Understand your bill
Time-of-use electricity rates, explained with a worked example
By the Energy Savings AI editorial desk · Edited by Carlos Gil, publisher · Updated November 1, 2026 · first published October 31, 2026 · Not yet technically reviewed
Key takeaways
- A time-of-use rate charges more per kWh during on-peak hours and less at other times, so it lowers your bill only if a small enough share of your use falls on-peak or you can move use out of those hours.
- With two prices and the same fixed charges, time-of-use beats a flat rate when your on-peak share is below (flat price minus off-peak price) divided by (on-peak price minus off-peak price).
- A monthly bill can't show your on-peak share; you need hourly or daily-by-hour usage from your utility.
A time-of-use (TOU) rate charges a different price per kWh depending on when you use electricity: more during on-peak hours, less the rest of the time. It lowers your bill only if a small enough share of your usage falls in on-peak hours, or if you can move usage out of them. The same kWh can cost more on a TOU rate than on a flat rate, so do the math with your own usage before switching.
The terms, defined
The U.S. Department of Energy's Federal Energy Management Program describes the common rate types this way (its guidance is written for federal facilities, but the definitions apply to any bill):
- Time-of-use rates change by set amounts at set times. You know the prices and the hours in advance.
- Dynamic rates reflect hour-to-hour movements in wholesale electricity markets, so prices aren't fixed in advance.
- Demand charges are based on your maximum demand, measured in kilowatts (kW), during a given period, typically each month. They charge for how much power you draw at once, not only how many kWh you use in total.
A worked example
Illustrative example: an invented TOU rate, not any utility's tariff
A household uses 900 kWh a month. Its flat rate is 15¢ per kWh. The invented TOU option charges 30¢ per kWh on-peak and 10¢ per kWh off-peak, with the same fixed charges as the flat rate (so we can leave them out).
| Scenario | On-peak kWh | Off-peak kWh | TOU cost ($) | Flat-rate cost ($) | TOU vs flat ($) |
|---|---|---|---|---|---|
| 30% of use on-peak | 270 | 630 | 144.00 | 135.00 | +9.00 |
| 20% of use on-peak | 180 | 720 | 126.00 | 135.00 | −9.00 |
At 30% on-peak, the TOU option costs $9.00 more: 270 × $0.30 + 630 × $0.10 = $81.00 + $63.00 = $144.00, against 900 × $0.15 = $135.00. Moving 90 kWh out of on-peak hours brings it to $126.00. Each kWh moved saves the price gap, 20¢, so 90 kWh × $0.20 = $18.00.
Your break-even on-peak share
On any two-period TOU rate with the same fixed charges as your current plan, the TOU option costs less only when your on-peak share is below:
break-even share = (flat price − off-peak price) ÷ (on-peak price − off-peak price)
In the example: (15¢ − 10¢) ÷ (30¢ − 10¢) = 5 ÷ 20 = 25%. Below 25% of usage on-peak, the TOU option is cheaper; above it, the flat rate is. If the TOU plan has a different fixed charge, or more than two periods, add those into the comparison rather than using the shortcut.
How to find your own on-peak share
A monthly bill only shows total kWh, so it can't tell you when you used it. You need hourly or daily-by-hour usage from your utility. FPL's free Energy Manager, for example, shows when, where and how a home uses energy. Add up the kWh that falls in the plan's on-peak hours and divide by your total for the month. Do this for a hot month and a mild month: cooling can shift your share a lot between seasons.
What can move, and what usually can't
The easiest kWh to move are from equipment you can start later: a dishwasher, laundry, electric-vehicle charging or a pool pump on a timer. Each kWh moved saves the gap between the on-peak and off-peak price, which you can value with the appliance cost calculator by running it at each price. Cooling and cooking are harder to move, because you need them when you need them.
How much usage would you need to move?
The break-even share also tells you how big a shift you'd need. Subtract the break-even share from your on-peak share and multiply by your monthly kWh.
Illustrative example: the same invented rate, a household with 35% on-peak
At 900 kWh a month with 35% on-peak (315 kWh), the invented TOU rate costs 315 × $0.30 + 585 × $0.10 = $94.50 + $58.50 = $153.00, against $135.00 on the flat rate. To break even, on-peak use has to fall to 25%, or 225 kWh: a shift of 90 kWh a month, about 3 kWh a day over 30 days. At 225 kWh on-peak the TOU bill is 225 × $0.30 + 675 × $0.10 = $67.50 + $67.50 = $135.00, the same as flat.
