Time-of-Use Rates Without the Confusion

Time-of-use rates charge different prices per kilowatt-hour depending on when you use electricity, so moving the same task to a cheaper period can lower its energy cost without reducing its energy use. Whether a TOU plan lowers your total bill depends on your actual usage schedule, the seasonal price differences, and charges outside the time-based energy rate. Start with your exact utility rate plan—not a national average or another customer’s peak-hour schedule.

Time-of-Use Rate Details That Determine Your Cost

Rate-plan detail	What to find	Why it changes the decision
Peak, off-peak, and any additional periods	Start and end times for each period	A task saves money only to the extent that its electricity use moves into a lower-priced period.
Weekday, weekend, and holiday rules	The calendar that applies to your specific plan	Weekends are not automatically off-peak; PG&E’s residential E-TOU-C has peak pricing every day.
Seasonal rates	Season dates and each period’s price in USD/kWh	The savings from shifting the same amount of energy can change substantially between summer and winter.
Generation and delivery charges	Whether the displayed price includes both services	Comparing a generation-only price with a combined price produces a misleading result.
Baseline allowances or credits	Eligible kWh, credit amount, and allocation rules	A TOU plan can also include a usage-based credit; time periods alone do not describe the full calculation.
Fixed or base service charges	Daily or monthly charge and applicable customer category	Moving electricity use does not eliminate a charge that applies independently of kWh consumption.
Demand charges, where applicable	USD/kW rate, measurement interval, and billing rules	A business can lower its TOU energy cost while leaving its demand charge unchanged.

How Time-of-Use Rates Work

A TOU plan divides the day into pricing periods. On-peak electricity costs more than off-peak electricity under the same applicable rate conditions. Some plans add a mid-peak, partial-peak, or super-off-peak period, creating more than two prices to track. Utilities use these differences to encourage customers to move flexible electricity use away from higher-cost periods.

The unit being priced is energy:

[
E=P\times t
]

Here, (E) is energy in kilowatt-hours (kWh), (P) is average power in kilowatts (kW), and (t) is operating time in hours. One kilowatt-hour is the energy used by a 1 kW load operating for one hour. If power varies during operation, use measured energy or an appropriate average power rather than assuming the nameplate rating applies continuously.

TOU changes the price applied to those kWh. It does not, by itself, change how much energy the equipment needs. PG&E, for example, recommends shifting flexible tasks such as dishwashing and laundry into its lower-priced periods.

Peak Hours Belong to the Plan, Not the Entire Utility

Even plans offered by the same utility can have different schedules. PG&E’s residential E-TOU-C uses a 4–9 p.m. peak period every day, while its E-TOU-D identifies a 5–8 p.m. weekday peak period. Copying a neighbor’s timer settings without checking the plan can put your equipment in the wrong pricing window.

Nor is “overnight” a universal synonym for “cheapest.” SCE’s residential TOU-D 4–9 p.m. plan lists a winter super-off-peak period from 8 a.m. to 4 p.m. Its summer weekend evening period is mid-peak, not simply off-peak. These are Southern California plan examples, not nationwide schedules.

Read the Rate Schedule Before Using a Price

The formal tariff—the utility’s approved rate schedule—is the controlling reference for rates, eligibility, and billing conditions. A utility’s plan overview helps explain the options, but the schedule applicable to your account and service dates supplies the calculation details. Official entry points include PG&E’s tariff library, SCE’s tariff books, and SDG&E’s current and effective tariffs.

Match four things before copying a rate: the utility service territory, customer class, exact schedule code, and effective date. Also check whether you receive both generation and delivery from the utility. Under PG&E’s E-TOU-C tariff, Community Choice Aggregation and Direct Access customers receive generation from another provider, so their calculation differs from the bundled-service calculation.

A Verified California Example: PG&E Residential E-TOU-C

The following figures come from the official E-TOU-C tariff retrieved on October 12, 2026. The energy-rate sheet has an effective date of June 1, 2026. They apply to residential bundled service in PG&E’s California electric service territory; they are not national benchmarks or prices for another utility.

E-TOU-C detail	Summer	Winter
Season	June 1–September 30	October 1–May 31
Peak period	4–9 p.m., all days	4–9 p.m., all days
Off-peak period	All other times	All other times
Total bundled peak energy rate, before baseline credit	USD 0.52240/kWh	USD 0.39757/kWh
Total bundled off-peak energy rate, before baseline credit	USD 0.39940/kWh	USD 0.36757/kWh
Baseline credit, eligible usage only	USD 0.08140/kWh	USD 0.08140/kWh

All figures and schedule details in this table are from the same tariff. The baseline credit applies only to eligible usage, and the tariff also includes a base services charge that varies by customer income category. The energy-rate table therefore does not represent the entire bill.

