Momma Said ‘Time-of-Use’ Electricity Pricing

Map of polluting power plants in Los Angeles County. Many are located in or near the region’s most vulnerable communities that are already over-burdened by air pollution.

My mom is a pro at shopping for good deals. She taught me the importance of timing my purchases during the off-peak season to get the most value for my dollar.

Time-of-Use (TOU) electricity pricing reminds me of the lessons my mom taught me, and it can help empower families to take control of their energy use, while saving money AND improving air quality.

Like the name implies, TOU pricing allows customers to choose when to power-up large appliances (think laundry, dishwasher, A/C) in order to avoid using high-demand, “peak” energy – which is more polluting and expensive. It is a voluntary program with a proven track record.

Peak energy demand typically occurs late in the afternoon when everyone is coming home from school and work, running the A/C, charging phones, cooking, doing laundry, or streaming Netflix on a T.V. During this high-demand time, energy prices spike and electric utilities flip on expensive and dirty fossil fuel “peaking” power plants to meet energy demand (because nobody wants to lose power and heaven-forbid the Internet!).

We all know something is most expensive when everyone wants it at the same time. Why not hold-off on a purchase until the rush ends to save some money? Timing your energy use during off-peak times allows you to use cheaper electricity. Even better, you can time your energy use to take advantage of peak sun, when California’s solar panels are humming; or late at night, when our wind turbines are spinning. You’ll be making smart choices, saving money, AND helping clean the air.

Mom would be proud!

Still need convincing? Want to learn more?

My colleagues at EDF put together a terrific primer on Time-of-Use electricity pricing. Here are three ways TOU can help California make smarter, healthier energy choices.

Lower Electricity Bills

TOU gives people options to save by conserving and shifting energy use to cheaper times of the day. By paying more attention to the timing of energy use, Californians could have a new means of lowering energy bills and reducing the use of costly, polluting power plants. In fact, because peaker power plants run so infrequently and inefficiently, EDF estimates that if half of all Californians participate in TOU, electric utilities and customers could save nearly $500 million annually.

All Californians, including low-income families, have much to gain from TOU because it is a customer-focused program. For example, Washington D.C. initiated PowerCents DC, with nearly 900 residents, including low-income households, to test responsiveness to TOU pricing and to see how smart thermostats could help residents save money. The results showed nearly all participants (regardless of household income) saved money and responded favorably to the program. Sacramento Municipal Utility District (SMUD) launched a similar program, and the vast majority of participants either paid the same amount as before or saved money through TOU. With the right customer education programs and built-in safeguards, proactive Californians could easily replicate this outcome.

Freedom of Choice

TOU puts people in the driver’s seat, empowering them to make energy choices – if they choose to. As California’s electric utilities expand the use of TOU rates in the coming years, customers will have the option to opt-in or opt-out, effectively choosing how they want to pay for electricity. When SMUD implemented TOU pricing, people reported greater satisfaction with this plan compared to existing electricity rates, noting that TOU provides “fairer pricing” and “more opportunities to save money.” From an economic, health, and environmental perspective, EDF encourages Californians to choose TOU, as this program will open the door for other clean energy resources like rooftop solar and smart thermostats.

Clean, Healthier Air for All

TOU could bring relief to communities located near power plants, as they bear a significant health burden from breathing in toxins from these facilities. Power plant emissions have been linked to premature death, aggravated lung and heart disease, bronchitis and asthma (especially in children), and an increased number of missed school and work days. With TOU, California has the tools at hand to protect air quality and help businesses and families save money without reducing the reliability of the electric grid.

This post originally appeared on our California Dream 2.0 blog.