You check your electric bill. The rate is the same whether you ran the dryer at 2 p.m. or midnight. That’s how most people assume electricity pricing works. One flat number, no matter when you use it. TOU changes that assumption entirely.
TOU stands for time-of-use. It’s a billing structure where the price you pay per kilowatt-hour shifts depending on the time of day. Use power during high-demand hours, you pay more. Shift that same usage to off-peak hours, you pay less. For households with any flexibility in their daily routine, TOU can turn ordinary habits into real savings. Running the dishwasher after dinner instead of during it is one example.
TL;DR
- TOU (time-of-use) pricing means the cost per kWh changes based on when you use electricity. Higher during peak hours, lower off-peak.
- Peak hours are typically late afternoon into evening on weekdays, when grid demand is highest. Off-peak usually means overnight and weekends.
- TOU exists because building infrastructure for the busiest moment of the year is expensive. Shifting usage away from peak hours eases that strain.
- A smart meter is required to enroll. TOU billing depends on tracking exactly when you used power, not just how much.
- TOU can lower your bill if your household has real flexibility. Laundry, dishwasher, or EV charging shifted to evenings or overnight all count.
- If your usage stays locked into daytime hours no matter what, a fixed rate energy plan will likely serve you better than TOU.
- Con Edison, National Grid, PSEG, PECO, and PPL Electric all offer some version of time-of-use pricing. Peak windows and rules vary by utility.
- Comparing your actual hourly usage pattern matters more than chasing the lowest advertised rate on paper.
What TOU Actually Means for Your Bill
A TOU plan splits your day into pricing windows. These are usually called peak and off-peak, sometimes with a mid-peak tier in between. Electricity costs more during peak hours. That’s typically late afternoon into evening. Air conditioners, ovens, and lighting all run at once across an entire service territory during this window. It costs less overnight and often on weekends, when demand on the grid drops.
This isn’t a marketing gimmick. It reflects the actual cost utilities face generating power. When demand spikes, utilities sometimes have to fire up more expensive backup generation to keep up. TOU pricing passes some of that real cost difference on to you. That means it rewards you directly for shifting when you use electricity, not just how much you use.
Con Edison’s own Time-of-Use rate program is a good real-world example. Customers pay a standard delivery charge structure that’s lower during off-peak hours and higher during weekday peak windows. The goal is to encourage exactly this kind of shift.
Con Edison isn’t the only utility doing this. National Grid, PSEG Long Island, PECO, and PPL Electric all offer some version of time-of-use pricing or demand-based rate options in their territories. Specific peak windows, off-peak discounts, and enrollment rules vary by utility. If you’re outside Con Edison’s territory, check directly with your provider. National Grid, PSEG, PECO, or PPL Electric can each confirm what their current time of use electricity rates look like. “TOU” isn’t a single standardized product across New York and Pennsylvania.
Why TOU Plans Exist in the First Place
Every grid has a peak demand problem. Utilities have to build enough infrastructure to handle the absolute busiest moment of the year. Think a heat wave afternoon in July. That level of demand only happens a handful of days annually. The rest of the time, that infrastructure sits underused.
TOU pricing is one of the tools utilities use to smooth that curve out. If enough customers shift even a portion of their usage away from peak hours, it reduces strain on the grid. That can delay or reduce the need for expensive infrastructure upgrades. Those costs otherwise get passed on to everyone through delivery rates.
Some utilities take this a step further with a demand charge. This is a separate fee based on your single highest moment of usage during a billing period, not your total consumption. Demand charges are more common on commercial accounts than residential ones. It’s worth knowing the term exists. Time of use pricing and demand charges sometimes get bundled together in more advanced rate structures.
For customers, that translates into a genuine incentive. Say you’re a household that can run laundry at night, charge an EV overnight, or delay the dishwasher until after 8 p.m. A time of use electricity rate can meaningfully lower your bill compared to a flat rate structure.
How TOU Compares to Fixed and Standard Rate Plans
It helps to see TOU next to the alternatives.
A fixed rate plan
Locks in one price per kWh for your entire contract term, regardless of when you use power. You get predictability, your bill doesn’t swing based on habits or seasons, but you also don’t get rewarded for shifting usage to cheaper hours.
A standard flat rate
Works similarly to fixed, one price around the clock, though it can still change over time based on utility rate case approvals.