The summer peak/off-peak difference is:

[
\text{USD }0.52240/\text{kWh}

\text{USD }0.39940/\text{kWh}
=
\text{USD }0.12300/\text{kWh}
]

The winter difference is:

[
\text{USD }0.39757/\text{kWh}

\text{USD }0.36757/\text{kWh}
=
\text{USD }0.03000/\text{kWh}
]

This explains why the same scheduling change can be more valuable in one season than another. Assuming total energy and baseline eligibility remain unchanged, moving 100 kWh from peak to off-peak reduces the energy charge by USD 12.30 in summer or USD 3.00 in winter under these rates. These are calculated energy-charge differences, not guaranteed reductions in the final bill.

Calculate TOU Energy Charges by Period

For a straightforward TOU calculation, multiply the energy used in each pricing period by that period’s applicable rate, then add the results:

[
C_{\text{energy}}=\sum_i E_i r_i
]

Where:

• (C_{\text{energy}}) is the energy charge in USD.
• (E_i) is energy used in period (i), in kWh.
• (r_i) is the applicable rate for that period, in USD/kWh.

This follows the tariff structure of applying different energy rates to peak and off-peak usage. If rates, seasons, or credit eligibility change during the billing cycle, divide the calculation into the applicable segments rather than applying one price to the whole month.

Worked Example: A Two-Period Monthly Calculation

The following is a hypothetical U.S. residential example. It does not represent a utility tariff, state average, or official 2026 benchmark.

Assume:

• Total metered energy is 600 kWh.
• Peak usage is 180 kWh.
• Off-peak usage is 420 kWh.
• The peak rate is USD 0.40/kWh.
• The off-peak rate is USD 0.20/kWh.
• Both rates include the same generation and delivery components.
• There are no baseline credits, additional pricing periods, or rate changes in this example.
• Fixed charges and taxes are excluded.

Pricing period	Energy	Assumed rate	Calculation	Energy charge
Peak	180 kWh	USD 0.40/kWh	(180\times0.40)	USD 72.00
Off-peak	420 kWh	USD 0.20/kWh	(420\times0.20)	USD 84.00
Total	600 kWh		(72.00+84.00)	USD 156.00

The weighted average energy rate is:

[
r_{\text{average}}
=
\frac{\text{USD }156.00}{600\text{ kWh}}
=
\text{USD }0.26/\text{kWh}
]

That average describes this particular usage mix. It is not the price of the next kWh, which depends on the pricing period in which that kWh is consumed.

Now assume 90 kWh moves from peak to off-peak without changing total consumption:

[
E_{\text{peak,new}}=180-90=90\text{ kWh}
]

[
E_{\text{off-peak,new}}=420+90=510\text{ kWh}
]

[
C_{\text{energy,new}}
=
(90\times0.40)+(510\times0.20)
=
36.00+102.00
=
\text{USD }138.00
]

The savings are USD 18.00 for the example billing cycle:

[
\Delta C
=
90\text{ kWh}\times
(\text{USD }0.40-\text{USD }0.20)/\text{kWh}
=
\text{USD }18.00
]

The household still uses 600 kWh. The reduction comes entirely from changing when 90 kWh is purchased.

Split Tasks That Cross a Pricing Boundary

A start time alone does not determine the cost of a task that continues into another period. Divide its energy between the periods it actually occupies.

Using the same hypothetical rates, assume a load draws a constant 2 kW from 8:30 p.m. to 9:30 p.m., with off-peak pricing beginning at 9 p.m.:

[
E_{\text{peak}}=2\text{ kW}\times0.5\text{ h}=1\text{ kWh}
]

[
E_{\text{off-peak}}=2\text{ kW}\times0.5\text{ h}=1\text{ kWh}
]

[
C=(1\times0.40)+(1\times0.20)=\text{USD }0.60
]

Moving the entire one-hour task after 9 p.m. would cost:

[
C_{\text{off-peak}}=2\times0.20=\text{USD }0.40
]

The assumed saving is USD 0.20. For equipment whose power varies during a cycle, interval-meter data provides a better allocation than assuming constant power.

Compare Plans Using the Same Usage Profile

A low off-peak price does not establish that a plan is cheaper overall. The comparison must include the electricity you cannot move, the applicable peak prices, and differences in fixed charges or credits. Utility rate-comparison tools can help evaluate available plans against account usage.

