Electricity companies in states across the country have begun offering time-variable or demand response pricing most often through a “Time-of-Use” rate plan. These plans encourage consumers to use electricity during off-peak hours when there is less demand on the power grid. For some individuals, this means that you can save big just by adjusting when you use energy-consuming appliances like your dishwasher and dryer.
To get the most out of a Time-of-Use rate plan, you need to know when the peak hours are and avoid using as much electricity as possible during those times. Peak hours differ by region, so it is imperative that you review your electricity bill and compare plans in your area. To get you started, we’ve compiled some important information about how to keep your utility costs low this winter and all year long.
What Is a Time-of-Use Rate Plan?
Traditionally, energy companies charged a flat rate based on the number of kilowatts per hour (kWh) that a consumer used. In an effort to reduce energy consumption during periods of high use, when the cost of generating electricity is at its highest, these companies introduced new plans that charged varying amounts depending on the time of day that energy was being used.
Known as Time-of-Use (TOU) rate plans, a consumer is charged a lower price per kWh during off-peak hours when the demand for energy is lower. They are charged a higher rate per kWh during peak hours when the demand and cost to generate electricity are highest.
What Are Peak Hours?
Peak hours are when people are using electricity the most. For instance, in California through Southern California Edison, peak hours when electricity costs the most on a time-of-use rate plan are from 4 p.m. to 9 p.m. Monday through Friday. Off-peak hours or when the price of electricity is at its lowest are before 4 p.m. and after 9 p.m. Monday through Friday and all hours on weekends and most holidays.
Other parts of the country have different peak and off-peak hours. The hours correlate with when people in the region use the most energy. Rate prices during the summer (June through September) tend to be more expensive than the rest of the year because people usually use more electricity over the hotter months.
How Can I Save on My Utility Bill?
Just remember when the demand for electricity is high, the price goes up. When demand is lower, the price goes down. It goes without saying that running large appliances on off-peak hours is ideal for saving big on your electricity bill. This means if you can wait to do all of your laundry until the weekend during off-peak hours, that will help. Getting the most out of a Time-of-Use rate plan is all about planning ahead. Knowing when peak hours in your area are and making sure not to use appliances that consume a large amount of electricity is key.
If you are able, consider also upgrading to energy-efficient appliances. These may help you cut down on costs even if you end up using them during peak hours. Another good option is to unplug appliances that are not in use. It may surprise you how much electricity is being wasted simply because your computer and microwave are always plugged in.
Which Appliances Use the Most Electricity?
Half the battle is simply knowing which appliances are gobbling up the electricity. While some cost-saving efforts are easy, like switching off lights when you leave a room, others are more challenging. It is important to take stock of how you and your household uses electricity and whether you can make changes that will help reduce your monthly bills.
According to Perch Energy, appliances that consume the most energy include:
- HVAC system (heater and air-conditioning units)
- Electric water heater
- Washer and dryer
- Electric oven
- TV and cable box
Today, smart appliances can be programmed to use less energy during peak hours. Consumers are also encouraged to look into alternative energy sources such as solar, wind and hydropower to help reduce non-clean energy consumption.
More From GOBankingRates
- 10 Places To Retire That Are Just Like Arizona but Way Cheaper
- If You Find a Rare 'Doubled Die' Penny, It Could Be Worth $1.14 Million
- 3 Ways to Recession Proof Your Retirement
- 5 Mistakes Even High Earners Make