A TOU plan
Trades that predictability for potential savings. If your household genuinely has flexibility, someone home during the day who can run appliances off-peak, or a family that naturally does laundry and dishes late in the evening, TOU can beat a flat rate. If your usage is concentrated during peak hours regardless (a home office running equipment all day, for example), a flat or fixed rate energy plan might actually serve you better.
There’s no universal right answer here, it depends entirely on your household’s actual usage pattern, which is worth reviewing in our breakdown of fixed vs. variable energy rates if TOU doesn’t sound like the right fit.
Do You Need a Smart Meter?
Generally, yes. TOU billing depends on your utility knowing exactly when you used electricity, not just how much over the whole month. That level of detail requires a smart meter rather than the older mechanical kind. Most New York and Pennsylvania utilities have rolled these out broadly at this point. Still, confirm your home has one before enrolling in any time-based plan. Our guide on smart meters walks through how to check and what the upgrade process typically looks like.
Is TOU Actually Worth Switching To?
This is the question that matters most. The honest answer: it depends on your flexibility, not just your total usage.
A few signs TOU could work well for you:
- You can shift big energy draws, laundry, dishwasher, EV charging, to evening or overnight hours.
- Nobody’s home running appliances heavily during weekday peak windows.
- You’re comfortable monitoring your usage timing rather than setting it and forgetting it.
A few signs a flat or fixed rate energy plan might be the safer bet:
- Your household runs on a fairly fixed daytime schedule you can’t easily shift.
- You prefer bill predictability over the possibility of savings.
- You work from home with equipment or HVAC running consistently through peak hours.
Review your own peak energy usage patterns before switching. That’s the single best way to answer this honestly, rather than guessing based on what worked for a neighbor.
Comparing Providers Before You Commit
TOU is set by your utility, not by a supplier like City Power and Gas. What we do help with is the other half of your bill, the supply rate. Whether your utility has you on a standard rate or TOU, you can still choose a fixed or variable supply plan through City Power and Gas, and compare that against what other suppliers are offering. Understanding your actual hourly usage still matters here, since it affects how much a fixed rate could save you regardless of which delivery structure your utility uses.
Enter your zip code, compare fixed and variable supply rates side by side, and see the difference for yourself. No obligation, no pressure.
The Bottom Line
TOU electricity rates can genuinely lower your bill. That only holds if your household can actually shift usage away from peak hours. It’s not a universal upgrade. It’s a trade: predictability for potential savings. That trade only pays off if your daily routine has the flexibility to take advantage of it.
Before switching, take an honest look at when you actually use power. If the answer points toward evenings and weekends, TOU is worth exploring. If your usage is locked into the middle of the day no matter what, a fixed rate energy plan will likely serve you better. Either way, compare your options directly. Assuming one rate structure fits every household is the step that costs you money instead of saving it.
FAQs
What does TOU mean on my electric bill?
TOU stands for time-of-use, a billing structure where your electricity rate changes depending on when you use power. Time of use pricing charges more during peak hours and less off-peak, rather than one flat rate around the clock regardless of timing.
Do I need a smart meter to enroll in a TOU plan?
Yes. TOU billing depends on tracking exactly when you used electricity, not just your total monthly usage. Most New York and Pennsylvania utilities have rolled out smart meters broadly, but confirm yours has one before enrolling.
Is TOU cheaper than a fixed rate energy plan?
It depends on your flexibility. If you can shift usage to off-peak hours, TOU can beat a fixed rate energy plan. If your usage stays locked into peak daytime hours, a fixed rate or standard electric rate is often the safer, more predictable choice.
How do I compare electric rates before choosing a TOU plan?
Look at your actual hourly usage pattern first. Then compare electric rates across TOU, fixed, and standard options. Comparing electricity rates on paper alone doesn’t tell you which structure fits your household’s real routine.
What’s the difference between TOU pricing and a demand charge?
Time of use pricing charges different rates by time of day. A demand charge is a separate fee tied to your single highest usage moment in a billing period, more common on commercial accounts than typical residential bills.
Do Con Edison, National Grid, PECO, and PPL Electric all offer TOU rates?
Yes, in some form. Con Edison, National Grid, PSEG, PECO, and PPL Electric each offer time of use electricity rates or demand-based pricing. Specific peak windows and enrollment rules vary by utility and service territory.
Are competitive suppliers like Constellation or Green Mountain Energy an alternative to utility TOU rates?
Yes. Suppliers such as Constellation, Green Mountain Energy, Clearview Energy, and Energy Harbor offer their own time-based or fixed rate energy plans. That gives you options beyond your utility’s default time of use pricing structure.
