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FAQ: Time of Use electric rates and how to use them to save money

23163 Views 16 Replies 6 Participants Last post by  ChrisC

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.

Terms Defined:
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 Dryers
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.
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I am going to start posting some links to local power companies and their rates. Feel free to post links to your own (for comparison, or helping others find rates in their area).

Progress Energy in NC:

Duke Energy in NC:

Dominion energy in NC:

Pennsylvania Power and Light
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Since there was another thread asking


For public interest, could you calculate the cost to charge the Volt the full 8 kwh every evening at your rate. This would equate to 365 days times 8 kwh or 2,920 kwh.

This amount of energy would provide 40 X 365 or 14,600 miles.

I would be interested to see what the cost per mile is, because with your electric rates it seems like it would be very low.

I thought a charge would take more than 8 KwH. in any event, with the numbers you have provided, demand factor would not be an issue charging after 9 PM or on the weekends. Assuming 4.5 cents per kwh, this would amount to around $130.40 cents to charge per year. It would cost 9/10s of a penny per mile.

The Volt has a 16 kWh battery, but is designed to operate between 80% and 30% state of charge. Therefore, it has a useable storage of 8 kWh, which can provide 40 miles AER.

The purpose of the 80/30 battery state is to prolong the battery life, but also provide some capacity after initial charging for regen braking (for instance, if you live on a hill and will be using the regen braking directly after charging).

Anyway, 0.9 cents per mile for energy compares very well to even the Prissy, which at 45 mpg and $4 per gallon has an energy cost of about 9.0 cents per mile.

So that is a factor of 10 to 1!
As I will explain later, the only difference to my life style is drying clothes during non peak hours (after 9PM or on weekends).
Why don't you just hang your laundry outside to dry?
I live in a nice neighborhood. I believe clothes lines are prohibited in the covenents. even if they were not, I would not do it. I have a hard enough tim doing laundry to begin with, let alone having to pile it in a basket to take outside and string it across my yard.

I just did my bit for the environment/energy use this year. I just a spent a small fortune installing a new very efficient ac unit this weekend. The unit is also dual fuel. I'll heat the house with a heat pump, but if it gets too cold for the heat pump, natural gas kicks in. I now expect my year on year savings with electricity to be over $1000 with this meter and now heating my house with more efficient electricity over natural gas.

Where ?

CZ, we had "Peak Corps" in Sacramento, Ca when I lived there. I just wish to provide my experience, not lessen what you have gone out of your way to provide as, literally a public service. We had "gas" natural gas, AKA methane, from another provider. It serviced the heat, hot water and clothes dryer. The gas bill was always small and a fraction of the electric bill. The biggest part of the biggest electric bill was undoubtably the air conditioner in the summer. And they would cycle us off exactly when we needed it the most, when we came home from work in late afternoon ambinet temps over 100 F. I swore when it expired we would never, never use the service. I guess we were spoiled and wanted the AC badly. This was SMUD, Sacramento Metropolitan Utility District, BTW.

Where are you located where you realized your savings and if you have scorching PM temps, how do you deal effectively with that ??

this is a different type of peak meter.

Service is not interrupted under any circumstances.

California is so different than anywhere else in just about everything, and I have heard of peak plans that allow the power company to disconnect under high load times, but the plan I am describing does not do this. If it did, I wouldnt be on it.

I am in Raleigh, NC. The only change to my lifestyle is drying clothes after 9PM or on the weekends. You dont even have to do that. Now that I just upgraded to a high end HVAC (dual fuel), my yearly savings will be over $1000 with this meter (will rarely be using natural gas for heating anymore, unless it gets really cold outside, then a high efficiency furnance takes over the heat pump).
bttt. I still say this post or some summarization should go into FAQ
DTE (Detroit Thomas Edison) has the following rates:

June through October:
8.750¢ per kWh for all On-peak kWh
2.100¢ per kWh for all Off-peak kWh

November through May:
7.000¢ per kWh for all On-peak kWh
2.025¢ per kWh for all Off-peak kWh

On-Peak Hours: All kWh used between 11:00 a.m. and 7:00 p.m. Monday through Friday.
Off-Peak Hours: All other kWh used.

Service: $19.00 per month
Distribution: 4.359¢ per kWh for all kWh
(I don't think power supply and delivery charges are added)

We are currently paying the following:

First 17 kWh per day: 4.531¢ per kWh
Additional: 5.941¢ per kWh

Service: FREE
Distribution: 4.284¢ per kWh
Power Supply: 1.0964¢ per kWh
Delivery: 0.5911¢ per kWh
I would have to crunch the numbers to see which is better. Right now, I'm pretty sure regular service is cheaper.
Yeah, it seems to be a toss up for those who can save. The rates in NC are very advantageous to time of use based rates, while other providers seem to make it work for only the biggest users.
BTTT. Getting pretty close...

Since I started using ToU w/Demand in July of 2001, I have saved almost $5000 in electric costs. The savings when I get a plug in are going to probably bump this up another 20-30%.
In light of the very deficient posting Lyle had on the front page, I wanted to highlight this thread again. TOU-D is going to be the better plan for many over TOU.
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