Time-of-use plans charge different rates for electricity at different times of the day. They are meant to create an incentive for consumers to use more electricity during times when electricity is cheap to produce and less electricity during times of peak demand.
Time-of-use are made possible by the fact that wholesale electricity rates change throughout the day in response to both demand for electricity and available supply at any given moment. This is particularly true in Texas where the state has an abundant supply of wind energy.
Wind power makes electricity at night even cheaper
With natural gas power plants, the operators can ramp up or ramp down the production of electricity to meet the demands of the power grid. When demand for electricity drops overnight, it is a simple matter to reduce the output of fossil fuel energy sources.
Wind energy is a little different. Wind turbines produce electricity when the wind blows, and they don’t when the wind doesn’t. Operators don’t determine when they produce electricity or how much they produce. This can create a situation where the output of wind generated electricity can sometimes peak just when demand is at its lowest.
Using more power during times when the bulk of the power on the grid is from green energy sources can help mitigate the environmental impact of electricity production. When demand for power on the grid is at it’s highest, older and less efficient power plants have to be brought online. These power plants, called peakers or peaker plants, only come on when the spot price of electricity goes high enough to make it profitable. Therefore, any additional electricity used during peak demand periods is more expensive and more harmful to the environment.
Electric Companies Innovate
The TXU free nights plan introduced in 2013 was one of the first examples of time-of-use plans in Texas. It was an immediate hit with Texas consumers.
Since then, TXU and a number of other electricity providers have created numerous plans with time-of-use pricing. These plans mostly focus on free or reduced electricity rates at night or on the weekends.
Who Benefits from Free Nights and Weekends plans?
Electric vehicle owners can benefit from such plans because they can charge their vehicles overnight when there’s less demand for electricity and when electricity rates are low and often free.
The electricity rates for the non-free hours of most time-of-use plans can be very high. Therefore, it is important for customers to take advantage of the free or low-cost hours by shifting their habits. Otherwise, the cost of the non-free hours will outweigh the benefits of the hours of free energy.
Tips for taking advantage of time of use or free nights and weekends electricity plans.
- Do your laundry in the evenings
- Wash your dishes in the evenings
- Charge electric vehicles overnight
- Adjust your thermostats to use less electricity during peak hours
- Adjust the timing on your pool pumps so that the pool equipment runs more during overnight and free periods