Time-of-use rates explained: paying the clock instead of the meter

The idea in one sentence

Under a time-of-use (TOU) rate, the price per kWh changes by the clock: expensive during the hours the grid strains (typically late afternoon through evening), cheap overnight and midday. The meter keeps counting exactly as before; the tariff multiplies each hour's kWh by that hour's price.

TOU exists because electricity is instantly expensive to store at scale. The marginal cost of serving the 6 p.m. air-conditioning wave — peak plants, stressed lines — is far above the cost of serving 3 a.m. dishwashers. TOU passes some of that difference to the customer.

Anatomy of a TOU tariff

Designs differ by utility, but the vocabulary is shared:

• Peak: the expensive block — most commonly 4–9 p.m. in the versions rolling out now, weekends usually exempt.
• Off-peak: the cheap block — overnight and, in many plans, midday hours when solar floods the grid.
• Shoulder: the middle price between the two.
• Critical peak / events: a handful of declared days per year at much higher prices, optional in most programs.

Peak-to-off-peak spreads commonly run from about 1.5× to 3× — a far wider gap than the flat rate it replaces.

Who wins and who loses on TOU

• Natural winners: households whose load already skews off-peak — EV owners who charge overnight, homes with pool pumps on timers, remote-solar households that self-consume midday.
• Natural losers: all-evening households — dinner cooked at 6, laundry at 7, HVAC fighting the day's heat at peak price.
• The bigger the shiftable load, the better TOU pays. Water heating, EV charging, dishwashing and drying are the classic movable loads; lighting and refrigeration are not movable.

Utilities usually offer TOU as an opt-in, with a trial period; a few states push it as default for new smart-meter customers. The honest evaluation: take twelve months of usage, look at your hourly shape if your utility's portal shows one, and simulate the two tariffs before switching.

Shifting load without living differently

1. EV charging — schedule it: set the charge window to off-peak in the car or charger app. This is the single largest lever most TOU households have.
2. Water heating — a timer or heat-pump-water-heater schedule can heat before the peak block.
3. Dishwasher and dryer — delay-start buttons exist precisely for this; run them after the peak window closes.
4. Pre-cool or pre-heat — nudging the thermostat an hour or two ahead of peak lets thermal mass ride through the expensive hours.

Then quantify it: your state's average rate is here, and the per-appliance kWh figures on our appliance pages plug straight into the math.

Frequently asked questions

What does time-of-use mean on an electric bill?

The price per kWh varies by time of day: higher during peak hours (often late afternoon to evening), lower overnight and midday. The total bill sums each hour’s usage at that hour’s price.

Is time-of-use cheaper than a flat rate?

It depends on when you use electricity. Off-peak-heavy households (especially overnight EV charging) usually save; all-evening households often pay more. Simulate both tariffs on a year of your usage before switching.

What are typical peak hours for time-of-use rates?

Commonly 4 p.m. to 9 p.m. on weekdays in current US designs, though windows vary by utility — some keep older noon-to-6 p.m. blocks. Your plan’s fact sheet lists the exact hours.

What appliances should I run at night on TOU?

The shiftable, high-kWh loads: EV charging, electric water heating, dishwashing and drying. Lighting and refrigeration draw when they draw — they don’t move.