3 kWh a day is, for example, an appliance drawing 1,500 W for 2 hours moved out of on-peak hours every day. Only the kWh moved beyond that point would start saving money.
TOU options in Florida
FPL's October 2026 residential rate sheet lists an optional time-of-use rider, RTR-1, that applies on top of the standard RS-1 charges: it adds 14.410¢ per kWh to the base energy charge on-peak and subtracts 6.157¢ per kWh off-peak, with adjustments to the fuel charge as well. We haven't verified the rider's on-peak hours or its fuel adjustments, so we don't calculate a break-even for it here; read the full rider on FPL's rate sheet or ask FPL before enrolling. More on FPL's standard charges: your FPL bill, line by line.
Flat, tiered, time-of-use and demand rates side by side
| Rate type | What sets the price of a kWh | What you need to evaluate it |
|---|---|---|
| One price per kWh | Nothing: every kWh costs the same | Total kWh and the per-kWh charges |
| Tiered | How many kWh you've used in the billing period; FPL's and JEA's residential rates charge more above 1,000 kWh | Total kWh per bill |
| Time-of-use | When you use it: set prices at set times | kWh by hour, or on-peak and off-peak kWh |
| Dynamic | Hour-to-hour movements in wholesale electricity markets | Hourly usage and hourly prices |
| Demand charge | Your maximum demand in kW during a period, typically each month | Your peak kW, from interval data |
Questions to ask before you switch
- Which hours are on-peak, and do they change on weekends, holidays or by season?
- Does the plan change the fixed monthly charge or add a new one?
- Are other per-kWh charges also priced by period? FPL's rate sheet shows its time-of-use rider adjusts fuel charges as well as base energy charges.
- Is there a minimum time on the plan, and how soon can you switch back?
- Can you see at least a few months of your hourly usage before you decide?
- Does it change anything about other programs you're enrolled in?
- If you have rooftop solar, how does the plan treat the power you send to the grid?
Comparing bills on a TOU rate
If you're already on a TOU rate, a change in your bill can come from a price change or from a shift in when you used electricity, and a single average price per kWh can't tell those apart. Our bill comparison flags this: choose "time-of-use" and it explains which parts of its split are approximate. For an exact answer, compare the on-peak and off-peak kWh on each bill.
Frequently asked questions
Is time-of-use cheaper than a flat electricity rate?
Only if enough of your use falls outside on-peak hours. In this guide's illustrative example (900 kWh, a 15¢ flat rate, 30¢ on-peak and 10¢ off-peak), the time-of-use option costs $144.00 with 30% of use on-peak, more than the flat rate's $135.00, and $126.00 with 20% on-peak. The break-even is 25% on-peak.
What can I move to off-peak hours?
Equipment you can start later moves most easily: a dishwasher, laundry, electric-vehicle charging or a pool pump on a timer. Cooling and cooking are harder to move. Each kWh moved saves the gap between the on-peak and off-peak price.
What is a demand charge on an electric bill?
The U.S. Department of Energy's Federal Energy Management Program describes a demand charge as based on your maximum demand, in kilowatts (kW), during a given period, typically each month. It charges for how much power you draw at once, not only for the kWh you use in total.
Does FPL offer a time-of-use rate?
FPL's October 2026 residential rate sheet lists an optional time-of-use rider, RTR-1, on top of standard RS-1 charges: it adds 14.410¢ per kWh to the base energy charge on-peak and subtracts 6.157¢ off-peak, with adjustments to the fuel charge. Its on-peak hours aren't verified here, so read the rider on FPL's rate sheet or ask FPL before enrolling.
What is the difference between time-of-use and dynamic pricing?
The Department of Energy's Federal Energy Management Program describes time-of-use rates as changing by set amounts at set times, so you know the prices and hours in advance. Dynamic rates reflect hour-to-hour movements in wholesale electricity markets, so the price isn't fixed ahead of time.
Sources
- U.S. Department of Energy, FEMP: Evaluating your utility rate options · checked October 31, 2026
- FPL residential rates, October 2026 (PDF) · checked October 31, 2026
- FPL Energy Manager · checked October 31, 2026
- JEA rates (electric rates, fuel rate history, taxes and fees) · checked October 31, 2026