Not all electricity pricing charges you the same way for the same usage — understanding the structure is the difference between a plan saving you money or quietly costing more.
Time-of-use: when you use power matters, not just how much
Time-of-use (TOU) plans charge more during high-demand hours — typically late afternoon into evening — and less overnight or midday. Shifting flexible loads like EV charging, laundry, or dishwashing to off-peak windows can meaningfully cut a bill without using less total electricity.
Not every load can shift — evening cooking and lighting generally can't — so a TOU plan isn't automatically cheaper than a flat rate for every household. Run your actual usage pattern through the time-of-use savings calculator before assuming it's a win.
Demand charges: one bad 15 minutes can cost you all month
Unlike a per-kWh energy charge, a demand charge bills based on your single highest usage spike during the billing period — often measured over just a 15-30 minute window. Running several large loads simultaneously for even a few minutes can set an expensive peak that applies to the whole month, regardless of total energy used.
Most standard residential plans don't include demand charges, but they're common for commercial accounts and increasingly appear on some residential EV or TOU-specific plans. Check your bill structure and estimate the impact with the demand charge calculator.
How battery storage addresses both
A battery that discharges during peak TOU hours captures the rate spread directly; a battery that discharges during a facility's usage spike caps the peak draw pulled from the grid, directly reducing demand charges. Both are forms of the same underlying strategy — see the peak shaving calculator and the battery ROI calculator for the two sides of this math.
Frequently asked questions
Do residential customers usually pay demand charges?
Most standard residential rate plans don't, but they're common for commercial and industrial accounts and are increasingly appearing on some residential time-of-use or EV-specific rate plans — check your specific bill.
Which appliances are easiest to shift to off-peak hours?
EV charging, dishwashers, and washer/dryer loads are the most common candidates since they can usually run on a delay timer without any real inconvenience to the household.