# How to make time-of-use electricity rates work for everyone

*Published:* 2026-08-20
*Author:* EDF Blogs

***By*** [***Lily Dell***](https://www.linkedin.com/in/lily-dell/)***, EDF Legal and Regulatory Intern***

For many Americans, keeping the lights on and paying the electric bill have become growing concerns. The average U.S. household is expected to pay about [$197 a month](https://www.eia.gov/outlooks/steo/tables/pdf/sf02.pdf?utm_source=chatgpt.com) for electricity this summer, up 6% from last year. At the same time, extreme heat and rising electricity demand are straining parts of the power grid.

Time-of-use electricity rates can help address both challenges. These rates charge customers less for electricity during off-peak hours, when demand is lower, and more when demand is highest. By encouraging customers to shift when they use electricity, well-designed TOU rates can lower bills, reduce strain on the grid and support clean energy.

That said, not everyone can easily change when they use electricity. Customers who rely on 24-hour medical equipment, work fixed schedules conflicting with off-peak hours or otherwise lack flexibility may end up paying more under a TOU rate. As more utilities propose these rates, strong consumer protections are essential to ensure TOU programs deliver benefits without leaving vulnerable customers behind.

TOU programs also differ in how customers enroll. Some jurisdictions allow customers to opt in, while others transition customers to a TOU rate by default. Both approaches should include customer protections, but these safeguards are especially important for default rates so automatically enrolled customers retain meaningful choice.

EDF has [championed TOU rates](https://blogs.edf.org/energyexchange/2013/07/01/hows-your-electric-bill-treating-you-time-to-give-it-some-thought/?utm_source=chatgpt.com) for more than a decade because, when designed well, they can lower electricity costs, reduce peak demand and support a cleaner, more reliable grid. As far back as 2013, EDF advocated for TOU rates while emphasizing the importance of customer choice. As TOU rates become more common, getting the details right is more important than ever.

**Early education is essential**

Customer education is key to a successful TOU rate. Customers need clear, accessible information about how TOU rates work, how prices vary throughout the day and personalized strategies to lower their bills. This education should begin long before customers transition to a TOU rate, giving them time to learn and adapt and reducing the risk unexpectedly high bills. Effective education helps the rate work as intended and gives customers greater power to lower their bills.

**Shadow billing helps customers prepare**

Shadow billing can be one of a utility’s most valuable tools for successfully implementing a TOU rate, providing both customer protection and education. A customer receives an alternate “shadow bill” for several months that compares their current bill with what they would pay under a TOU rate. This personalized information helps customers become familiar with the TOU rate, identify opportunities to save money by changing their behavior and better understand utility billing, which can strengthen trust.

In Massachusetts, Groton Electric Municipal Light Plant used shadow billing as part of a TOU rate pilot. A subsequent [case study](https://www.publicpower.org/periodical/article/journey-time-use-rates) from American Public Power showed that this method contributed meaningfully to reductions in peak electricity usage. In California, utilities must provide [shadow bill comparisons](https://law.justia.com/codes/california/code-puc/division-1/part-1/chapter-4/article-2/section-745/) for at least a year before transitioning a customer to a TOU rate and continue providing them while the customer remains on the rate. This gives customers advance information on how their bill can change so they can make informed decisions about their electricity use.

**Bill stabilization helps protect customers as they adjust**

Bill stabilization helps protect customers from paying more under a TOU rate than they would have on their standard rate plan. During California’s statewide TOU transition beginning in 2019, the state [required utilities](https://law.justia.com/codes/california/code-puc/division-1/part-1/chapter-4/article-2/section-745/) to stabilize customers’ bills for 12 months. Utilities automatically calculated whether each customer was saving money or paying more under the TOU rate. Customers who paid more received a credit for the difference. This approach gave customers time to adapt their household electricity use while eliminating the financial risk of trying a new rate.

Post-implementation shadow billing can reinforce this protection. By showing customers what they would have paid under the standard rate, utilities give them the information they need to decide whether to remain on the TOU rate or switch back.

**Not every customer can shift their electricity use**

TOU rates are designed for customers who can shift when they use much of their daily electricity, but that flexibility is not universal. Some states exclude certain customer classes from the default rate. California exempts many vulnerable customer classes, including certain low-income households, customers with medical needs and older adults, from automatic enrollment.

**Choice builds trust** Customers should maintain control of their electricity plan. TOU rate programs should provide a clear and guaranteed way to opt out without enrollment fees or cancellation penalties. Customers should be able to opt out online, on paper or by phone.

Research conducted for the Massachusetts Attorney General’s Office [reinforced the importance](https://www.mass.gov/doc/rate-task-force-phase-1-debrief-and-phase-2-kick-off/download) of this “choice builds trust” principle. Customer outreach found that people wanted utilities to preserve agency, choice and control when changing how they are charged for electricity. Meaningful choice is especially important when customers must navigate a new and unfamiliar rate. If customers know they can leave without financial consequences, they have greater freedom to try a TOU rate and determine whether it works for their household.

**TOU rates should work for everyone**

As states expand TOU rates, they should measure success not only by the impacts on the electric grid and customers’ bills, but also by how well customers understand their rates, whether they believe the rates benefit them and whether they are adequately protected.

The strongest TOU programs recognize the importance of all these factors. EDF advocates for TOU programs that work for all customers and encourages individuals, utilities and other stakeholders to support customer choice and protections.