When you, as a customer, recognize how to monitor your electricity consumption and learn how the rates are set at various times, you can then adjust your behavior according to those peak hours. The energy-intensive tasks can wait until the rates are at their lowest.
The factors that primarily impact the electricity rates are demand and the way electricity is consumed. Other variables contribute but these are key. Understanding the “cause and effect” allows better decision-making with energy use and when selecting a plan.
It makes sense that when the demand for electricity goes up, the rates will as well. At specific times of the year, rates will spike, and in others, they will fall.
Specifically, in the spring and fall, electricity use is low and will cost less but thisincreases in the summer and winter with the extreme temperatures. That’s because of the heating and cooling use.
Summer is typically considered a higher peak than winter with air conditioning making the rates the highest in the hottest months of the year. Determining the peak/off-peak use is based on location and the weather conditions.
When To Lock in at a Fixed Electricity Rate
Electricity suppliers will supply a fixed rate or locked-in electricity contract where the rate will remain the same for the duration of the plan’s length, regardless of market fluctuations. The market can change based on the time of day, season, and other variables.
The advantage of a fixed plan is a predictable, stable rate to be able to set a budget. The idea is to wait until the cost is cheapest, usually in the spring or fall when use is at the lowest. But that will depend on your location and the weather at those times.
Another factor to consider the time of day. The season and weather aren’t the only variables that can determine when energy rates go down. The time of day will also have an impact on the price. Because of this, some suppliers will include “time-of-use” plans with their offerings.
These allow customers to pay varied rates based on the time of day. When demand is at its highest, the rates will increase and at the lowest point, the prices will go down or sometimes be free. The rates can change for various customers in certain circumstances.
The type of customer can sometimes affect the rates. For instance, an industrial customer with the likelihood for heavy usage could pay a lower rate compared to a residential customer but these clients will also have extra demand fees that the residential client isn’t responsible for.
The Fuel Type Affects Access and Rate
The fuel cost for the resources used to generate power can also have an impact on the rates at specific times. Coal and natural gas are common fuels used in the US with the demand for these commodities rising and falling as is true for any commodity.
When natural gas is in high demand, the price rises, and that increases the rate of electricity that is generated from this resource. Transporting the fuel from the primary source to the generating plant will also increase the cost.
The desire is to find alternative resources for power to be more environmentally friendly, but the cost is considerable.
Geographic Location Has an Impact on Energy Rates
While it’s important to know when off-peak hours are, it’s also important to recognize where the lowest rates are. From one state to the next, the costs vary and that’s true even of the location of your home in the state where you reside.
If you’re near a power plant, it’s less expensive to bring electricity to your home. Some plants are nearby to fuel resources allowing price reductions for the local communities.
When Are the Rates the Cheapest
When customers grasp when the rates fall and at what point they’re at the lowest, usage can be manageable and costs better controlled. It takes a bit of planning but is an invaluable effort.
Monitor the rates in your area to learn what time of year is the cheapest, whether spring or fall, and then lock in at those rates. View here for an idea of when electricity rates are the lowest.
What Is Time-Of-Use Electricity Rates
Time-of-use rate structures and varied other pricing plans each have the objective of incentivizing the client to use energy during off-peak times and disincentivizing use at the point when generating costs are highest. When customers gain better insight into the plan methodologies, they can reduce their monthly rates.
The TOU rates are part of an “innovative rate structure” meant to adjust electricity rates customers pay at varied intervals of the day, commonly called “time-varying rates.”
The rate customers will pay to use electricity is meager at certain periods, when electricity generation costs and demand are minute, like in the middle of the night. At the same time when these are high like in the middle of a sweltering high summer afternoon, the rate will be considerable.
Time-of-use will vary on holidays, seasons, weekends, weekdays, and throughout the different hours of the day.
Why Is the Time-Of-Use Structure Needed
The TOU- time-of-use structure attempts to align the electricity rates the customer sees with the genuine price of electricity production. As a rule, the utility companies update the residential rates roughly twice annually at a specific “$/kWh.”
The price is meant to include each aspect of electricity generation for the customer. These costs differ at varied times of the day for many reasons. With increased demand, the generating prices go up also. The “time-varying rate” offers customers insight into how rates increase and drop throughout the day.
TOU rates supply a layer of transparency. With adjustments in the costs based on a particular period, you can more thoroughly understand the genuine price point for your usage. This knowledge allows a better opportunity to reduce the utility bill by adjusting when you use power.
When Is the Cheapest Time of Day for Electricity Use
To determine når på dagen er strømmen billigst or when during the day is the electricity cheapest, you need to know when everyone else is not using it. That sounds relatively simple. As a rule, in many areas of this country, peak hours include:
- The winter: In the morning from “6 am until 9 am” and then in the evening running between “5 pm and 9 pm” so it’s essential before people leave for work and after they return home.
- The summer: The peak in summer is at the time of day when the heat is at its worst, and the air conditioning is working the hardest, roughly between “12 pm and 6 pm.”
The off-peak hours for most areas include:
- The winter: The temperature in the house is at its highest during the day and the home is typically empty. The lowest usage falls between “9 am and 5 pm.”
- The summer: Once the most extreme part of the heat has dissipated and the air conditioning can calm down, as can the occupants, the usage goes down usually between “5 pm and 10 pm.”
The lowest usage for every season and most all regions include night hours ranging from roughly “9 pm until 5 am.”
It’s suggested to avoid using electricity at peak hours, but day-to-day schedules will dictate the way electricity needs to be used. Some tips can be incorporated to benefit from the off-peak hours, however.
- Seasonally: Adjust the temperature before leaving home for the day. Raise the setting in the summer and keep it low in the winter.
- Appliances: Smart appliances can be programmed so these run in the night at off-peak times. These include the dishwasher and washer/dryer.
In the winter, you can dress warmer and put extra blankets on the bed instead of raising the temperature. The home should have weatherproofing including weather stripping of the doors and windows to prevent air from escaping for greater energy efficiency.
Aside from monitoring when electric rates are at their lowest to adjust your usage and reduce your costs, you can take added measures to reduce your utility costs further. A professional home energy audit will give you insight into where you can conserve energy.
This will show poor insulation, gaps, and where energy is needlessly being consumed. Old or outdated appliances will cost more than modern energy-efficient machines. You’ll see a return on these investments with reduced energy costs and often rebates and tax credits are offered when new appliances or an HVAC system are added to a home.