Time of Use Charges Could Be Sabotaging Your Utility Bill

by Anna Gretz
October 6, 2016
Home Battery

Time-of-use billing can completely sabotage your utility bill… or save you a ton of money.

There’s a good chance your utility company uses time-of-use billing, and you might not even know it. Time-of-use billing can completely sabotage your utility bill… or save you a ton of money. This is why it’s so important that you understand what time-of-use shifting is, and how you can use it to slash your utility bills in half. We’ll lay out everything you need to know about time-of-use rates, as well as demand charges, so you can have control over your own energy use.

Let’s start with time-of-use rates.

Put in simple terms, time-of-use rates include a pricing system that charges customers different rates for electricity used at different times during the day. The purpose of time-of-use rates is to level out the cost of retail power so it better matches the wholesale energy costs of providing power to the people. With time-of-use rates, the cost of electricity will be considerably higher during the hours of peak demand, or, the times when the most people need the most power. This is usually in the early evening hours, around 5:30pm, when many people are returning home from work.

Picture this: It’s 5:30 PM, and you’re ready to get things done at home. You need to charge your devices, take care of some household chores, and maybe catch up on podcasts. Your home needs power… and so does everyone else’s. The utility companies call this peak demand-- the times during the day, week, or even season when power is needed the most. Because high demand requires high (and hopefully consistent) power supply, your electric company may be charging you a higher price for the energy you are using.

So if prices are high when there’s high demand, does power cost less when people aren’t using it? Exactly. In the middle of the night when most televisions, dishwashers, and clothes dryers are shut down, the cost for electricity drops.

What if there was a way to use power during high-demand times, while getting charged low-demand prices?

That’s where a home battery comes in.

With a home battery, you can store energy when the cost is lowest, and use it whenever you need it. This is the time-of-use shifting we’re talking about, and it’s a great way to stick it to the power companies, and shave some money off of your bill.

Home batteries can also offer some energy security in the face of a vulnerable power grid. If the grid cuts out for a few hours (in the case of bad weather, or rolling blackouts like those proposed in California), you don’t have to worry. Your home can still be powered by the energy stored by your battery. For those who depend on electricity to power life-essential medical machinery, or for households that use electricity to heat their home during cold winter months, this sort of energy security can be a big deal.

Solar customers with energy storage in the form of home batteries get to store the energy generated by their solar panels during the day, so they can have it ready and available when they need it the most--at night. And since it’s when everyone needs it the most, it’s when rates will be at their highest. Home battery owners get to avoid those higher rates altogether, by staying disconnected from grid electricity at night, and using the power they stored earlier in the day.

In fact, non-solar customers can also take advantage of time-of-use shifting too with grid-connected home batteries. Even if you don’t have solar panels, you can use energy storage in the form of a home battery to store energy when it’s cheap during the daytime hours, and use it later at night when it would otherwise be offered at a much higher rate. Solar panels give you the opportunity to maximize your benefits by generating free energy from the sun, but home batteries are the key to shifting when you use energy from whatever source you store it, even if it’s from the grid.

Where do demand charges come in?

Glad you asked. Let’s talk about what demand charges are, and why they might be showing up on your bill.

Demand charges exist to encourage homes and businesses to spread out their electricity use during the day, in order to keep grid electricity demand under control, and service more reliable. Utilitie calculate demand charges by taking a look at the 15-minute intervals when homes and businesses are using the maximum amount of electricity. This means that demand charges can change each month, depending on when you’re using more power. Staggering the times that you use high-powered equipment and appliances, instead of using them all at the same time, is one way to lower demand charges. Utility companies want you to spread out the power you’re using during the day so they don’t have huge spikes in electrical demand--something that the power grid is really struggling with.

This is when home batteries really give you a leg up. Home battery owners can use stored energy to power their household appliances, easily spreading out power demand throughout the day without having to change the schedule of your life. Home batteries that are hooked up to solar panels can avoid the hassle of demand charges all together by cutting ties with the power grid, and storing energy straight from the sun.

Utility company plans can be confusing.

Home batteries can help you take advantage of huge savings with time-of-use shifting, as well as avoid unwanted demand charges. Utility company plans can be confusing. If you still have questions about how you can cut your utility bill, or cut ties with the grid entirely, ask a Swell representative.