What Is Time Of Day, Or Flexible Pricing For Electric Rates?

Can you save on electricity by using a flexible pricing plan?
Can you save on electricity by using a flexible pricing plan? | Source

Time Of Use Power Rates

With the advent of "smart" power meters, electric companies are now often capable of reading your meter from a remote location and at any time they wish, and computers make it easy for them to keep track of just when you are using power.

Large industrial users have long had the ability to have their electricity charges based on the time of day they actually use that electricity and try to perform their high energy tasks late at night, when the charge is less. With the smart meters many electric utilities are now making that option available to the homeowner as well. It is to their advantage; if they can convince people to use power when the demand is lower the utility will need less generating capability.

While not available everywhere by any means, the option is becoming more popular throughout the country. Often termed "Time of Day" or "Flexible Pricing" these plans are worth checking into to see if they will fit your needs and there is any savings possible. Saving electricity at home is a great goal; it can not only help you personally but the country as a whole.

Flexible Pricing For The Home

It would be impossible to discuss all the various rate schedules in use through the country here, but we can look at one utilities schedule and how a similar plan might affect you in your own home. From that point you will have to contact your own electric utility to see just what their plan is (if they have one) and how it might affect you. Some locations in Texas, for example, have free power when off peak, but charge a fixed monthly fee in addition to usage fees to use the service.

Below is the flexible pricing schedule for Idaho Power in Boise, Id., followed by their regular schedule. The flexible schedule charges vary by season and time of day while the regular schedule varies by season and the amount used over the entire month.

Flexible Rate Schedule

Time of Day, weekdays
Summer, June-August
Rates
1PM-9PM
Peak
12.78 cents/kWh
9PM-1PM
Off-Peak
7.32 cents/kWh
Time of Day, Weekdays
Non-summer, Sept-May
Rates
7AM-9PM
Peak
9.43 cents/kWh
9PM-7AM
Off-Pean
7.32 cents/kWh

Weekends and certain holidays are all off peak with the time of use schedule.

Now for the regular schedule:

Regular Rate Schedule

Tier
Summer Rates, July-Aug
Non Summer, Sept-May
tier 1, 0-800 kWh
8.57 cents/kWh
7.97 cents/kWh
tier 2, 801-2000 kWh
10.31 cents/kWh
8.78 cents/kWh
tier 3, over 2,000 kWh
12.25 cents/kWh
9.73 cents/kWh

As an example let's look at a day in November, where we'll assume the usage was 1400 kWh (Kilo Watt Hours) off peak and 1000 kWh on peak.

The flexible pricing plan gives us 1400X7.32 + 1000X9.43 = $196.91

The regular pricing plan gives us 800X7.97 +1200X8.78 + 400X9.73 = $208.04

A savings of $11.13, or a little over $130 per year if we did the same thing each month. At the same time, though, if we had used 1400 kWh On peak and 1000 off peak the results would have been much different. So how can we shift our usage to nighttime rather than day?

If you have a plug in car, a flexible spending plan from your utility can pay big dividends.
If you have a plug in car, a flexible spending plan from your utility can pay big dividends. | Source

Making Flexible Spending Work For You

The first step will be to at least make an educated guess as to when you are using power. This writer uses an electric heat pump for heat, and that will be the biggest electric user in the house. Also to consider is the hot water tank, range, electric clothes dryer and any other large user you have. Lighting (especially if CFL's or LED bulbs) won't matter too much for most homes, and neither will a flat screen TV. The older TV's did matter as they pulled considerably more current, but the newer flat TV's are much more energy efficient. It's the big items that are going to matter, then, and not all the small things that use power most of the time.

Below is a graph of a single day's use for this writer, provided by the utility company:

Usage by time of day
Usage by time of day | Source
A programmable thermostat like this can help a lot with a time of day fee schedule.
A programmable thermostat like this can help a lot with a time of day fee schedule. | Source

We see a big jump at 6 AM - that's when the programmable thermostat installed years ago begins to heat the house up. It then turns the heat back down at 7 AM, to remain down until 11 AM, whereupon it turns the heat on again, this time until 10 PM.

There is a surge around 11-12 noon, when the furnace comes back on and lunch is cooked. Usage then remains fairly constant until 9 PM when the electric car begins to charge it's battery. At the same time the dishwasher is started and, if necessary, the clothes washer and dryer are run. This task is generally saved for the off peak hours of the weekend, but sometimes it has to be done during the week. We can also see a small jump around 5 PM, when dinner is cooked.

