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25th November 2020
What is The Time of Use Rates?
  • BY : Ellen Ra
  • BY : Ellen Ra
  • 25th November 2020

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What is The Time of Use Rates?

Suppose you are one of the types of people who do not care much about the utility bill’s breakdown in costs but rather just opens and pays it. In that case, you might assume that your energy is a set price every month, especially if you have installed solar panels in your home to use solar energy, I mean how can it differ that much from month to month? However, for most people, the electricity bill is a variable rate that depends on how much you use electricity and what time of day. In most states, if you have solar paneling in your home, these variable rates are optional and left to utility companies’ discretion. Still, they are becoming mandatory in a few states such as California.

Time of use rates

When it comes to solar panels, these variable rates are known as the time of use rates, and they were set in place to help consumers and homeowners to save money on their utility bills. The time of use rates is put in place to encourage customers to use the bulk of their energy at specific times. It can even affect where you plan on placing the solar energy panels on your roof!

What is the reason for offering these rates

As mentioned above, the Time of Use rates refer to a price set out by your electricity company, and it determines the amount that you will pay to use energy based on the time of day in which you use it. Suppose you pay a fixed rate for electricity in your home. In that case, it does not matter when or how often you use your power. The price you pay will always be the same, making household budgeting more manageable, but does not tell you exactly how much electricity you are using weekly to monthly.

Depending on the time of day that you use your energy, you are putting higher or smaller demands on your electric grid. Mornings and evenings when most people are home from work and doing their daily tasks are when the network goes through the most strain.

How do these rates work

In simple terms, your solar paneling or electricity company will give two different rates: off-peak hours when the electricity usage is not in high demand, and on-peak hours when it is in high demand. Also, it may change based on the weekend days when more people are home and weekdays when most are away.

Solar panels and TOU rates

California started the mandatory trend, but other states are following suit and beginning to require homeowners that have solar paneling also to have to use the Time of Use Rates plan. Those with solar energy have their rates reasonably similar to those with traditional power in their home. The new rule for those with solar panels is called Net Metering 2.0, based on the credit that you get for electricity. For those with solar energy in their homes, the peak hours will start in the early evening and go until the sun is high the next day. Because the sun is the highest in the southern hemisphere, your panels will generate the most electricity if they face toward the south, which means that it can help you save money. You will create the most power if your panels face the South, but because of the Time of Use Rates, the value of that generated electricity may be higher if the panels face towards the west. If you make more electricity than you need, you may get a better credit when it comes to on-peak hours, meaning that you can save or spend more or less money depending on where you place the panels.

Thank You so much for your time,

Ellen Ra
Love Solar Energy

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