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 to 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 does Time Of Use (TOU) rate impact my bill? Am I able to save money on a TOU rate 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.

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

Peak Demand or Peak hours are hours of the day that electricity usage is high. According to the California Public Utilities Commission (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 to 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 Time Of Use (TOU) time frames in your area.

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

Energy Upgrade California^® encourages all Californians to initiate energy savings during the peak hours of 4 to 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 California Public Utilities Commission (CPUC) effort to support the state’s ongoing shift to cleaner energy. Time Of Use (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 have been 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.

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.

This is why Californians were transitioned to Time Of Use (TOU) rate plans. In response to Assembly Bill 327 (Perea, 2013) in 2015, the California Public Utilities Commission (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 Time Of Use (TOU) rate plans began in 2019.

When did Time Of Use (TOU) plans go into effect in California?

Time Of Use (TOU) pricing plans have been in effect for large business customers across the state since the 1980s, and small business customers began enrolling in Time Of Use (TOU) plans beginning in 2009. The California Public Utilities Commission (CPUC) directed each of the investor-owned utilities (IOUs) to conduct both an opt-in and a default pilot of TOU rate plans for residential customers. San Diego Gas and Electric (SDG&E) was the first IOU transitioning its residents to TOU plans in 2019. Pacific Gas and Electric (PG&E) and Southern California Edison (SCE) began defaulting customers to TOU in October 2020. All eligible residential customers of SDG&E, PG&E, and SCE had been transitioned to TOU by June 2022.

Does Time Of Use (TOU) impact my gas bill as well?

Time Of Use (TOU) affects electricity pricing only.

How does Time Of Use (TOU) impact me as a solar customer?

Solar customers should contact their local energy provider to learn how Time Of Use (TOU) may impact their bill.

How does Time Of Use (TOU) impact me as an electric vehicle owner?

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

Can I still use energy during peak hours?

The state is not asking Californians not to 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 to 9PM.* and when possible 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 Time Of Use (TOU) time frames in your area.

Is Time Of Use (TOU) a California-only initiative?

No. Other states across the nation have implemented similar Time Of Use (TOU) programs, such as Arizona, Illinois, Maryland, Mississippi and New York, with the goal of shifting energy use to times 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, wind and solar have become viable utility- scale sources and researchers continue to develop other technologies.

What are the benefits of clean energy?

Using clean energy will help California 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 Time Of Use (TOU) plans available in my region?

The three large IOUs (PG&E, SCE and SDG&E) in California are required to transition to default Time Of Use (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? Am I affected by Time Of Use (TOU)?

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

[Updated June 2022]