As we see here, most heavy use can be shifted to evening hours and/or weekends if we wish. There are still several electric appliances that have not been well controlled - an electric baseboard heater on it's own thermostat and the hot water heater come to mind - but overall there is more being used at night than in the day even with the electric furnace keeping the house warm whenever the owner is home (they are gone from 8 AM to 11 AM each day).

If you have an empty house during weekdays, then, you may be a good candidate for time of use pricing from your utility. If, on the other hand, you are home all day and using electricity while there, it will probably cost more than it saves.

Some utilities charge a "changeover" fee that can make experimentation difficult, and most will require that a change be left alone for several months. My own utility has no fee, but requires that if I go back to the regular schedule I must leave it there for at least one year. I cannot, then, change back and forth on a whim, but have to choose and live with it for a year or more. Care is needed to make sure that any change won't cost you an arm and a leg; my utility offered a free analysis which indicated I should save about $100 per year. As the new electric car will only add to that savings (presuming I only charge at night), it was worth a try.

My own experience is that the savings is a little more than what I use to charge the car; I can thus do most of my driving for free, without buying any gas and with the electricity necessary "paid" for by making a few simple, painless changes in my work schedule at home.

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Comments 8 comments

win-winresources 20 months ago from Colorado

Dan-

The underlying factor to time of day pricing is, simply, generated electricity has no shelf life. It must be used immediately. So, convincing people to use power at low demand hours (late night to early morning) is done by making those kwh's cheaper. Commercially, that means exploiting a graveyard shift. Residentially is a little dicier. You can run your dryer, or dishwasher late at night, but in the overall scheme of things of things, a home uses power during the peak periods - when you are there and cooking, air conditioning, watching tv or working on your electronic devices.

As an aside, commercial facilities measure their electricity in a two part manner. Actual electricity and the demand factor. The big savings occur in the demand portion.


wilderness profile image

wilderness 20 months ago from Boise, Idaho Author

All correct to the best of my knowledge. But what if you aren't at home during most of the peak hours? You can turn down the thermostat, you can wash clothes just a little later and you can, as I do, charge the car (a big user) off peak.


win-winresources 20 months ago from Colorado

Dan-

Charging an electric car at night is a great idea but won't actually save you any money. Most utilities, however, do not have off-peak demand benefits for residences (because residences don't pay a demand factor). Typically the utilities will have an INCREASED rate for residences if they exceed consumption limits (in kwh).

Lastly, unless you have electric heat, the little furnace fan is a non-material user.


wilderness profile image

wilderness 20 months ago from Boise, Idaho Author

But my utility DOES have residential time of day fee schedule; it is shown above. The off peak rate, summer, is just under 60% of the top tier regular rate that I would otherwise pay for the car (with a total electric home I always cross into top tier during the month). The car uses about 11 kWh per day, which does indeed come to a considerable savings over the year. $197 to be exact.

And yes, I DO have electric heat; that was specified above. While a heat pump is normally pretty efficient it DOES still take power to run and when the heating strips kick in whenever it goes under 30 degrees outside it becomes just another electric furnace, hogging power for all it's worth. If you look at the huge spike at 7AM on the graph of power usage, that's the heat pump kicking in and raising the house temperature for the morning. If you're familiar with such things (and it sounds like you are) that heat pump operates off of 1 60A breaker and 2 30A breakers. A total possible draw of over 28 KW although it will never, of course, reach that maximum potential.


win-winresources 20 months ago from Colorado

Dan-

An all electric house! My condolences. Sounds like you are doing your best to mitigate this.


wilderness profile image

wilderness 20 months ago from Boise, Idaho Author

Yep. They were popular and the utilities actually pushed for them back in the 70's when mine was built. I even have a brass plate near the front door touting how energy efficient it is with 2X4 walls and ceiling radiant heat, no less.

I've disconnected the radiant heat (although it did make a good backup when the heat pump went down) and switched to a heat pump, as well as replacing most of the aluminum windows. I've done enough that my bills are only slight more than comparable homes with gas.

But it's not as bad as it sounds; the NW, where I live, has pretty cheap power and that helps a lot. Gas prices vs electricity kind of fluctuate around each other, with one higher this year and the other next year.


Ericdierker profile image

Ericdierker 20 months ago from Spring Valley, CA. U.S.A.

Very interesting and a great teaching tool. I sure learned a lot about how it works. We do not have the flexible rates in my area.


Kristen Howe profile image

Kristen Howe 18 months ago from Northeast Ohio

Great hub, Dan, on how to save money on utilities by using electricity. Very useful for everyone. Voted up!

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