The rising costs of essentials—like eggs and utilities—are putting a strain on many households. With the average monthly expense for gas and electricity exceeding $200, an unexpected spike in your utility bill can create anxiety. Unfortunately, there’s only so much that can be done to decrease energy consumption.

One potential strategy to help contain these costs is to explore whether your utility provider offers a Time of Use (TOU) plan. Although these plans can require adjustments and a commitment to change habits, they may offer a valuable opportunity to reduce your monthly utility expenses.

What Is a Time of Use Utility Plan?

Utility companies typically bill customers at a flat rate; however, the demand for electricity fluctuates significantly throughout the day. Peak demand periods—generally occurring from 5 p.m. to 9 p.m., coinciding with the time many individuals return home from work and operate various appliances—pose challenges for energy providers. To alleviate this pressure, TOU plans are designed to motivate consumers to shift energy usage to off-peak times by offering lower rates during those periods.

Increased Costs During Peak Times

It’s vital to recognize that most TOU plans involve higher charges during peak hours compared to the standard rates one would pay without such a plan. Thus, signing up for a TOU plan won’t yield any savings unless you actively reduce energy use during these high-demand times, or it might lead to increased costs.

Potential Savings

If a TOU plan is available with your utility provider, it could result in significant savings. While the actual savings depend on specific rates and individual consumption habits, it’s feasible for some to save up to 40% on energy bills. However, achieving these savings requires effort and planning.

Ways to Maximize Savings with a Time of Use Utility Plan

To benefit from a TOU plan, one must acclimate to using energy predominantly during off-peak hours, which the utility company designates; flexibility in choosing when to benefit from lower rates is not an option. This necessitates lifestyle adjustments, such as running dishwashers, washing machines, and other high-energy appliances late at night. For those who own electric vehicles, charging them post-peak hours becomes essential. Additionally, adjusting the thermostat settings to minimize HVAC usage during peak hours is important.

While it may initially seem manageable to do household chores late into the evening, maintaining this schedule long-term can prove challenging. Should motivation wane and routines revert to a more convenient schedule, not only will the potential savings be lost but account holders could find themselves paying more than they would have under standard billing terms.

It’s also critical to acknowledge that some electricity will inevitably be consumed during peak hours, and those rates would be notably higher. To genuinely realize savings, enough energy usage must be shifted to those coveted off-peak slots; for individuals working remotely or who tend to spend extensive time at home, this might prove difficult.

Locating a Time of Use Utility Plan

If a TOU plan appears advantageous, the first step is to reach out to your energy provider to determine if such a plan is available. Furthermore, the U.S. Department of Energy’s website provides a state-by-state directory of utility companies offering variations of TOU plans. However, be aware that just because a TOU program is listed doesn’t guarantee its availability; some utility companies have limited enrollment periods or may be on hold for new customers, making direct contact essential for exploring options.