How to read a time-of-use tariff

A time-of-use tariff charges different prices at different hours. Roughly 2,500 of the residential tariffs on file in the US work this way, and utilities are steadily moving more customers onto them.

Whether that is good or bad for you has almost nothing to do with the advertised prices.

What the tariff actually specifies

A TOU tariff defines periods — commonly on-peak, off-peak and sometimes a shoulder — and then a schedule saying which period applies in each hour of each month. In the underlying data this is literally a 12×24 grid: twelve months, twenty four hours, each cell naming a period.

Three details matter and are easy to miss.

Weekends usually differ. Most TOU tariffs price the entire weekend off-peak. That is a separate 12×24 grid, and it materially changes the arithmetic — roughly two sevenths of the year sits outside peak pricing entirely.

The peak window moves by season. A tariff will often run a summer peak in the late afternoon and evening and add a winter peak in the morning, reflecting when the grid is strained. The same clock hour can be on-peak in July and off-peak in April.

The spread is often wide. At the typical utility, the peak price is about two and a half times the cheapest hour of a summer weekday, and at about a third of utilities it is three times or more. That is the point: the tariff is paying you to move consumption.

Why the price comparison misleads

Here is the trap. Two households on the same TOU tariff, using exactly the same total kWh per month, can get bills that differ by 30% or more. The tariff has not changed. The shape of their usage has.

So the question "is this TOU rate cheaper?" has no answer without knowing when you use electricity. A household that is out all day and cooks at 6pm is pushing consumption directly into the most expensive window. A household with an EV charging at 2am and a timer on the dishwasher is doing the opposite.

This is also the honest limitation of every TOU comparison, including ours. The tariff database contains prices; it does not contain your meter data. We apply a documented average residential usage profile — overnight trough, morning ramp, evening peak, amplified in summer — and say so on every result. Our methodology sets out the exact shape.

If your usage is unusual, our TOU figures will be too optimistic or too pessimistic for you specifically. Flat and tiered tariffs do not have this problem: for those, only the total matters, and the answer is exact.

Working out whether TOU suits you

Ask three questions, in this order.

1. Can you actually shift load? Not "would you be willing to" — can you? EV charging, water heating, pool pumps, dishwashers and laundry are all shiftable on a timer. Cooking, lighting and heating in the evening mostly are not.
2. How much of your consumption is shiftable? If it is 10%, the spread barely matters. If you charge an EV at home, it can be most of your bill, and TOU is likely a large win.
3. What is the peak window, in your months of heaviest use? A 4–9pm summer peak is hard to avoid if you run air conditioning through the evening.

If you can shift meaningfully, a TOU tariff with a wide spread will usually beat a flat one. If you cannot, the flat tariff is the safer choice, and the spread is a risk rather than an opportunity.

Many utilities also offer a bill protection period — typically a year — where they will refund the difference if TOU costs you more than your old tariff would have. Ask; it converts the experiment into a free one.

You can compare the TOU and flat tariffs offered in your state here.