Maximize your savings by learning how peak and off-peak electricity hours affect your energy bill
Knowing the difference between peak and off-peak hours can significantly impact your energy bills when managing your home’s electricity usage. Energy providers structure pricing around these time periods, so identifying when rates are higher or lower allows you to optimize your electricity consumption and reduce costs. Peak hours are times of day when electricity demand is at its highest, while off-peak hours are periods of lower demand. Understanding this distinction helps households save money and reduces strain on the power grid, and can even make us a more energy-efficient society.
Keep reading to make smarter choices that lower electricity bills and contribute to a cleaner, more sustainable future.
In this article:
- The difference between peak and off-peak hours
- Factors influencing peak and off-peak hours
- Time-of-use (TOU) plan examples
- Ways to take advantage of cheap electricity
- Maximizing savings through smart energy use
- Frequently asked questions
The difference between peak and off-peak hours
Peak and off-peak hours are specific times during the day when electricity demand fluctuates. Peak hours occur when electricity usage is at its highest, typically during the morning and evening when people are most active in their homes. As demand spikes, utilities often increase rates to manage grid strain. This is called time-of-use (TOU) pricing, or time-of-use rates.
On the other hand, off-peak hours are periods of lower demand, often during the daytime on weekdays, or overnight. During these times, rates are usually lower, offering consumers a cost-effective opportunity to shift their energy consumption and reduce their electricity bills.
Examples of peak and off-peak hours
On-peak and off-peak hours can vary depending on location and season, but a common pattern exists. For residential electricity users, peak hours can range between mid-morning and early evening — often from around 7 AM to 10 AM and again from 5 PM to 9 PM. Peak pricing can vary significantly by utility and plan, but generally, the afternoon and evening are included. For example, one Pacific Gas & Electric (PG&E) Residential Time-of-Use rate plan has peak pricing every day from 4-9 PM.
On the other hand, off-peak hours usually happen when most people are asleep or businesses have closed for the day. Late-night and early-morning periods, such as from 9 PM to 7 AM, are commonly designated as off-peak times, with lower demand and, consequently, lower rates. The exact hours depend on the provider, the season, and often other factors. In some cases, weekends and holidays are also classified as off-peak times. For example, if you live in an area where utilities offer time-of-use pricing, you might see lower rates during the weekends when commercial energy use is reduced.
Factors influencing peak and off-peak hours
Several factors influence peak and off-peak hours for electricity. These factors can vary widely depending on the region, time of year, and economic environment.
Geographic location
Geographic location significantly impacts the timing of peak and off-peak hours. In warmer regions, like the southern United States, peak hours often occur during the hottest parts of the day when air conditioners run at full capacity. Conversely, in colder regions, peak demand may happen in the early morning and evening hours, as people heat their homes and turn on lights during shorter winter days.
For example, peak hours typically align with the afternoon heat in states like California and Texas. In contrast, in the northeastern U.S. or Canada, peak hours might shift toward the early morning and late afternoon when heating systems are in high demand during colder months.
Seasonal variations
Seasonal changes also play a crucial role in determining peak and off-peak hours. Electricity demand tends to fluctuate depending on the time of year, largely because of temperature variations that drive heating and cooling needs. In the summer, peak hours often occur during the afternoon when air conditioning usage is highest, while in the winter, peak hours may shift to mornings and evenings as people rely more on heating.
So, you should adjust your energy-saving habits seasonally. In the summer, running major appliances like dishwashers or washing machines late at night may help avoid peak-hour rates. Shifting usage to midday or late evening could yield similar savings in the winter. Be sure to know the specific rate details for your energy company and plan before making any changes.
Consumer behavior
Consumer behavior is another critical factor in shaping peak and off-peak hours. Daily routines, work hours, and lifestyle choices drive electricity demand at certain times of the day. Moreover, large-scale events or cultural shifts can influence energy consumption patterns. For example, the increased prevalence of remote work during the COVID-19 pandemic shifted peak hours for many regions as more people stayed home throughout the day, running their air conditioning, computers, and other devices. The collective habits of consumers directly impact when electricity usage spikes and when demand tapers off.
Economic factors
Economic conditions, such as electricity pricing models, government regulations, and overall energy supply, can also affect peak and off-peak hours. In regions with time-of-use pricing, consumers are charged different rates based on the time of day to incentivize shifting energy use to off-peak hours, reducing overall strain on the grid during peak times.
Additionally, during times of economic growth, when businesses are operating at higher capacities, peak demand may extend throughout the workday. In contrast, electricity demand can be lower during economic downturns as businesses reduce their operations. Government incentives for energy efficiency, such as subsidies for renewable energy installations like solar power for a home, can further alter demand patterns by encouraging consumers to adopt alternative energy sources during peak hours. It could also be argued that by charging more during peak times, utilities make more money.
