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Time-of-Use Rates Explained

Time-of-Use (TOU) refers to electricity rate schedules that break the day into a series of hourly periods, like peak, off-peak and part-peak. With TOU rates, the amount you pay for electricity changes based on these TOU periods, the day of the week and your specified rates.

The California Public Utilities Commission (CPUC) directed the creation of TOU rate plans as an incentive to help decrease peak period energy use. Peak periods are times of day when demand for electricity spikes, solar energy production starts to diminish and energy costs are at their highest.

First identified in a publication produced by the California Independent System Operator and now commonplace in conversations about solar power production, the “Duck Curve” shows the everyday decrease in solar energy that coincides with an increase in electricity demand. It represents the transition point for solar energy and resembles a duck, as its name suggests. To learn more about “Confronting the Duck Curve: How to Address Over-Generation of Solar Energy,” please visit Energy.gov. Video courtesy of the Department of Energy.

Residential TOU

TOU rate plans are based on how much energy a customer uses and the time of day when the customer uses it. TOU rate plans have been available to customers for years. In an effort to better match electricity usage with the current renewable energy market, the CPUC mandated that all residential customers be transitioned to the default TOU-C rate. Utility customers producing solar energy are placed on a TOU rate when they activate their photovoltaic (PV) system. Non-solar customers who did not take action were transitioned to a TOU rate during April 2022.

Transition to TOU-C is automatic unless customers choose a different TOU rate or advise PG&E that they decline to transition. The Pioneer board decided that customers will not automatically be transitioned to a TOU rate, but this applies only to the generation component of the bill. Customers will still need to make a choice regarding whether they would like to decline the transition to a TOU rate for the transmission and distribution component. If a customer remains an E1 customer (that is, does not transition to a TOU generation rate) with Pioneer but transitions to the TOU rate for transmission and distribution, they will be on a “hybrid rate.”

How TOU Rates Work

E1 RATES are a flat-rate plan. This means that customers pay one price per kWh used, no matter the day of the week or the time of day. 

TOU-C has peak pricing from 4 p.m. to 9 p.m. every day (including weekends and holidays). The price changes based on the time of day:

  • Peak (higher price) – 4 p.m. to 9 p.m. every day.

  • Off-Peak (lower price) – before 4 p.m. and after 9 p.m. every day.

  • This rate includes a Baseline Allowance and a tier for usage above that allowance.

Customers can save money if they can reduce their energy usage during the higher-priced (peak) hours. Winter Rate months (October through May) have lower prices than Summer Rate months (June through September).

TOU-D has a peak price from 5 p.m. to 8 p.m. on weekdays. This rate plan offers lower prices during periods of the day when energy costs are lower—before 5 p.m. and after 8 p.m. on weekdays and during all hours on weekends and most holidays.

The price that customers pay changes based on the time of day, the day of the week, and the season as shown below:

  • Peak (highest price) – 5 p.m. to 8 p.m. Monday through Friday (except most holidays).

  • Off-Peak (lowest price) – before 5 p.m. to 8 p.m. Monday through Friday and all hours on weekends and most holidays.

  • Winter Rate months (October through May) have lower prices than Summer Rate months (June through September).

  • Unlike the TOU-C rate Plan 4-9 p.m., there is no Baseline Allowance on TOU-D.

PG&E indicates that TOU-D may be more attractive for higher energy users because the price of electricity is lower than TOU-C if the customers monthly electricity usage exceeds the Tier 1 amount (Baseline Allowance).

Customers interested in seeing if they can save money on a TOU or other rate plans should conduct a rate analysis.

PG&E conducts “high impact” analysis. For NEM customers who would experience a significant negative impact from a transition to a TOU rate, PG&E should have called these customers to ensure that they are aware of the pending transition. For more information about Pioneer NEM programs, please visit our Understanding your Solar Bill page.

Pioneer Notified Customers of Possible Savings

With all TOU rates, customers have the opportunity to save money if they can reduce their energy usage overall, especially during the higher-priced (Peak) hours. To evaluate your rate options, please visit PG&E’s website for a comparison of available options.

Learn More About TOU Rates

Pioneer Community Energy hosted a TOU webinar with PG&E to answer customers’ questions regarding rates and time-of-use pricing. Please view our video.

Should you have any further questions about rates, pricing or choices in energy options, please contact your Pioneer team by email at info@pioneercommunityenergy.org or by phone at (916) 758-8969.

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