The Science Behind Time-of-Use Electricity Rates

I used to think time-of-use rates were a scam. The monopoly raises prices during the day when you need AC the most. They say it is about grid reliability. I thought it was about profit. It is both. The Time-of-Use Rate Comparator can help you decide if TOU is right for you.

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Time-of-Use Rate Comparator

Enter your hourly usage pattern — see whether a TOU plan saves or costs you money.

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This is the science. Electricity is hard to store. The grid must match supply and demand second by second. During peak hours, demand spikes. The monopoly has to turn on expensive power plants. Peaker plants run on natural gas. They are inefficient. They cost more. The monopoly passes those costs to you. The Electric Bill Estimator can show you how peak demand affects your bill.

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Electric Bill Estimator

Enter your zip code, home size, and usage — see estimated monthly and seasonal costs.

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In Texas, peak hours are usually 2 PM to 7 PM in summer. That is when everyone is home, AC is blasting, and the grid is stressed. In 2026, ERCOT set a new record peak demand of 85 GW. The grid nearly failed. The monopoly issued conservation appeals. They asked people to raise thermostats. They asked factories to shut down. They paid battery owners to discharge. The Smart Thermostat Savings Estimator can help you reduce your peak demand.

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Smart Thermostat Savings Estimator

Enter your thermostat settings and home size — see estimated savings from programmed setbacks.

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Time-of-use rates are designed to shift demand away from peak. If you run your dishwasher at 9 PM instead of 6 PM, you help the grid. The monopoly rewards you with a lower rate. If you run it at 6 PM, you pay a penalty. That equals the theory. It works. The math on my TOU plan. Peak is 30¢. Off-peak is 10¢. The spread is 20¢. A typical dishwasher uses 1.8 kWh per load. Running it at 6 PM costs 54¢. Running it at 9 PM costs 18¢. That comes to a 36¢ saving per load. Over a year, 300 loads, $108. Not nothing. The Home Energy Score Calculator can help you see if your home is TOU-ready. But not everyone can shift. My neighbor works from home. His AC runs during peak. His EV charges during peak. His family cooks dinner during peak. He cannot shift. TOU would cost him more. He opted out. The monopoly knows this. They offer TOU as an option, not a mandate. In some states, TOU is the default. In Texas, you can choose. Look at the controversial part. Some studies show that TOU does not reduce peak demand as much as promised. People shift their dishwasher and laundry, but they do not shift their AC. AC is the biggest load. AC is the hardest to shift. Pre-cooling helps, but only so much. I ran an experiment last August. I pre-cooled my house to 70°F at 1 PM. Then I let it drift to 80°F from 2 PM to 7 PM. My AC did not run during peak. I saved $2 a day. But my house was 80°F. My fiancée complained. I bought her a fan. She still complained. I bought her ice cream. She stopped. The Appliance Cost Calculator can help you find which loads are easy to shift. The real solution is batteries. A battery lets you shift any load, including AC. You charge the battery at 10¢ off-peak. You discharge it at 30¢ peak. You save 20¢ per kWh. No behavior change. No pre-cooling. No fighting with your fiancée. I calculated a battery for TOU. A 10 kWh battery costs $8,000. It will save you $2 a day in peak shaving. That works out to $730 a year. Payback 11 years. Not great. But if you have solar, the math improves. Under net billing, the battery stores your excess solar and uses it at night. That saves you another $500 a year. Payback drops to 6.5 years. The Solar ROI Calculator can help you model battery savings. In 2026, battery prices are dropping. Tesla Powerwall 3 costs $9,000 installed. Local installers offer cheaper options. A 10 kWh LiFePO4 battery from a Chinese manufacturer costs $5,000. The warranty is shorter. The risk is higher. I am waiting for prices to fall further. The monopoly is watching. They are not stupid. They know that TOU and batteries go together. Some utilities are offering incentives for batteries. Austin Energy gives $500 per kW. For a 5 kW battery, that is $2,500 off. That changes the math. My friend Mark installed a battery after his $847 bill shock. He paid $5,500 after rebate. He shaves his peak AC load. He saves $2 a day. Payback 7.5 years. He also charges his EV at night. He saves another $1 a day. Total payback 5 years. He is happy. Check out your action plan for TOU. To startcheck your utility’s TOU hours. They vary by season. Summer peak is different from winter peak. Next updownload your hourly usage data. Most utilities have a portal. Look for “green button data.” Open it in Excel. See how much you use during peak. Thenrun the Time-of-Use Rate Comparator. Enter your peak and off-peak usage. See if you save. Alsoif you save, switch. If not, shift what you can. Start with dishwasher, laundry, pool pump, EV. These are easy. Finallyconsider a battery if your utility has incentives. The payback might be shorter than you think. The monopoly wants you to stay on flat rates. They want you to pay for expensive peak power without knowing it. They want you to ignore TOU. Do not let them. Watt and Volt do not care about TOU. They care about the warm spot on the floor where the sun hits. I have been on TOU for 14 months. I have saved $720. That means a new battery. Almost.

The Science Behind Time-of-Use Electricity Rates

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