available to residential customers.
Peak Hours
When electricity demands are highest or peak hours, utilities charge more per kilowatt-hour. This makes sense, as it costs more to generate electricity when the grid is strained with lots of energy users all plugged in and running appliances.
For homeowners on a time-of-use rate plan, the key to savings is limiting use during peak hours. This can be done by shifting activities like washing laundry and charging an EV to off-peak periods. During off-peak hours, electricity rates are much lower than during peak times.
Peak hour periods vary depending on the energy company and region. Generally, they occur from 4 to 9 pm on weekdays, with some exceptions on holidays.
This rate plan features a different set of peak and off-peak hours than the E-TOU-A rate plan but still offers customers a way to save money. On this plan, peak hours are from 4 pm-7 pm on weekdays, with off-peak periods being before and after that time as well as all weekend days and holidays.
Off-Peak Hours
Electricity prices are much lower during off-peak hours, typically at night and in the day when most households aren’t using as many appliances or electronic devices. Shifting energy consumption to these times when rates are lower can significantly impact your bill.
On-peak electricity rates are usually much higher than off-peak rates and change based on season. For example, FPL’s TOU rate plan E-TOU-D has peak electricity rates between 5 pm and 8 pm Monday through Friday from June to September, with on-peak rates also applying to Saturdays and Sundays and off-peak rates during all other hours, including holidays.
Power companies charge higher electricity rates during peak demand periods to offset the costs of meeting the increased demands on the electricity grid. This is because it requires more energy to produce the same amount of electricity at high-demand times than at low-demand times when electricity production costs are lowest. This incentivizes consumers to decrease their usage during peak hours and shift their energy consumption to off-peak times to help reduce the demand on the grid, reducing the need to generate electricity from less clean sources.
Fixed-Rate Contracts
Traditionally, an electricity bill was easy to calculate: multiply your usage in kilowatt-hours by the rate you pay per kWh. However, calculating your electric bills requires more thought with time-of-use rates.
Your time-of-use energy plan includes peak and off-peak hours, with the on-peak period usually lasting from 4:00–9:00 pm daily. During these periods, the electricity demand is higher, and prices are higher as well. The goal is to save on your energy bills by shifting your usage to off-peak hours, like at night or early morning, when electricity demand and prices are lower.
With SVCE and PG&E’s time-of-use plans, customers will typically choose either a fixed-rate contract or an indexed plan linked to a market indicator (like the wholesale price of power). If your current plan does not match your home’s energy usage pattern and you are not on a fixed-rate contract, you will be automatically transitioned into a TOU plan once it expires. Then, you will have to closely examine your usage patterns and determine whether a TOU plan is the best option for you.
Month-to-Month Contracts
Across the nation, utility companies are increasingly offering time-of-use electricity rates that can help families save by shifting their energy consumption to less costly times. These rate structures, including demand charges and real-time pricing, incentivize consumption during off hours and discourage usage during peak hours to align the cost of generating energy with consumer demand.
However, the specifics of these innovative electricity rate structures can confuse many homeowners. Using a tool to evaluate electricity providers can help make the process more transparent and empower families to make smart decisions.
Depending on your household’s needs, it may be more beneficial to sign up for a long-term contract that offers a stable supply rate throughout the contract. This provides more stability in energy costs and allows you to take advantage of low market rates during high demand. However, short-term contracts can offer more flexibility to track market trends and shop for the lowest rates if desired. Whichever electricity plan you choose, it’s important to compare electricity rates in your area and make a well-informed decision based on local and regional energy prices.
