What is a time-of-use (TOU) electricity rate plan?

Time-of-use (TOU) is a rate plan in which electricity rates vary according to the time of day, season and day type (weekday or weekend/holiday). Electricity prices are higher during peak demand hours and lower during off-peak hours. Peak times may vary by rate and/or energy provider but are generally defined as the hours between 4–9PM.* TOU plans support a cleaner power grid by encouraging energy use when renewable resources, like solar and wind power, are readily available. All TOU plans share a common theme: when electricity is used matters as much as how much electricity is used.

*Peak times may vary by rate and/or energy provider. Check with your local energy provider to understand the TOU time frames in your area.

How will this impact my bill? Will I be able to save money on a TOU plan?

If Californians can shift some of their electricity use to take advantage of the lower-priced (off-peak) time periods, they may be able to lower their overall electricity costs. Running the dishwasher during off-peak periods instead of on-peak periods is an example of shifting usage to lower electricity costs.

For more information on billing impacts, please contact your local energy provider.

Are there exceptions for certain individuals?

Yes, certain exemptions exist for individuals and families:

  • Customers without one year’s worth of interval data
  • Individuals with a medical baseline allowance
  • Those who cannot be disconnected without an in-person representative
  • Customers who request third-party notification

Additionally, the CPUC has decided that customers who are eligible for the California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) programs in certain hot areas are not going to be defaulted to TOU plans.

To learn whether you qualify, please contact your local energy provider.

What is the “peak demand” or “peak hours” period?

According to the CPUC, the California Energy Commission (CEC) and California Independent System Operator (CAISO), the state’s electricity grid reaches its peak level of usage between the late afternoon and early evening – a time frame in which electricity produced by renewable resources is less available and thus costs more to produce.

The peak demand period is generally defined as the hours between 4–9PM,* though peak times may vary by rate and/or energy provider. Californians are encouraged to shift their behavior to best conserve electricity and manage electricity use in their homes and places of business during this time.

Check with your local energy provider to find out about the TOU time frames in your area.

What can I do to reduce energy use during peak hours?

Energy Upgrade California® is encouraging all Californians to initiate energy savings during the peak hours of 4–9PM,* such as by:

  • Turning off all but essential lighting
  • Using less hot water by operating washing machines and dishwashers during off-peak hours or on cold water
  • Pre-cooling your home outside of peak demand hours
  • Setting the thermostat for your air conditioner at a higher temperature when it is running
  • Installing timers on electricity-consuming appliances such as electric water heaters, indoor and outdoor lighting, water recirculation pumps, and pool and spa pumps
  • Using timers to run appliances such as dishwashers, washing machines and ovens at non-peak times

*Peak times may vary by rate and/or energy provider. Check with your local energy provider to find out about the TOU time frames in your area.

Why is the state of California making energy more expensive when I need it the most?

The new pricing plan is part of a CPUC effort to support the state’s ongoing shift to cleaner energy. TOU plans support a cleaner and more reliable power grid for everyone.

The state’s electrical grid is increasingly powered by clean, renewable sources of energy, when the sun is out and the wind is blowing. The challenge is in the late afternoon and evening, when demand for energy peaks. At this time, electricity is more likely to be produced by carbon-intensive energy sources, which emit greenhouse gases.

Californians will be doing their part to help the state reach its clean energy goals and preserve the environment for future generations. There are things Californians can do to minimize their environmental impact, and it doesn’t take much effort to make a huge difference if all Californians get involved. Certain individuals may also save money by shifting to off-peak hours, depending what rate plan they are on.

For more information on billing impacts, please contact your local energy provider.

How are the state’s goals affecting Californians’ electricity use?

For California to achieve the long-term goals of reducing greenhouse gas emissions and becoming a zero-carbon state, the trend to produce more electricity from renewable resources must continue. Over the past decades, Californians have done a great job conserving energy and becoming more energy efficient. They can continue that progress and help the state reduce harmful emissions by taking additional steps toward sustainability. The availability of cleaner energy during the day creates an opportunity for Californians to think about not only how, but also when electricity is used to power their daily lives.

In response to Assembly Bill 327 (Perea, 2013) in 2015, the CPUC, which regulates investor-owned utilities (IOUs), protects consumers, safeguards the environment, and ensures Californians’ access to safe and reliable utility infrastructure and services, approved the Residential Rate Reform decision (D.15-07-001). This decision ordered the state’s major IOUs – Pacific, Gas & Electric (PG&E), Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) – to transition residential customers to TOU rate plans beginning in 2019.

Is there a specific time frame when TOU plans go into effect?

TOU pricing plans have been in effect for large business customers across the state since the 1980s, and small business customers began enrolling in TOU plans beginning in 2009. The CPUC directed each of the IOUs to conduct both an opt-in and a default pilot of TOU rate plans for residential customers, with the latter comprising roughly 630,000 customer accounts across the state.

Following the lead of the Sacramento Municipal Utility District (SMUD), SDG&E will be the first IOU transitioning its residents to TOU plans beginning in 2019. PG&E and SCE will begin defaulting customers to TOU in October 2020. Please check with your local energy provider for more information.

Does TOU impact my gas bill as well?

TOU affects electricity pricing only.

How will TOU impact me as a solar customer?

Solar customers should contact their local energy provider to learn how TOU may impact their bill.

How will TOU impact me as an electric vehicle owner?

Electric vehicle owners may benefit from switching to a TOU rate plan if they charge their vehicles overnight. Check with your local energy provider to understand the impacts.

Will I still be able to use energy during on-peak hours?

The state is not asking Californians to not use energy, change their lifestyles or turn their schedules upside down. Instead, it is encouraging Californians to efficiently use power between the hours of 4– 9PM.* and shift use to parts of the day when electricity from renewable resources (such as solar and wind) is more readily available.

*Peak times may vary by rate and/or energy provider. Check with your local energy provider to understand the TOU time frames in your area.

What is Energy Upgrade California® doing to educate Californians about the shift to TOU electricity rate plans?

TOU plans create another opportunity for Californians to manage their energy consumption by harnessing the availability of low-cost, cleaner energy during off-peak hours. Energy Upgrade California® is expanding its statewide public education campaign to promote energy efficiency (the “how much” of electricity use) and to encourage behaviors that will support the shift to TOU plans (the “when” of electricity use). Please check with your local energy provider for more information.

Is TOU a California-only initiative?

No. Other states across the nation have implemented similar TOU programs, such as Arizona, Illinois, Maryland, Mississippi and New York, with the goal of shifting energy use to when clean energy is more readily accessible and promoting more efficient use of their energy resources.

What is considered a clean energy source?

In short, any energy source that can be considered “zero-carbon” is a clean energy source. Traditionally, hydropower has been the main clean energy resources in widespread use, but more recently, options have diversified as newer sources like wind and solar have become viable utility- scale sources and researchers continue to develop other technologies.

What are the benefits of clean energy?

When residents use clean energy, they help to combat climate change and preserve and protect the environment. Other benefits include cleaner air/less air pollution, improved public health, jobs and other economic benefits.

Why aren’t certain TOU plans available in my region?

The three large IOUs (PG&E, SCE and SDG&E) in California are required to transition to default TOU plans. This mandate does not include municipal utilities or Community Choice Aggregation (CCA) providers. However, many municipal utilities also offer TOU rates. Please check with your local energy provider for more information.

What if I am in a Community Choice Aggregation (CCA) program? Will I still be affected by TOU?

If your energy is supplied through a CCA program, please reach out to your provider to learn more.