What Are Time of Use (TOU) and Tiered Rates?
Ontario residents can choose between two rates from their utility companies—time of use (TOU) and tiered rates. The best plan for you will depend on your household’s usage patterns and needs.
Time of Use
As its name suggests, time of use prices vary based on when the electricity is used. Electricity prices are more expensive when the demand is higher in the later afternoons and evenings, and cheaper during the night and early mornings. Prices change throughout the day depending on the price periods, which are known as off-peak, mid-peak and on-peak hours. Hours will also change depending on the season based on general usage patterns. You can see the different prices and hours of each period on the chart below.
Referenced from: Electricity rates | Ontario Energy Board (oeb.ca)
TOU allows you to schedule certain parts of your daily usage and take advantage of cheaper rates. For instance, many people will wait until after 7 p.m. to use large appliances such as washing machines or dishwashers.
Solar and TOU are best taken advantage of with a battery so you can store energy generated by your solar panels to use during on-peak hours.
Tiered Rates
Tiered rates depend on how much electricity you use overall. Each tier will have a maximum amount you can use until you have to start paying for the next tier’s higher rate. Like with time of use, the maximum usage amount for each tier is also different based on the seasons due to changing usage patterns. It’s expected that most households will use more power during the winter because of shorter days and heating. During the winter months, the threshold is higher for the lowest tier, capping at 1000kWh and allowing customers to use more at a cheaper rate. During the summer, the lowest tier threshold is reduced and capped at 600kWh instead.
Referenced from: Electricity rates | Ontario Energy Board (oeb.ca)
Unlike with TOU, you don’t have to worry about when you’re using electricity during the day, but it is important to consider how much energy you use overall. Staying below that threshold for the lowest tier is the obvious sweet spot to get the best price.
If you’re on a tiered plan and using a lot of electricity at the higher tier, solar panels can help offset a lot of those expenses because you’re able to generate and use your own energy instead of relying entirely on the grid.
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