By next year in 2020, all the utility companies in California plan to roll out Time of Use (TOU) rates for 20 million consumers. Some will start this year. TOU has proven quite successful at small scale, saving households money while helping offload the state’s electric grid.

Time of Use (TOU) means that utility companies charge different rates for energy use at different times of the day and in different seasons. We’ve talked about TOU before, explaining why utility bills can get so high. Essentially, it costs a lot more for utility companies to keep up with “on peak” demand when everyone wants to draw more electricity, e.g. during the afternoon in hot summer days for air conditioning. Not only does it cost more to keep up with the “peak demand”, but it also puts the grid in danger of rolling brownouts–if not blackouts. By making electricity cost more when everyone wants it (on peak) and much less when the demand is low (off peak), TOU gives people the option to save money if they are willing to make some adjustments.

Here’s the planned Time of Use rates to be effective by 2020 for all three utility companies in California. Some believe this Time of Use rollout in 2020 will be a win-win-win for the (1) utility company, (2) the earth and (3) Californians’ wallets. Here’s how the general thinking goes:

• Utility companies can waste less money and resources by mitigating peak demand periods.
• The earth gets less greenhouse gas emission because generating peak demand electricity is just “dirtier.”
• Households get another way of saving money on their energy bills. People can opt to shift electricity use from “on peak” to “off peak” to save money. We’ve talked about using timers to make this easier. Further, TOU rates can also work help with “bill volatility.” Your summer and winter bills won’t jump as much compared to other months.

Of course, people have brought up adverse effects. If you are a Californian, this is how the TOU 2020 rollout may adversely effect you:

• Some scoff that it used to be a choice, and now I am going to be charged a lot more to keep my house refreshingly cool during those hot summer days. This is a free country! Check out our articles on reducing electric costs on hot summer days. You don’t have to sacrifice comfort.
• If you have solar panels installed in your house, you might be getting fewer $$$ credits for your generated electricity. The rates at which solar energy is compensated will drop. Check out our article Is Solar a Good Investment?

Most people in the utility industry are optimistic that this big rollout will be well-received by Californians. According to the CPUC, PG&E transitioned roughly 110,000 customers to Time of Use as a pilot, over 90% of participants chose to stay with TOU after the pilot was over.

As an advocate for reducing energy bills and just making life more affordable without sacrificing much comfort, we believe the Time of Use rollout in 2020 in California will turn out well and set a good precedence for other states to follow.