What is the Cheapest Time of Day to Use Electricity in 2024?

Do you want to know when is electricity cheapest and how you can save money on your energy bills? As a homeowner or a business owner, it’s important to understand the cost of electricity per kilowatt hour and when peak hours occur. By knowing the off-peak times, you can take advantage of lower energy costs and save money. Get ready to learn everything you need to know about when electricity is the cheapest and how you can take advantage of lower energy costs.

Time-Of-Use Energy Plans

The time when electricity is cheapest is not only dependent on the seasons and weather but also on the time of day. This is why some utility companies offer time-of-use rates, allowing you to pay different prices depending on the demand for electricity. When demand is high, you will pay a higher price, but during off-peak hours, your rate can be lower or even free.

The cost of electricity per kilowatt hour can vary depending on the type of customer. Industrial customers, who consume large amounts of electricity, may pay lower rates compared to residential customers, but they may also incur additional demand charges that residential customers do not have to pay. It is important to keep in mind that not every customer pays the same rate for electricity and that the type of customer can greatly affect electricity prices.

TOU vs Standard Rates

Utility companies offer time-of-use (TOU) energy rates, which are designed to reflect the cost of electricity during peak hours. During these peak hours, the cost of electricity is higher because most people use electricity at the same time, such as when they return home from work. TOU rates also take into consideration the use of energy-intensive appliances like air conditioners. The exact hours of peak periods can vary based on the utility company and the specific rate plan.

In contrast to TOU rates, standard energy rates do not vary based on the time of day. With standard rates, the price of electricity remains constant throughout the day, regardless of the amount of electricity being consumed. For those who use most of their electricity during off-peak hours, TOU rates can result in lower bills than standard rates. On the other hand, for those who use the most electricity during peak hours, TOU rates may result in higher bills than standard rates.

In general, TOU rates encourage consumers to use less electricity during peak periods and to shift their usage to off-peak periods, when the price of electricity is lower. By doing this, TOU rates can help reduce the demand for electricity during peak hours and reduce the need for utilities to generate electricity from less clean energy sources.

Off-Peak Electricity Hours

Off-peak hours refer to the periods of time when electricity usage is at its lowest, typically at night or during the day when most people are not at home. During these hours, the utility company often charges lower rates for electricity usage, which can be a cost-saving opportunity for customers who are on a time-of-use rate plan. 

Some energy plans have designated off-peak hours during which the price of electricity is much lower than during peak hours. Utilizing off-peak hours to run energy-intensive appliances like air conditioners, clothes dryers, and others can help you save money on your utility charges. However, it’s important to note that while off-peak hours generally offer lower rates, they may still be higher than rates charged by standard energy plans.

On-Peak Electricity Hours

On the other hand, on-peak electricity rates are the times during the day when the demand for electricity is the highest and therefore the utility companies charge a higher rate for it. These peak hours usually occur in the early afternoon and continue until early evening when people return home from work and use more lights and appliances. During on-peak hours, it is important to be mindful of your energy use and consider implementing energy efficiency measures such as turning off lights and unplugging electronics when not in use. 

If you find that you are using most appliances during these on-peak hours, you may want to consider switching to a time-of-use energy plan which offers lower rates during off-peak hours. This way, you can reduce your electricity costs by using your appliances and devices during the times of the day when the price of electricity is lower.

On-Peak Hours in Different States

Different states, different rules. Here are the on-peak hours in different states: 

• Times are subject to change, please check with your local utility 

Off-Peak Hours on Different States

As every state has its own energy grid and its own production capacity, they all have different off-peak times during the day. Here are a few: 

• Times are subject to change, please check with your local utility

Factors That Affect Electricity Rates

There are several factors that determine electricity prices. Among these are the price of fuels, power plant prices, and weather conditions. Some of these depend on energy efficiency, that is how well the grid can handle more energy during certain periods of the day. Some of them depend on international factors and cannot be affected. Here is a detailed breakdown: 

Fuels

Fuels play a significant role in determining the energy rates you pay for electricity. Energy providers need fuels to generate electricity, and the cost of these fuels makes up a large portion of your energy bill. In the future, as the electric grid modernizes and more renewable resources are used, it is expected that energy rates will decrease, as renewable power plants don’t require fuel. To reduce your energy costs in the meantime, it’s important to choose energy providers with lower energy rates and be mindful of your electricity use.

Fuels play a significant role in the cost of generating electricity. Some of the common fuels used in energy generation are coal, natural gas, nuclear, and renewable energy sources such as wind, solar, and hydro. The cost of fuel, as well as the supply and demand, can greatly impact the electricity rates charged by energy providers. For example, if there is a shortage of natural gas, the cost of generating electricity from natural gas will increase, leading to higher electricity rates for customers. Additionally, renewable energy sources, such as wind and solar, are becoming more widely used, as they are cheaper and have a lower impact on the environment.

