Understanding Arizona's Time-of-Use Rates and Demand Charges

Arizona's major utilities—Arizona Public Service (APS) and Salt River Project (SRP)—use time-of-use (TOU) rates and demand charges that can significantly impact your monthly electric bill. Understanding how these pricing structures work is essential for managing energy costs in the desert climate.

What Are Time-of-Use Rates?

Time-of-use rates charge different prices for electricity depending on when you use it. Both APS and SRP divide the day into peak and off-peak periods, with substantially higher rates during peak hours when demand on the grid is highest.

APS Time-of-Use Periods

APS defines peak hours differently depending on the season:

Summer (May-October):

On-Peak: 3 PM to 8 PM weekdays
Off-Peak: All other hours, weekends, and holidays

Winter (November-April):

On-Peak: 6 AM to 9 AM and 5 PM to 8 PM weekdays
Off-Peak: All other hours, weekends, and holidays

SRP Time-of-Use Periods

SRP uses a similar structure with some variations:

Summer (May-October):

On-Peak: 2 PM to 8 PM weekdays
Super Off-Peak: 11 PM to 5 AM
Off-Peak: All other hours

Winter (November-April):

On-Peak: 5 AM to 9 AM and 5 PM to 9 PM weekdays
Off-Peak: All other hours

Understanding Demand Charges

Demand charges are based on your highest electricity usage during peak hours within a billing period. Unlike energy charges (based on total kWh consumed), demand charges measure your peak power draw in kilowatts (kW).

How Demand Charges Work

Measurement: Your meter records the highest 30-minute or 60-minute average power draw during on-peak hours
Billing: You're charged a fixed rate per kW of that peak demand
Impact: A single high-usage event can affect your entire monthly bill

Example Calculation

If your peak demand during on-peak hours is 8 kW and the demand charge is $13.50/kW:

Demand charge = 8 kW × $13.50 = $108.00

This charge applies regardless of your total energy consumption.

Strategies to Lower Your Bill

Shift Usage to Off-Peak Hours

Run dishwashers, washing machines, and dryers during off-peak hours
Charge electric vehicles overnight
Pre-cool your home before peak hours begin
Use timers on pool pumps and other equipment

Reduce Peak Demand

Avoid running multiple high-draw appliances simultaneously during peak hours
Stagger air conditioning, cooking, and laundry activities
Consider a smart thermostat that pre-cools before peak periods
Use ceiling fans to reduce AC load during peak hours

Solar Considerations

If you have solar panels, be aware that:

Solar production typically peaks midday, before on-peak hours
Battery storage can help shift solar energy to peak hours
Both APS and SRP have specific rate plans for solar customers
Net metering credits vary by utility and rate plan

Choosing the Right Rate Plan

Both APS and SRP offer multiple rate plans. The best choice depends on:

Your ability to shift usage to off-peak hours
Whether you have solar panels or battery storage
Your household's usage patterns
Your willingness to monitor and adjust behavior

APS Rate Plans

Saver Choice: Standard TOU plan for most customers
Saver Choice Plus: Higher demand charges but lower energy rates
Saver Choice Max: Best for customers who can significantly reduce peak demand

SRP Rate Plans

E-26: Basic TOU plan with demand charges
E-27: TOU plan without demand charges (higher energy rates)
Customer Generation: Designed for solar customers

Monitoring Your Usage

Both utilities offer tools to track your usage:

APS: My Account portal shows hourly usage data
SRP: My Account includes demand tracking and bill projections

Review your usage patterns monthly to identify opportunities for savings and ensure you're on the optimal rate plan.

Conclusion

Arizona's TOU rates and demand charges require active management, but understanding how they work can lead to significant savings. Focus on shifting usage to off-peak hours and reducing peak demand during the hottest parts of summer days when rates are highest.

Understanding Arizona's Time-of-Use Rates and Demand Charges