Time-of-use (TOU) rates charge different prices for electricity depending on when you use it. Peak hours (typically weekday afternoons and evenings) have the highest rates because demand on the grid is greatest. Off-peak hours (nights and weekends) offer lower rates. Some utilities add a mid-peak tier. TOU pricing incentivizes consumers to shift energy-intensive activities to off-peak hours, reducing strain on the grid and potentially lowering bills. Many states are transitioning to TOU as the default rate structure.
Time-of-Use (TOU) Rates
Pricing that varies by time of day, with higher rates during peak demand hours and lower rates off-peak.
Related Terms
Electricity Rate
The price charged per kilowatt-hour of electricity, varying by customer class (residential, commercial, industrial).
Peak Demand
The maximum electricity consumption in a grid during a specific period, typically hot summer afternoons.
Tiered Pricing
A rate structure where the price per kWh increases as consumption rises above set thresholds.