Power Plant Prices

Even with the latest technology, power plants still incur costs for their building, operation, maintenance, and running business. These costs are reflected in the energy rates charged by energy providers and are included in the price you pay for electricity. It’s important to note that these costs are money well-spent, as power plants are essential for ensuring a reliable supply of electricity for both residential and commercial customers. By reducing your electricity consumption, you can also save money on your energy bill.

Transmission and Distribution Area System

The local transmission and distribution systems also contribute to the electricity rates you pay. These charges can be found on your monthly bill under the heading “utility delivery charges.” If you have any questions about these charges, your utility customer care center can offer support and provide information on how to better understand them.

Area Regulations

Local area regulations also play a role in determining the energy rates you pay for electricity. These regulations standardize energy products and protect customers by dictating the energy price and limiting how much you can pay for early termination fees, kilowatt hours of power, and other special conditions of your contract. These regulations also dictate how information is displayed when shopping for electricity.

Weather Conditions

Local weather conditions can also affect energy prices. For example, extreme weather events such as freezes or heat waves can increase energy demand, driving prices up and making it difficult for energy providers and utilities to meet the electric needs of all customers. During peak times, when electricity demand is high, it can be more expensive to purchase extra energy, as energy providers must work to meet the increased demand. In contrast, during off-peak periods, when electricity demand is lower, it’s often cheapest to purchase extra energy. For example, during particularly hot weather, when many residential customers turn on their air conditioning, electricity demand increases, leading to higher energy rates.

Summer

Energy consumption in the United States typically rises during the summer months. There are two main factors (higher temperatures and increased demand) that contribute to this increase in electricity usage. One of the main factors is the weather, as many people turn on their air conditioning to cool their homes during hot temperatures. This results in higher electricity consumption and higher demand for electricity, which can drive up the price of electricity during peak hours.

In order to manage the increased demand for electricity during the summer, utility companies may also need to bring additional power plants online to meet the increased demand. This can also contribute to higher electricity rates during the summer months, as the cost of generating electricity is reflected in the price that customers pay for electricity.

Winter

The United States experiences an increase in energy prices during the winter season for a few reasons. A rise in demand from homeowners needing more heat is one primary cause, as well as rising production costs due to the need for more fuel and transportation costs increasing in worse weather conditions. Any of these factors individually can lead to higher prices, and all together make this seasonal bump a reality.

Time of Day

The time of day you use electricity also affects the energy rates charged by energy providers. Energy providers have peak and off-peak periods, and the rates for electricity can be different during these times. During peak times, when demand is high, electricity rates are often higher. This is because energy providers have to generate more electricity to meet the high demand, which can be expensive. On the other hand, during off-peak periods, when demand is low, electricity rates are often lower. This is because energy providers do not have to generate as much electricity, which saves them money.

Customer Type

The type of customer you are, whether residential or business, can also impact the energy rates you pay. Residential customers often have lower energy consumption compared to businesses, as they typically use electricity for lighting, heating, and air conditioning. Businesses, on the other hand, often have higher energy consumption, as they use electricity for a variety of purposes such as manufacturing, office lighting, and computers. Energy providers often charge different rates for residential and business customers, to reflect the different levels of energy consumption.

Geographic Location

Geographic location can also impact the energy rates charged by energy providers. Some US states have lower generation capacity and therefore, electricity is more expensive. This is because energy providers have to import electricity from other states to meet the demand, which can be expensive. Additionally, states that are rich in natural resources, such as coal or natural gas, may have lower electricity rates, as the cost of generating electricity is cheaper.

Current Events

Current events on the geopolitical scene can also impact energy rates. For example, a war in a major oil-producing country can lead to a shortage of oil, which in turn can drive up the cost of generating electricity. Additionally, foreign arrangements, such as trade agreements and tariffs, can also impact the cost of energy generation. For example, if a country imposes a tariff on imported coal, the cost of generating electricity from coal in that country will increase, leading to higher electricity rates for customers.

FAQs

Conclusion

Understanding when electricity is cheapest is crucial for homeowners and businesses alike. By knowing the off-peak hours, you can take advantage of lower energy costs and save money on your electricity bill. Additionally, time-of-use energy plans and energy efficiency measures can help reduce the demand for electricity during peak hours and lower the need for utilities to generate electricity from less clean sources. By considering factors such as fuel prices, power plant prices, and weather conditions, you can make informed decisions about your energy usage and take steps towards a more sustainable and cost-effective future.

Updated on 03-08-23