Understanding the two most common electricity rate structures and which one could save you money based on your lifestyle.
Rates vary based on when you use electricity. Peak hours cost more, off-peak hours cost less.
Peak: 4 PM – 9 PM
Highest rates (30-50¢/kWh)
Partial Peak: 3-4 PM, 9-12 AM
Medium rates (20-30¢/kWh)
Off-Peak: 12 AM – 3 PM
Lowest rates (10-20¢/kWh)
Rates increase based on how much you use. First tier is cheapest, higher usage costs more per kWh.
Tier 1: Baseline
Lowest rate (15-20¢/kWh)
Tier 2: 101-200% of Baseline
Medium rate (25-35¢/kWh)
Tier 3+: Over 200% of Baseline
Highest rate (35-50¢/kWh)
| Factor | TOU | Tiered |
|---|---|---|
| Savings potential | 20-40% if flexible | 10-20% if low usage |
| Complexity | Higher | Lower |
| Behavior change needed | Yes | No |
| EV charging | Excellent | Poor |
| Solar compatibility | Excellent | Good |
| Bill predictability | Variable | More predictable |
Most utilities allow one rate plan change per year. Some require you to stay on a plan for 12 months before switching. Check with your utility for specific rules.
Your rate plan is listed on your bill, usually near the top or in the "Rate Schedule" section. Common names include "E-TOU-C" (TOU) or "E-1" (tiered) for California utilities.
Many California utilities have made TOU the default. Focus on shifting high-energy activities (laundry, dishwasher, EV charging) to off-peak hours. Smart thermostats can pre-cool your home before peak hours.