Time-of-use electricity pricing is a model in which the cost of power varies by time of day. Instead of paying a flat rate per kilowatt-hour, your energy price is higher during peak demand and lower during off-peak hours.
In Texas, these time-of-use (TOU) plans aim to encourage customers to use more power during lower-demand periods and less during peak hours. For some households, that shift can lead to meaningful savings if you move most of your energy consumption to times of off-peak hours.
Understanding how TOU rates work, and whether they match your daily routine, is key before choosing this type of electricity pricing plan.
How Time-of-Use (TOU) Rates Work
Time-of-use rates reflect the real-time cost of producing and delivering electricity. When demand on the Texas grid is high, electricity costs more. When demand drops, prices typically also fall.
Electricity providers determine rates for TOU plans based on energy usage patterns from their customer base. Times of higher usage are assigned higher rates and vice versa. That means your total bill depends on both how much electricity you use and the time you use it.
Peak/off-peak hours and rates vary by provider and plan, so reading the electricity facts label (EFL) is essential to helping you determine whether a plan fits your household usage.
What are Peak, Off-Peak, and Mid-Peak Hours?
Time-of-use electricity plans divide the day into pricing periods based on demand.
- Peak hours: The most expensive time to use electricity. In Texas, this typically occurs in the late afternoon and early evening, when air conditioning, cooking and other household usage are highest.
- Off-peak hours: The least expensive period, usually overnight or early in the morning, when demand on the grid is lowest.
- Mid-peak hours: A middle-tier pricing period that falls between peak and off-peak electricity times. Rates are higher than off-peak but lower than peak pricing.
For example, Tara Energy’s Nights Free Plan credits your bill back for energy used from 9:00 p.m. to 7:00 a.m., helping customers who run appliances overnight. Its Weekends Free Plan works similarly, crediting your bill back for usage from Friday 7:00 p.m. to Sunday 11:59 p.m. This is a great plan to consider if you can use most of your high-energy appliances like washers and dryers over the weekend. Tara Energy’s Free Days Plan works this way as well, crediting your bill back from usage from 9:00 a.m. to 4:00 p.m. during the day.
The most reliable way to estimate your potential savings could be to compare your actual usage patterns to the plan’s pricing windows. You can check a plan’s electricity facts label for this information.
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Example of a TOU Schedule
A typical time-of-use schedule in Texas might look like this during the week:
- Off-peak hours (when electricity demand is usually the lowest): 9:00 p.m. to 7:00 a.m.
- Mid-peak hours (when electricity demand starts to rise): 7:00 a.m. to 2:00 p.m
- Peak hours (when electricity demand is typically the highest): 2:00 p.m. to 8:00 p.m.
For weekend days, some time-of-use plans in Texas reduce or eliminate peak pricing on Saturdays and Sundays. Others offer free electricity starting from Friday evening through Sunday night.
Pros and Cons of Time-of-Use Electricity Plans for Texans
Time-of-use electricity plans can be a good fit for some people, but they aren’t always the most cost-effective plan for everyone. The value depends largely on how flexible your household is and when you use the most electricity.
Pro: Potential Savings for Flexible Users
TOU plans tend to favor customers who can shift energy use to off-peak hours. Things like running dishwashers, laundry machines, and pool pumps overnight can help costs under TOU plans.
Plans with free electricity times, such as nights or weekends, that can help boost your savings even more when you use power during those windows.
Con: Risks of Higher Costs During Peak Hours
Activities like running the air conditioning, cooking, and entertaining guests commonly happen during peak energy hours in Texas. It’s likely that if you don’t change your energy consumption habits, a TOU plan could end up costing you more, even if off-peak rates are low.
If your family has a rigid schedule or limited flexibility, you may find it too challenging to shift your usage enough to offset higher rates.
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Who Should Consider a TOU Plan in Texas?
Time-of-use plans tend to work best for Texans with flexibility in their daily routines, such as:
- Households that can run major appliances late at night or on weekends
- Remote workers or night-shift employees with nontraditional schedules
- Renters or homeowners whose electricity use is already concentrated outside peak hours
A TOU plan may not be the best fit if your household:
- Typically runs the HVAC system in the late afternoon and early evening hours
- Has fixed schedules that limit when electricity can be used
- Prefers the predictability of a flat-rate electricity plan
Ready to find the right plan? Explore Tara Energy’s electricity plans today and take control of your energy costs with confidence.
How to Optimize Your Energy Usage with Time-of-Use Plans from Tara Energy
If you’re considering a time-of-use plan, small adjustments to when you use electricity can make a noticeable difference in your energy bill.
- Shift energy use to off-peak hours. Run dishwashers, laundry machines, pool pumps and other energy-intensive appliances overnight or early in the morning, when electricity rates are typically lower.
- Use tools to automate savings. Programmable thermostats, smart plugs and appliance timers can help move electricity use out of peak hours without requiring constant attention.
- Choose a plan that matches your routine. Tara Energy’s Nights Free plan may benefit customers who use more electricity overnight, while the Weekends Free plan can work well if you’re active at home on the weekends.
Frequently Asked Questions About Time-of-Use Electricity Plans
What is a time-of-use electricity plan?
A time-of-use electricity plan is an energy plan with variable electricity rates that depend on the time when electricity is used. Prices are higher during peak demand hours and lower during off-peak periods, encouraging customers to shift usage.
Is a TOU plan better than a flat-rate plan?
A TOU plan isn’t automatically better. It’s generally a better fit for households able to move their energy usage to off-peak hours. Flat-rate plans may be more predictable and cost-effective for customers with fixed schedules.
What time-of-use plans does Tara Energy offer?
Tara Energy offers a Nights Free and Weekends Free energy plan. You can see what’s available in your area by entering your zipcode on the website.
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Is Time-of-Use Electricity Right for Your Home?
TOU plans reward off-peak usage and can lower your household’s energy costs. They can be a good choice for people who understand their energy habits and have flexibility in when they use power.
Before you switch, be sure to review your daily energy patterns and see if you can optimize them to take advantage of a TOU plan’s off-peak rates.
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