Energy Cost & Tariff Savings

Formula

Cost = Σ (kWh_t × Rate_t)

Total cost is the sum of usage in each time period multiplied by that period's rate. Savings come from 'Load Shifting'—moving consumption (kWh) from high-rate periods (Peak) to low-rate periods (Off-Peak).

Worked Examples

Example 1: Flat Rate

Problem:1000 kWh @ $0.15

Solution:$150.00 total bill.

Result:$150.00

Example 2: TOU Optimized

Problem:1000 kWh: 10% Peak ($0.25), 90% Off-Peak ($0.08)

Solution:(100 * 0.25) + (900 * 0.08) = $25 + $72 = $97.00

Result:$97.00 (Save $53)

Example 3: TOU Lazy

Problem:1000 kWh: 50% Peak ($0.25), 50% Off-Peak ($0.08)

Solution:(500 * 0.25) + (500 * 0.08) = $125 + $40 = $165.00

Result:$165.00 (Pay more!)

Frequently Asked Questions

What are the biggest energy hogs to shift?

EV Charging, Electric Dryers, Dishwashers, and Pool Pumps. HVAC is hard to shift without discomfort (Pre-cooling).

Is TOU always cheaper?

No! If you are home all day running AC during peak hours and don't shift usage, TOU will likely cost you MORE than a flat rate.

What is dollar-cost averaging?

Dollar-cost averaging (DCA) means investing a fixed dollar amount on a set schedule regardless of market conditions. When prices fall your fixed amount buys more shares; when prices rise it buys fewer, lowering your average cost over time. DCA eliminates emotional decision-making — research shows most investors who attempt to time the market underperform a simple DCA strategy due to behavioral biases. It is especially effective for volatile assets like equities and index funds.

Background & Theory

Understanding Your Bill

Your bill is usually split into Generation (making the power) and Delivery (moving it). TOU rates often apply to both.

Strategy: Load Shifting

The game is arbitrage. Buy low, use high.

Easy Shifts: Set EV charger to midnight. Run dishwasher before bed.
Medium Shifts: Pre-cool the house (Super-cooling) before 4 PM, then turn AC up/off during peak.
Hard Shifts: Cooking dinner. It's hard to shift cooking time without lifestyle changes (or using a crockpot).

The Battery Advantage

Home batteries (Powerwall, etc.) automate this arbitrage. They charge from solar/grid when cheap and discharge when expensive, effectively making your "Peak" usage zero.

History

The Era of Flat Rates

For decades, electricity meters were dumb analog dials. They only counted total kWh. Utilities charged a flat rate (e.g., 10¢/kWh) regardless of when you used power.

The Duck Curve & Smart Meters

With the rise of solar power, utilities faced the "Duck Curve"—too much energy at noon, not enough at sunset. Smart Meters (AMI) allowed them to measure when energy was used. This enabled Time-of-Use (TOU) pricing to incentivize people to use power when it's cheap and abundant.

The Electrification Era

As homes adopt EVs and Heat Pumps, electricity consumption is doubling. Grid constraints make TOU critical. Utilities are now moving to "Dynamic Pricing" where rates change hourly based on real-time grid stress.

Common Misconceptions

Myth: "Electricity is electricity." Reality: Electricity at 5 PM on a hot day costs the utility 10x more to generate than at 3 AM. TOU reflects this reality.
Myth: "I can't save much." Reality: An EV driver can save $500+/year just by scheduling charging for 2 AM.