How to Save Money With a Time-of-Use Utility Plan
It’s not just the eggs : everything essential to our lives is becoming increasingly more expensive, including the energy we use to run appliances, heat our homes, and just about everything else. The average monthly cost of electricity and gas is already over $200 , so when your utility bills skyrocket, it’s often a reason to panic. After all, there’s a lot you can do to reduce usage.
If you’re looking for ways to manage your utility bills, there’s one option worth exploring. Check with your local utility company to see if they offer what is called a Time of Use (TOU) plan. While these plans require some adjustment and a healthy dose of personal discipline, they also offer the opportunity to save real money on your utility bills.
What is a time-of-use utility plan?
Although the typical utility bill is a flat rate for consumption, electricity demand varies greatly depending on the time of day. When demand is high (typically between 5:00 pm and 9:00 pm when people get home from work, turn on all their appliances, and heat/cool the house), it is harder for your utility company to provide enough energy. When demand is lower, it’s easier to generate enough energy to meet demand, so a TOU plan is designed to encourage customers to shift their energy use to off-peak hours by charging them lower during those times.
Electricity will cost more during peak hours
It’s very important to note that most TOU plans charge you a higher rate during peak hours—that is, higher than the regular rate you would pay without a TOU plan. If you choose a TOU plan, not only will you not save money unless you commit to using less energy when demand is high, but you will also potentially lose money.
The savings can be significant
If your utility company offers a TOU plan (not all) this can result in significant savings; While the exact amount you can save on your utility bills will vary depending on your actual rates and your usage, you can potentially save up to 40% on your energy bills. But this will require some effort.
How to save money with Time of Use plan
The key point when choosing a TOU plan is that you will have to shift most of your energy use to off-peak hours to see any benefit. The off-peak hours that are cheaper under a TOU plan are set by the utility—you don’t get to choose when you’ll be offered a lower rate. You will have to adapt your lifestyle according to the plan to save money. This means keeping appliances like dishwashers, washing machines and vacuum cleaners running late at night. If you have an electric car, you will have to charge it after peak hours. And you’ll need to adjust the thermostat to keep your HVAC system from running at full capacity during peak hours.
While it may seem feasible to start doing laundry and vacuuming the house at 10 pm, keep in mind that you will have to maintain this schedule shift for a long time. If you lose motivation after a few weeks and switch back to a more convenient plan, you won’t get the cheaper rate—as noted, you may even end up paying more than you would have if you hadn’t chosen the TOU plan in the first place.
Consider also the fact that you will use at least some electricity during peak hours and will likely pay a higher rate for it. You need to be able to shift enough of your usage to off-peak periods to really save money, which means it probably won’t work if you work remotely or are a big homebody.
How to Find a Utility Plan by Time of Use
If you think a TOU plan might be right for you, you can contact your current energy supplier to see if they offer it. You can also visit the U.S. Department of Energy website, which maintains a list of utilities that offer some version of TOU, depending on the state. However, just because a program is listed doesn’t mean it’s active: some utilities have specific subscription periods, and some are temporary and may not be accepting new clients, so you’ll have to contact the listed utility directly to discuss your options.