Use this process:

1. Find the schedule code on your bill and confirm which alternative plans you are eligible to use.
2. Collect interval usage covering a representative year when available, so the comparison includes seasonal changes rather than one unusually mild month.
3. Apply each plan’s calendar, time periods, and effective rates to the same usage record.
4. Include generation, delivery, fixed charges, credits, and any demand charges without counting the same component twice.
5. Create a separate shifted-use scenario using only changes you can realistically maintain.
6. Check enrollment restrictions and the ability to switch back before making the change.

The tariff and utility comparison resources supply the plan-specific rules; the interval record supplies the timing that a monthly kWh total cannot show. SCE, for example, states that switching to a TOU rate generally prevents another switch for 12 months, and that customers leaving a discontinued plan cannot re-enroll in it. Those are SCE conditions, not universal rules.

A Simple Break-Even Check

For a two-period TOU plan compared with a flat energy rate, define:

• (f): fraction of total kWh used during peak hours.
• (r_p): peak rate in USD/kWh.
• (r_o): off-peak rate in USD/kWh.
• (r_f): flat rate in USD/kWh.

If total energy is identical, fixed charges are equal, and there are no credits or demand charges:

[
r_{\text{TOU,average}}=f r_p+(1-f)r_o
]

TOU has a lower energy charge when:

[
f<
\frac{r_f-r_o}{r_p-r_o}
]

Using the hypothetical TOU rates above and an assumed flat rate of USD 0.27/kWh:

[
f<
\frac{0.27-0.20}{0.40-0.20}
=
\frac{0.07}{0.20}
=
0.35
]

Under these assumptions, TOU is cheaper when less than 35% of energy falls in the peak period. At exactly 35%, the energy charges are equal. Different fixed charges, seasonal rates, or credits require a fuller bill comparison.

A common comparison error is to multiply every kWh by the cheapest advertised rate. That ignores peak usage and may omit charges outside the energy price. Use the applicable time-period rates and the full billing structure. PG&E’s E-TOU-C tariff includes both baseline-credit rules and a separate base services charge.

Keep Commercial Demand Charges Separate

TOU energy charges measure kWh used in each pricing period. Demand charges measure billed demand in kW under the tariff’s measurement and billing rules. They are different quantities and need separate calculations. SDG&E’s business guidance describes both on-peak demand and non-coincident demand that can occur at any time of day.

For example, under a hypothetical tariff using 15-minute average demand, 5 kWh consumed in one measurement interval corresponds to:

[
D=\frac{5\text{ kWh}}{0.25\text{ h}}=20\text{ kW}
]

If that establishes the billed demand and the assumed demand rate is USD 15/kW:

[
C_{\text{demand}}=20\times15=\text{USD }300
]

Moving that load off-peak may reduce its energy charge, but it does not necessarily eliminate an all-hours demand charge. Starting several loads together overnight can still establish a high non-coincident demand. SDG&E also describes a billing rule that considers a portion of historical maximum demand, illustrating why reducing the current month’s peak may not immediately reduce every demand-charge component.

For facilities managers, evaluate both scheduling and simultaneous operation. The objective is not simply “run everything off-peak”; it is to reduce expensive-period kWh while controlling billed demand under the actual tariff.

Check Your TOU Calculation Against the Bill

A TOU energy calculation is only one part of bill reconciliation. PG&E’s tariff, for example, separates energy rates, base services charges, and credits, and provides different billing treatment for bundled and alternative-generation customers.

Before accepting a result, check the following:

• The account’s exact rate schedule and customer class match the rates used.
• Every rate has the correct effective date for the service being billed.
• Peak and off-peak periods match the applicable season and day type.
• Interval timestamps use the utility’s stated time convention.
• Energy assigned to all periods adds up to the billed metered kWh.
• Tasks crossing pricing boundaries are divided between periods.
• Generation and delivery are included once, not omitted or double-counted.
• Baseline allowances, credits, and discounts follow the account’s eligibility rules.
• Fixed charges use the applicable daily or monthly basis.
• Commercial demand charges are calculated separately from kWh charges.
• Estimated scheduling savings are distinguished from the final billed total.

If the energy subtotal does not match, first check period allocation, rate-effective dates, and credits. If the energy subtotal matches but the total bill does not, review the remaining charge and credit lines rather than changing the kWh calculation to force a match. A scheduling estimate becomes useful when its inputs explain the bill—not when it merely reproduces a total.