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What is a Time Of Use Electricity Plan?

Posted on by Everything Energy
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Traditional electricity plan have a fixed rate for electricity that applies to all your cumulative electricity use. You pay the same rate for your electricity regardless of the time of day or the season you are in. However, time of use electricity plans (TOU) have a variable rate that might be higher during peak hours of day, and lower during times of lower usage. Some providers in Texas, offer times of day when you pay nothing for electricity – Reliant Energy offers a ‘Free Nights’ and a ‘Free Weekends’ plan.

Time of Use plans are designed to reduced demand on the electricity grid during peak hours. Residential electricity use rises in the morning as people wake up, and wanes as they go to work, rising again in the early evening as people come home and turn on lights, cook dinner, run dishwashers. There are also seasonal shifts – electricity use is much higher on summer afternoons in Texas when all our air conditioners are battling the heat. TOU plans were designed to encourage electricity customers to shift usage to times when there is less demand, with a lower price being their reward for conserving during peak hours. Customers that are able to shift usage can save money on their electricity bill with a TOU plan.

How to save money with a Time of Use Electricity Plan

When reviewing a TOU plan, understand the peak and off-peak hours. Each TOU plan has it’s own distinct usage hours. Peak hours are the most expensive days of the day for billing since everyone uses electricity at that time. Off-peak hours are cheaper because electricity usage is lower. If you can shift usage to the off-peak hours, these plans may be a good fit. For example, if you are never home on the weekends to take advantage of a plan with lower-priced electricity on Saturday and Sunday, you may not be able to take advantage of the benefits. If you have an electric vehicle, charging at off-peak night hours can save you a lot money. Use this information while shopping for your electricity plan and find the right plan to suit your family’s lifestyle.

Navigate lifestyle changes to fit into off-peak hours. Once you understand the off-peak hours and rated of a potential electricity plan, think about how much you can shift your electricity usage into those hours. Can you do all your laundry on the weekend, to take advantage of Free Weekends? Instead of running the dishwasher right after dinner, can you wait until you go to bed, and take advantage of Free Nights? If you have a swimming pool, can you run the pool pump and cleaners during lower-cost hours?

Understand the billing plan from your electricity provider; While you may be trying to shift your usage to low-cost hours, you’ll still pay for the electricity you use during peak hours. Be sure to understand what you are being charged during peak hours. It’s important to read the energy facts label when shopping for your plan, which will help you understand what the peak hours cost and keep you from getting surprised.

How do I pick the right electricity plan?

Time of Use plans can definitely save you money if your usage fits the right curve, or if you are able to shift your usage to those lower-price hours. These plans also help keep the electric grid stable by reducing demand that stresses the grid during peak hours. Piqued your interest? Check out the Time of Use plans from our reliable providers.