Time-of-use (TOU) plan examples
Many states across the U.S. have implemented time-of-use plans to encourage consumers to shift electricity usage to off-peak hours. These plans offer lower rates during periods of low demand and higher rates when demand is at its peak. The availability of TOU plans varies based on utility providers, but several states have embraced this model to promote more efficient energy use and reduce grid strain. Below are some examples of states where TOU plans are available:
- California: TOU plans are widespread across the state, particularly with PG&E, Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E). These utilities typically have peak hours during the afternoon and early evening, with off-peak rates available during nighttime and early morning hours.
- New York: Con Edison provides TOU plans where super-peak hours are typically between 2 PM and 6 PM on weekdays. Off-peak rates are available overnight and on weekends, encouraging residents to shift their energy usage accordingly.
- Florida: Florida Power & Light (FPL) offers a TOU program that shifts peak demand to the afternoon and early evening, especially in the summer months. Customers can take advantage of off-peak rates.
- Colorado: Xcel Energy offers a TOU plan where peak rates apply from 3 PM to 7 PM on weekdays, and off-peak rates are available overnight and during weekends.
Check with your utility provider to verify if you have a TOU plan option.
Ways to take advantage of cheap electricity
Saving money on electricity isn’t just about choosing the right time to use it — it also involves taking full advantage of available technology and efficient energy practices. By integrating smart appliances, making energy-efficient upgrades, and considering renewable energy options, like solar panels and batteries, you can maximize off-peak electricity hours while reducing your overall consumption. Let’s explore some key strategies to help lower your energy bills.
Smart appliances
Smart appliances, such as smart thermostats, washers, dryers, and dishwashers, are designed to optimize energy use by allowing consumers to schedule when these devices operate. For example, a smart thermostat can automatically adjust heating or cooling based on the time of day and whether anyone is home, helping you reduce electricity usage during peak hours. Plus, in some cities, rebates are available for installing an ENERGY STAR-certified smart thermostat.
Smart washers and dryers often come with settings that allow you to start a cycle during off-peak hours, saving money when electricity is cheaper. Many of these appliances also provide real-time data on energy use, making it easier to see when and how much electricity is being consumed, which helps users make more informed decisions about their energy habits.
Energy efficiency upgrades
Upgrading to energy-efficient equipment is another key way to take advantage of cheaper electricity. LED lighting, high-efficiency HVAC systems, and Energy Star-rated appliances use less energy than older models, allowing you to save on electricity costs overall, regardless of the time you use them. Additionally, insulation improvements like installing energy-efficient windows or better insulation in walls and attics help maintain your indoor temperature, reducing the need for heating or cooling during peak hours.
Energy-efficient upgrades are particularly beneficial when combined with time-of-use rates. For instance, an energy-efficient water heater will use less electricity even during peak periods, reducing your bill. Home energy audits, which utility companies often provide for free, can help identify areas for improvement and potential savings.
Solar batteries and panels
Solar panels and batteries offer a way to generate and store your own energy, reducing your reliance on the electrical grid during peak hours. Solar panels harness energy from the sun and can be combined with solar batteries to store the excess energy they produce during the day. A typical solar panel can produce between 1 and 2 kilowatt-hours (kWh) per day, depending on the location, installation, and conditions.
This energy can be stored in solar batteries and then used during peak hours, reducing your dependence on the grid when electricity is most expensive. In many regions, solar energy systems are eligible for tax credits, incentives, and rebates, making the investment more affordable. And, of course, all solar systems are eligible for the 30% Federal Investment Tax Credit (ITC).
Maximizing savings through smart energy use
To maximize savings on your electric bill, it’s important to understand peak and off-peak hours and take proactive steps to adjust your usage patterns. Whether through smart appliances, energy-efficient upgrades, or renewable energy options like solar panels, there are many ways to make your energy consumption more cost-effective. Making the most of time-of-use rates alongside these strategies empowers you to save both money and energy, all while reducing your carbon footprint.
Frequently asked questions
What is the cheapest time of day to use electricity?
The cheapest time of day to use electricity is usually during off-peak hours, which vary depending on the location and the utility provider. Typically, off-peak hours are late at night and early in the morning when demand is low.
Do time of use (TOU) rates really save you money?
TOU rates can save money for some customers, but results vary significantly depending on your household characteristics and ability to shift usage to off-peak hours. Studies show savings vary widely, with some households saving significantly while others may see little benefit or even cost increases. You take advantage of lower rates by running appliances like dishwashers, washing machines, and dryers during off-peak times. However, if your energy consumption habits don’t align with the off-peak schedule, TOU plans may not offer savings.
When should I do my laundry to save money?
To save money, aim to do your laundry during off-peak hours. This could be late in the evening, early in the morning, or during the day on a weekday, depending on your utility provider’s TOU schedule. Weekends often have lower rates as well, making them a good time to run energy-intensive appliances like washing machines and dryers.
