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What is the Time-Of-Use rate plan?

Last Updated: Feb 02, 2016 02:05PM PST

A Time-of-Use rate plan charges different prices for electricity depending on the time of day and season the electricity is used. During the middle of the day, the demand for electricity is at its highest; businesses are running and so is the air conditioning. Because of the high volume of electricity being used, under the Time-of-Use plan, utility companies will charge customers more for the electricity they use during these peak times. Likewise, electricity rates are higher in the summer than in the winter.

Why do they charge more during these peak hours (Ex: 12PM-6PM)?

When the demand for electricity is high, your utility company must pull power from other plants, driving up the price.

Why does this billing plan benefit solar homeowners?

Lucky for you, the solar homeowner, peak hours coincide with your panel’s peak production time—midday. This means you avoid the burden of paying those high, midday prices. Under the Time-of-Use plan, the utility company will purchase the electricity you do not consume immediately, at the going hourly rate.

Please Note: While TOU metering and rates are available to many solar customers, not all utilities offer a TOU option. Check with your local provider for TOU availability. In some cases, the savings from your SunPower solar system will increase if you switch to a TOU rate plan.

Southern California Edison Customers

The Time-of-Use plan is also known as off-peak savings. Green Convergence recommends many of its SCE customers to switch to the Time-Of-Use Domestic Tiered (TOU-D-T) rate plan. You must call SCE to specifically request a switch to this plan. Check your proposal, ask your sales consultant, or speak with your project manager to ensure the Time-of-Use plan is right for your home.

Here’s an example of how the traditional Tiered Billing plan is applied in real life…

Under the Tiered plan, you are charged based on your electricity usage. You are charged at a flat rate for the amount of electricity you use. Often, if you reach the benchmarks for a usage level, the cost per kilowatt hour will increase. Let’s say the limit is 1,000 kilowatt hours for Tier 1. If you use 1,500 kilowatt hours, you will be charged the rate of Tier 1 for those first 1,000 kilowatt hours. For the subsequent 500 kilowatt hours, you will be charged at a higher rate.

Here’s an example of how the traditional Time-Of-Use is applied in real life…

**Under the Time-of-Use Plan, your electricity will cost differing amounts, depending on when the electricity is used. For example, under the TOU plan, you may be charged 25 cents per kilowatt hour, between the hours of 6 AM and 12 PM. But if you were to do a load of laundry between the hours of 12 PM and 6 PM, your electricity may cost you .34 cents per kilowatt hour.

**Prices are not exact numbers. They have been used for the purpose of illustration.

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Last updated on: 2016-02-02 22:05:58 UTC
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