Time-of-Use Rates and Equipment Settings

Why this matters

A converted house moves its biggest energy loads, heating, hot water and often a car, onto the electric meter. On a flat rate it does not matter what hour they run. On a time-varying rate it matters a great deal: the same kilowatt-hour can cost two or three times as much between four and nine in the evening as it does at two in the morning, and an all-electric house left on factory defaults does most of its work exactly in that window. Ten minutes of scheduling at the handover is often worth more on the customer's bill than the efficiency difference between two equipment tiers.

The trap on the other side is the promise. A tech who says "this will save you a third on your bill" has made a commitment about a rate the shop does not control, a household the shop does not live in, and a tariff that may change next year. This card covers how scheduling the shiftable loads changes what a converted house pays on a time-varying rate, how to set the equipment, and how to talk about it without promising anything.

What a time-varying rate is

Utilities price electricity by time in several ways, and the customer's bill or the utility's tariff page says which one applies:

• Time-of-use (TOU). Fixed windows, usually a weekday evening peak, sometimes a mid-peak shoulder, with off-peak hours priced lower. Windows and prices often change by season.
• Critical peak pricing. Ordinary prices most of the year, with a much higher price on a limited number of announced event days, usually hot summer afternoons or extreme cold.
• Real-time or hourly pricing. A price that changes hour to hour with the wholesale market. Less common for homes.
• Demand charges. Some residential rates bill the highest power drawn in any short interval of the month, in kilowatts, on top of energy in kilowatt-hours. On these, running the dryer, the EV charger and the strip heat at once costs more than running them one after another.

Rate design is a state matter. For investor-owned utilities, the state's public utility commission approves the tariffs; municipal utilities and cooperatives set their own. Some states and utilities have moved residential customers onto TOU by default: California's large investor-owned utilities did so for most residential customers. Many utilities offer TOU only as an option, and some offer none. Never assume a rate from the state; read the customer's bill.

The one number that tells you how much scheduling is worth is the peak ratio: the peak price per kWh divided by the off-peak price per kWh. A ratio of 1.2 makes scheduling a footnote. A ratio of 2.5 makes it one of the largest things you can do for the bill.

What in a converted house can move

Heat pump water heater. A tank of hot water is stored energy. Most units can be scheduled, either on their own controls or through the manufacturer's app, to heat ahead of the peak and coast through it. Raising the setpoint a few degrees before the window gives the tank more to coast on, but stored water above about 120 F needs a thermostatic mixing valve at the outlet to prevent scalding, and a hotter tank runs the compressor less efficiently and loses more heat while it waits. Do not schedule a unit to be off for so long that the evening showers drain it and the resistance element, on a hybrid unit, comes on in the peak to recover, which costs more than doing nothing. See related: Heat Pump Water Heater Reference.

EV charging. The single largest shiftable load in most houses. Charge after the peak ends and finish before the morning departure. Set the schedule in one place only, either the vehicle or the charger, not both, because two schedules fighting each other produce a car that never charges or one that charges at six in the evening. Leave the customer a way to override it for the night they need a full battery.

Heating and cooling. The house itself stores heat. Pre-cooling a few degrees in the hours before a summer peak, then letting the house drift up during it, moves part of the cooling load out of the window. Pre-heating in winter works the same way, with one serious catch: a heat pump with resistance strips that recovers a setback quickly after the peak ends, or one that falls behind during the peak, may bring the strips on, and strip heat costs a multiple of heat pump heat at any hour. Set adaptive recovery to start early and slow, and lock strips out above the house's balance point. See related: Backup Heat: Dual Fuel or Resistance.

Everything the customer does. Dryer, dishwasher, oven. Moving these is a habit, not a setting. Mention it once.

Worked example: a weekday in summer, three loads scheduled

The tariff: weekday peak from 4 pm to 9 pm, priced at 2.4 times the off-peak rate; all other hours off-peak. (Illustrative; read the real tariff.) To keep currency out of it, cost is counted in off-peak kWh equivalents: one kWh used off-peak counts 1.0, one used in the peak counts 2.4.

Read each line for what it says.

