Thanks to the advent of technology and the push to use electricity sustainably, energy providers are offering more innovative ways allowing homeowners to save on energy costs. And one of these ways is the introduction of time-of-use rate plans. They allow you to use electricity when it is cheaper. Here’s what you need to know about TOU rate plans.
What Is TOU?
Time-Of-Use rate is a dynamic electric rate that adjusts based on the grid’s demand. Energy providers offer the rate plans to homeowners in a bid to allow them to use electricity when the rates are lower. In short, they enable you to take advantage of off-peak hours.
For example, some energy providers will offer lower rates in the morning and early afternoon and adjust the rates at night.
As a homeowner, you ought to adjust with rates, otherwise you might pay more. While they allow you to reduce your energy costs, they can also cause your electricity bill to increase if you use electricity during on-peak hours.
If for example you work from home, you can perform chores that need energy-hungry appliances. Take laundry as an example. Instead of using your washing machine in the evening, you can decide to clean your clothes in the morning.
And if you have to commute to work, you’ll have to use electricity when the rates are higher. In short, TOU is a double-edged sword, requiring you to plan ahead so you can adjust with the rates.
How Do TOU Rates Work?
How TOU rates work is straightforward. energy providers sell you electricity at different rates depending on the time of day. As you’d expect, TOU rates vary depending on the region and energy provider. However, some terminology remains constant.
Most electricity providers will have higher rates in summer than during winter months. This is because homeowners tend to use more electricity during summer months. Ideally, energy providers will offer rates in four segments. They include:
- Super off-peak
- Off-peak
- Peak
- Super-peak
Super-off peak and off-peak hours run between early morning and late afternoon. Demand for electricity during these hours is at its lowest. Peak and super-peak hours run between late afternoon and evening.
It is during this time that demand is at its peak. Most homeowners will be running the AC, watching TV, playing video games, and charging devices among other energy intensive activities.
As you can see, it is more economical to run your cooling and heating system during off-peak hours as it consumes the most electricity.
Why are TOU Rates Necessary?
TOU rates aim to lower the cost of energy, allowing you to use electricity in a cost-effective way. Most energy providers will revise their rates once or twice a year. Expressed in cents per kilowatt-hour ($kWh), it aims to cover the cost of generating the electricity you use at home.
The rates however change throughout the day because of various reasons. Conventionally, an increase in demand for electricity causes an increase in the cost of electricity production. Without the TOU rate plans, you will not take advantage of the changing costs of production.
TOU rates not only allow you to use electricity at a reduced price but also provide a sense of transparency. As the rates adjust across the course of the day or week, you can have a better understanding of the true cost of the electricity you use. As such, you can adopt better habits to reduce your energy costs.
Difference Between Time-Of-Use rate bill and a Standard Bill
A standard bill is easy to calculate. Simply multiply the rate you pay for electricity by the amount of electricity you’ve consumed in a month.
The TOU rate bill is different. While it follows the same calculation procedure, you’ll multiply the amount of electricity based on different times of the day. For example the bill will be lower in the morning than in the evening.
With the TOU rate, you might notice a reduction in electricity bills even without changing your usage habits. Likewise, you might also see an increase in energy costs.
How To Make Most of The TOU Rates
As you’d guess, there are different ways to make use of the TOU rates. The most common is using appliances during off-peak hours. Doing so might lower your electricity bill by a huge margin.
For example, using your washing machine at 10.00 PM instead of 5.00 PM could save you a lot of money. And if you do the same with other appliances, you can save on your energy costs.
Another impressive way to make the most of the time-of-use rates is to invest in a solar system. While the initial investment might be high, it will save you money in the long run. Better yet, invest in solar panels and a storage system. You can then use energy stored in your solar batteries during peak and super-peak hours.
For example, you can invest in the BLUETTI AC200MAX + 2*B230 + 3*PV200 | Solar Generator Kit. It includes a powerful power station, expansion batteries, and three solar panels.
And the capacity is impressive so you can connect appliances such as coffee machines and electric grills. The 2048Wh capacity will serve you for hours on single charge. The solar panels have an exceptional 23.4% efficiency, which is higher than most panels.
As such, you can expect the power station to recharge within a few hours. With the two expansion batteries, you can increase its capacity to 6144Wh or 8192Wh. And the best part is that the power station, batteries, and solar panels are portable.
Another viable option is the BLUETTI EP500 + 3*PV200 | Solar Generator Kit, which has a higher capacity. This is an ideal option if your energy needs are higher. It has an impressive capacity of 5120Wh and comes with a 2000W pure sine wave inverter.
It also has multiple ports allowing you to connect numerous devices. And you don’t have to recharge with solar panels only, as you can use an AC outlet, lead acid battery, or your car. You also get an app for remote control and monitoring.
While TOU rates can help you reduce your energy costs, complementing them with a solar system can be a boon allowing you to use electricity from the grid during off-peak hours.
Other Tips for Saving Power Bill
How else can you reduce your monthly electricity bill? Let’s find out.
-
Avoid standby mode
Contrary to popular belief, standby mode consumes electricity even when your appliances are not running. By switching it off, you can save upwards of $60 annually. Modern electrical appliances can be unplugged from the AC outlet without upsetting their programming.
However, check the appliance’s manual since some might need to be left plugged in. For example, your digital TV recorder might need to stay plugged in to keep track of programs.
-
Use kitchen appliances wisely
Oftentimes, we use kitchen appliances when we don’t really need them. For example, you might use your microwave any time you want to heat your food. While this is easy and convenient, it can cause your energy costs to increase. So, avoid heating your food all the time using the microwave. Instead, use your stove or take the food at room temperature.
-
Use LED bulbs
Lighting can also cause an increase in energy costs, especially if your home has numerous rooms. To mitigate this, you can invest in LED bulbs since they consume less electricity compared to conventional bulbs.
-
Use a dishwasher
While dishwashers consume electricity, they save more water, time, and electricity. In fact, if you use an Energy Star-qualified dishwasher instead of cleaning utensils by hand, you can save up to 5000 gallons of water and $40 in energy costs. And the best part is you can program it to run for a few minutes.
-
Use a fan
If you live in a hot area, you can substitute a thermostat for a ceiling fan. A ceiling fan consumes less electricity than a conventional air conditioner. Furthermore, it makes a room feel cooler.
-
Use a dimmer
According to the US Department of Energy, installing a dimmer reduces your bulbs wattage and output, enabling you to use less electricity. What’s more is some dimmers come with an app allowing you to control your lighting system from any place.
Final Thoughts
Time-of-use rate plans allow you to schedule the use of electricity when the rates are lower. It allows energy providers to sell electricity to residential consumers at different rates throughout the day. Installing a solar system while using TOU rate plans can allow you to reduce energy costs.
