Why utilities price by the hour
Electricity cannot be stored cheaply at grid scale, so the grid has to generate exactly what people are using at every moment. Demand is not flat. It surges in the late afternoon when people come home, turn on the air conditioning, cook dinner and switch on lights, just as solar output fades. To meet that peak the grid fires up its most expensive and least efficient plants and pushes its wires to their limits.
Flat-rate pricing hides all of that. Everyone pays the average, so nobody has a reason to run the dryer at 10 pm instead of 6 pm. Time-of-use (TOU) pricing exposes the real cost by charging more during the expensive hours and less during the cheap ones, and lets households that can shift their usage capture the difference.
California moved most residential customers to TOU by default from 2020, and utilities in Arizona, Colorado, Michigan, Massachusetts, Maryland and many other states now offer or default to it. If your bill shows separate peak and off-peak kWh, you are on one.
What a plan looks like
A typical three-period summer weekday plan:
| Period | Hours (weekdays) | Price per kWh | What is happening on the grid |
|---|---|---|---|
| Off-peak | 9 pm – 3 pm next day, plus weekends and holidays | 12¢ | Low demand overnight; abundant solar and wind midday |
| Mid-peak (shoulder) | 3 pm – 4 pm | 25¢ | Demand rising, solar falling |
| On-peak | 4 pm – 9 pm | 40¢ | Maximum demand, most expensive generation running |
Prices vary enormously between utilities; California peaks can exceed 50¢ per kWh while a Midwestern cooperative's peak might be 20¢. Winter schedules are often different, with a second morning peak. The one constant is that the peak window is short, usually four to five hours on weekdays, and everything else is off-peak.
The math of shifting
Because the peak window is short, most of what you use is already off-peak, and the decision is about a handful of large, movable loads. Here is what moving them is worth on the plan above, compared with running them at peak.
| Load | kWh | At peak (40¢) | Off-peak (12¢) | Saving per run |
|---|---|---|---|---|
| EV charge, 40 miles of range | 13 | $5.20 | $1.56 | $3.64 |
| Electric dryer, one load | 3 | $1.20 | 36¢ | 84¢ |
| Dishwasher, one cycle | 1.3 | 52¢ | 16¢ | 36¢ |
| Electric water heater, daily reheat | 13 | $5.20 | $1.56 | $3.64 |
| Pool pump, 4 hours | 6 | $2.40 | 72¢ | $1.68 |
| Central AC, one hour | 3.5 | $1.40 | 42¢ | 98¢ |
An EV owner who charges every night instead of on arrival home saves about $109 a month on this plan. A family that moves laundry and the dishwasher to after 9 pm saves $24.08 or so. Those two changes alone are why TOU plans are usually a clear win for EV households and a wash for everyone else.
What is hard to shift
Air conditioning is the problem load. Peak hours exist precisely because everyone's AC is running then. The workable strategy is pre-cooling: set the thermostat to 72 to 74°F from 1 pm to 4 pm while power is cheap, then let it rise to 78 to 80°F through the peak. A well-insulated house coasts most of the way. A leaky one does not, and for that household a TOU plan may cost more.
Cooking happens at peak by definition. An oven at 2,400 W for an hour is 2.4 kWh, roughly 96¢ at the peak price above versus 43¢ on a flat rate. That is real but small; nobody should eat dinner at 10 pm to save 50 cents. Slow cookers and pressure cookers that finish before 4 pm are the painless version.
Space heating in winter has a similar problem when the morning peak coincides with waking up. Heat pump owners can pre-heat before the peak; resistance heat users mostly cannot avoid it.
Deciding whether to switch
- Get your hourly data. Download a year of interval usage from your utility's website (look for "Green Button" or "download my data"). Sum the kWh in each TOU period.
- Price it both ways. Multiply each period's kWh by the TOU price and compare the total with the flat-rate total. Most utilities have a rate comparison tool that does this automatically.
- Estimate what you could shift. Be honest. A dryer at 10 pm is easy. Not running the AC from 4 to 9 pm in August is not.
- Check the exit terms. Some plans require 12 months before switching back; others let you return at any time or offer a first-year bill guarantee.
- Automate it. Timers on the water heater and pool pump, a charging schedule in the car, delay-start on the dishwasher and washer. Savings that depend on remembering do not last.
To see what any specific appliance costs at your peak or off-peak rate, type that rate into the electricity cost calculator; the EV charging calculator is set up for exactly this comparison. And if you are not sure which period a line on your bill refers to, the bill-reading guide walks through it.