The water heater uses more energy when scheduled, 3.24 kWh against 3.00, about 8 percent more, because the tank is held hotter and loses more while it waits. It still costs less, 3.47 against 4.68, a little over a quarter less, because almost none of it runs in the peak.

The EV is the largest saving by far: 21.6 down to 9.0, which is 12.6 off-peak kWh equivalents, about 58 percent of that load's cost. Nothing about the car changed except the start time.

Cooling uses more energy too. Pre-cooling put 6 kWh into the afternoon to take 5 kWh out of the peak, so the house used 11 kWh instead of 10. It still costs less, 18.0 against 24.0, a quarter less, because the 5 kWh removed were priced at 2.4 and the 6 kWh added at 1.0.

Across the three loads, cost fell from 50.28 to 30.47, which is 19.81 off-peak kWh equivalents, about 39 percent of what those three loads cost on factory defaults. That is a saving on three loads on a peak weekday, not on the bill: weekends here have no peak, the rest of the house's usage is untouched, and the fixed monthly charge does not move. The bill saving is real and is smaller than 39 percent, by an amount that depends on all of those.

Two lessons in the arithmetic. Scheduling usually raises total energy use while lowering cost, which surprises customers who equate the two. And the ratio does all the work: at a peak ratio of 1.2, the same schedule saves far less, and the water heater's extra 8 percent of energy can cost more than the shift saves.

Why the tech should not promise a number

The worked example above is the kind of calculation the shop can do, and it still does not license a bill promise, for four reasons:

• The tariff is not the shop's. Windows and ratios change at the utility commission's next rate case, and the customer may switch plans.
• The house is not the shop's. How well it holds temperature through a peak depends on its envelope, its sun, and whether someone opens the patio door at five.
• The household is not the shop's. The EV saving assumes the car is plugged in by bedtime; the water heater saving assumes showers do not move to the peak.
• The baseline is unknown. A converted house has no history on the new equipment, so there is no "before" on this rate to compare against.

What the shop can promise is the settings, and the reasoning. Point the customer to the utility's own rate comparison tool, which most utilities with TOU offer, for any number at all.

CUSTOMER: So how much is this going to save me?
TECH:     I can't give you a bill number, honestly. Your
          rate charges about two and a half times as much
          from four to nine, so I've set the water heater
          and the car to stay out of that window.
CUSTOMER: But roughly?
TECH:     The car's the big one. Charging after midnight
          instead of when you get home costs less than
          half as much for the same charge. The utility's
          site has a tool that runs your actual usage
          against each plan. That's the number I'd trust.

Settings to leave in writing

At the handover, leave the customer and the equipment record a short list: the rate and its peak window as you understood it from the bill, and for each scheduled device the schedule set, the setpoint, where the schedule lives (unit, app, vehicle or charger), and how to override it. If the customer is enrolled in a utility demand-response program that can adjust the thermostat or the water heater during events, note it, because the utility's commands and your schedule will interact and the next tech will otherwise think the equipment is malfunctioning. See related: How to Document a Converted House for the Next Tech.

What changes the answer

A flat or tiered rate. On a flat rate, scheduling saves nothing and the water heater's extra standby energy costs money; leave it on its efficient default. On a tiered rate (price rises with monthly usage), what matters is total kWh, so the efficient setting wins.

Rooftop solar. On a rate that credits exports at a lower value than imports, running the water heater and pre-cooling at midday soaks up solar output that would otherwise be exported cheaply, so the schedule moves earlier in the day. See related: Solar and Batteries in a Conversion Plan.

Winter-peaking rates. Some utilities in heating-dominated regions put the peak on winter mornings. Pre-heating then fights the morning setback recovery, and the strip lockout matters even more.

References

• The customer's utility tariff and rate schedule, as approved by the state public utility commission (or the municipal or cooperative board).
• The utility's own rate comparison tool, where offered.
• Manufacturer scheduling and demand-response documentation for the water heater, thermostat and EV charger installed.
• See related: Heat Pump Water Heater Reference; Backup Heat: Dual Fuel or Resistance; Solar and Batteries in a Conversion Plan.