Peak vs. off-peak hours: How you can save money on your electric bill

What are on-peak hours and off-peak hours?

In terms of electricity usage, peak demand refers to times when energy use is highest. These peak or on-peak hours are the periods when residential homes are consuming the most electricity. Off-peak hours refer to the times of day when less electricity is used. Most often, weekdays during the daytime hours are considered peak hours, while evenings, overnights and early mornings are usually labeled as off-peak times. 

Because the price of electricity increases as demand increases, utility companies often pay more during times when usage is high, which can result in higher rates for residential customers. Time of use (TOU) plans link electricity prices directly to peak and off-peak hours by offering reduced or even free rates during certain off-peak periods. By shifting your energy use to off-peak times, you can take advantage of lower rates and reduce your electric bill by utilizing time of use pricing.

Peak hours defined across different markets

While there’s a general consensus about what on-peak hours vs. off-peak hours are, there is still some variance between different parts of the country. Time zones play a role in how peak hours are determined, as do local climates and weather patterns. For instance, hot Texas summers contribute to longer peak hours during the summer, while in the Northeast, frigid temperatures are a major factor in the winter. Utility companies base rates on when energy consumption is highest, and they look at local trends to understand consumption and demand. 

The benefits of off-peak periods

It may take some adjustments to your lifestyle, but shifting your highest energy usage tasks to off-peak periods can help you:

• Lower electric bills by using more energy when the rates are lower 
• Increase energy efficiency by operating appliances during periods when they may not have to work as hard
• Promote environmental benefits like reducing the strain on the electric grid and running appliances and HVAC units for less time

Of course, you don’t have to completely change your daily routine to take advantage of time of use rates. Simple changes can help make a difference for your electricity bill. 

Shoulder hours and intermediate pricing

Many utility companies that offer TOU plans also have different intermediate rates during shoulder hours. Shoulder hours are the time periods that transition from on-peak hours to off-peak hours, generally in the morning and in the evening. They offer an easier, more convenient way to access lower electricity prices without turning your schedule upside down.
 

How time of use billing works in deregulated markets

In deregulated energy markets, consumers have the power of choice, and utility providers have the power to set rates and offer incentives that are flexible and affordable. Deregulated electricity companies can offer off-peak rates that are competitive within their market, to attract more customers. 

Smart meter technology and real-time data

Advancements in technology mean that in many deregulated markets, electricity providers have access to instantaneous data through the use of smart meters, which are becoming the standard. This information helps companies create better forecasts and be ready for times of increased demand. It also helps when creating enticing incentive offers for consumers, like free electricity on nights or weekends.

Identifying your peak electricity usage patterns

Knowing when and how you use electricity will help you reduce your consumption or shift it to non-peak times when overall electricity demand is lower. This can help you reduce your overall usage and possibly help you reduce your monthly electricity costs.
 

U.S. residential sector electricity consumption by major end uses, 2022

Comparing time of use plans to standard rates

Compared to standard rate plans, which charge a consistent price for electricity, TOU plans reward flexible routines. If you can shift energy-intensive tasks — like laundry or dishes — to off-peak hours when rates are lower, TOU plans can help you save. If your schedule is less flexible or you use most energy during peak times, a standard plan may offer more predictable bills. Consider your lifestyle and willingness to adjust habits when choosing which plan is best for you.

Fixed vs. variable TOU rate options

A fixed-rate plan clearly sets out the peak and off-peak hours as well as their set rates that do not change. This is similar to the Direct Energy Free Power Weekends or the Twelve Hour Power plans, which offer free electricity during a set time like overnight or during the weekend. This can help make the plan more reliable so you can set a schedule that works for you. A variable rate plan can offer savings, but your rate is dependent on market conditions, which allows the rate to rise and fall with peak and off-peak periods.

Electric vehicle charging optimization

Electric vehicle (EV) adoption is on the rise around the world, and that brings new concerns about the additional electricity required for EV charging. There are, however, a few measures you can take if you have an EV to optimize electricity consumption and utilize time of use plans to maximize savings:

• Charge your EV during off-peak hours to maximize TOU plan savings
• Use your EV’s timer to automatically charge and only during off-peak hours
• Check with your electricity provider for additional EV incentives, discounts or rewards
• Keep your battery between 20% and 80% to avoid unnecessary charging during peak rates and protect your battery’s health
• Consider investing in renewable energy options that can help supplement electricity supplied by your electricity company
   

Reach for peak savings with a time of use plan

Make the most of your off-peak hours with a time of use (TOU) plan and take control of your energy costs. Adopting TOU strategies not only helps you save money but also can support grid efficiency. Plus, with all the resources Direct Energy has to offer, like a dedicated customer support team, intuitive energy management tools and educational guides, you can stay in control of your usage and maximize your savings.

Ready to experience the benefits for yourself? Switching is easy! Shop for a Direct Energy plan today.