THIS IS VERY LONG AND DETAILED. IF YOU THINK YOU KNOW ABOUT TIME OF USE RATES, AND ARE UNAWARE OF TIME OF USE WITH DEMAND, YOU NEED TO READ THIS.
A lot has been spoken about going to a time of use rate when it comes to plug in hybrids to save money. The basic idea is to change your service so that electric rates are cheaper in the evening when you would charge your car (reducing the cost to charge).
I have actually been on a Time of Use with Demand rider for the last 6 years. I know most of the Ups and Downs. It saves me over $600 a year, and I though I would post my experiences so people can go ahead and investigate the rates for themselves in their own area armed with more knowledge. In my 6 years with the service, I have NEVER gotten a bill where I failed to save money over the standard rate. NEVER. My total savings exceed $3000 dollars. As I will explain later, the only difference to my life style is drying clothes during non peak hours (after 9PM or on weekends). Basically I just do my laundry in the evening or weekends. You don’t have to do this, but if you can dry during non-peak, it adds a lot to your savings. A few things of note... It is VERY important you do your own research on electric rates in your area. The availability of these plans, and the effectiveness of their rates varies WILDLY from one power company to another. Also, in our area, the customer support centers for the electric utility will do their best to steer you away from these plans. I have convinced at least 4 co-workers to go to this plan, and everyone has saved a lot of money.
On-peak Hours: These are hours that your electric company has designated as peak hours for high energy demand. For many locations, this would start around 9AM and continue to the early evening (8-9PM) and include Monday through Friday (excluding holidays).
Off-peak Hours: These are hours that your electric company has designated as off peak hours for low energy demand. For many locations, this would start around 8-9PM at night and continue through 9AM the next morning. Off peak hours also normally include all hours during the weekend and holiday.
On-peak kWh: The energy used during on-peak hours
Off-peak kWh: The energy used during off-peak hours
Demand Factor: Differs depending on the area... The demand factor is a rate (usually a summer and winter rate) multiplied by the most On-peak kWh you used during a given period of time for the month (for my location, this is 15 minutes, I have seen more for others). This can be difficult to understand, and I'll explain that later.
Let me define a few types of rates out there when it comes to Time of Use:
Time of Use (or All Energy Time of Use):
General rate equation:
* Service Charge + (On-peak rate) x (total on-peak kWh) + (Off-peak rate) x (total off-peak kWh)
This means that after each month, they will add up all peak and off peak energy used, and multiply those numbers times their respective rate.
* What’s the catch? It’s the on-peak rate. It is often near double what you pay for your standard rate. The off peak rate is about half your normal rate. So during a given month, if you generally use about the same amount of energy on peak as off peak, you'll come out about even (and save no money).
* What’s the advantage? If you can structure your energy costs to the evening (don’t run much A/C or heat during the day, wash dry clothes at night) then you can save significantly.
Time of Use with Demand
General rate equation:
* Service Charge + (On-peak rate) x (total on-peak kWh) + (Off-peak rate) x (total off-peak kWh) + Demand Factor
* What’s the advantage? Your on and off peak rates are generally around half as expensive as the standard rate.
* What’s the catch? The demand factor.
The demand factor defined:
"The largest number of kWhs used during a 15 minute period during all on-peak hours multiplied by a seasonal adjuster."
You take the 15 minute period of energy used during peak hours (in my case, it averages around 7.5 kWh) and multiply is by a seasonal number. For my location, you multiply 7.5 x ($5.02) in the summer or ($3.50) in the winter. This gets added to the bill.
Actual number comparisons from my own bills for the different service:
PEAK MONTH USED (8/24/07 Bill Date):
3,360 kWh total used
1249 On Peak energy used
2111 Off Peak energy used
9.05 Demand Factor
If I paid for this using Residential Service:
$6.75 (service fee) + 3360 x .09678 cents = $325.18
If I paid for this using Time of Use Service All-Energy:
$9.85 (service fee) + 1249 x .16179 (on-peak charge) + 2111 x .04528 (off peak charge) = 9.85+202.08+95.59=$307.52
[17.66 savings over regular plan]
If I paid for this service using Time of Use with Demand (I currently have this rate):
$9.85 (service fee) + 1249 x .05902 (on-peak charge) + 2111 x .04528 (off-peak charge) + $5.02 x 9.05 (demand factor) = $9.85+$73.72 + $95.59 + $45.43 = $224.59
[$100.60 savings over regular plan]
As you can see, the savings with Time of Use with Demand can be very dramatic. The biggest X component is the Demand Factor. Most people are scared to subscribe to this service because their demand factor energy used it unknown.
How I estimated mine:
I cut everything on in the house that could be on at one point. I had the A/C running, the washing machine running, the dish washer going, the stove top on, the TVs on, then I went outside to look at my electric meter and recorded the number. I waited 15 minutes, then went outside to record the next number. That is your max demand factor estimated.
Biggest factors that will add to your demand factor:
Electric Water Heaters
Electric Air and Heat
I have a gas water heater and gas electric heater. With this rate, I actually wish I had an electric heater (would save me money), but the water heater being on gas does shave off some peak demand. My big rule is NEVER DRY CLOTHES DURING ON PEAK HOURS. Drying clothes can add 2-3 to the demand factor. Anything else goes.
Go to your local utility websites and start researching your rates. I have seen some locations where the actual rates are very bad, and some that are much better than mine. I seem to be in the middle.
Please ask questions and I will try to answer them. I do not mind giving you more information on my precise bills.
ON ADDED NOTE: you savings on time of use are going to be more impressive the more energy you use. During the winter, I use around 900-1700 kWh a month. During the summer, it peaks around 3500 kWh, but then tapers off to around 2500. If people get serious about switching, I can get more detailed.