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Time of use rates represent one of the most powerful yet underutilized strategies for reducing your monthly electricity expenses. While many homeowners focus on energy-efficient upgrades or simply cutting back on usage, understanding when you consume power can have an equally significant impact on your utility costs.
Research shows that by strategically shifting your energy consumption patterns throughout the day, you could save 10-40% on your electricity bills without sacrificing overall usage. This becomes increasingly relevant as more utility companies across the country implement variable pricing structures, especially for households with electric vehicles and home battery systems.
What Are Time-of-Use (TOU) Rates?
Unlike traditional flat-rate electricity plans that charge the same rate 24/7, time of use rates implement a dynamic pricing structure that varies based on the time of day.
These plans typically break down the day into distinct rate periods:
Some utilities also offer a third tier called super off-peak or economy hours—generally in the middle of the night or early morning—when electricity costs reach their lowest point.
For instance, PSEG Long Island provides residential plans with peak rates from 3 PM to 7 PM on weekdays. Off-peak hours run weekdays from 6 AM to 3 PM and 7 PM to 10 PM. Their super off-peak option delivers extra savings from 10 PM to 6 AM daily. Many providers also adjust rates seasonally between summer and winter months to reflect changing demand patterns.
Why utilities implement TOU pricing
Electricity generation costs fluctuate throughout the day based on demand. During summer afternoons when air conditioners run simultaneously, utilities must activate additional power plants to meet peak demand, substantially increasing production expenses.
Traditional flat-rate systems require utilities to absorb these variable costs while charging customers the same rate regardless of usage timing. This approach fails to reflect the true cost of delivering electricity during high-demand periods. Time of use rates were developed to better align consumer prices with actual generation costs.
Understanding bill impacts
Whether time of use rates benefit or hurt your bottom line largely depends on your flexibility to shift electricity usage patterns. Some customers see immediate savings without lifestyle changes, while others may face higher bills unless they adjust their consumption timing.
Making small adjustments to your electricity usage habits can lead to substantial cost reductions. Families who already use most of their power during off-peak periods, particularly overnight, often see immediate benefits from time of use rates. However, households that heavily consume electricity between 4 PM and 9 PM may experience increased bills unless they modify their usage patterns.
Smart Ways to Save Money with TOU Plans
To maximize savings with time of use rates, it's essential to plan your electricity consumption strategically. Simple changes to your daily routines can significantly reduce your monthly expenses while maintaining your comfort level.
Interested in making the most of your utility's rate plans? Meltek can help you take full advantage. Our Time-of-Day (TOD) feature is launching soon—let us help you maximize your savings!
✅ We manage your smart devices (like EVs, EV chargers and home batteries)
✅ We automate charging and usage during low-cost hours
✅ You earn rewards for every kilowatt-hour saved—all year round
✅ You pay nothing to get started
Want to dramatically cut your electricity delivery and supply costs? Check here for more information.
