How to calculate time-of-use electricity cost
Price each block of electricity at the rate applying when it was used, then add the results. A simple average of peak and off-peak rates works only when equal energy is used in those periods.
By HomeCost Radar · Reviewed 2026-09-27 · Editorial policy
A 500 kWh illustrative billing period
Assume 150 kWh at $0.40/kWh peak and 350 kWh at $0.20/kWh off-peak. These are invented teaching rates, not a quoted utility plan. Fixed charges, taxes and credits are excluded.
| Period | Energy × rate | Variable cost |
|---|---|---|
| Peak | 150 kWh × $0.40 | $60.00 |
| Off-peak | 350 kWh × $0.20 | $70.00 |
| Total | 500 kWh | $130.00 |
| Energy-weighted price | $130 / 500 kWh | $0.26/kWh |
What the example shows: A simple rate average of $0.30 would give $150, overstating this example by $20. Shifting 50 kWh from peak to off-peak without changing total usage lowers the variable charge by $10.
Match intervals to the actual plan
Get the tariff name, effective dates and period definitions from your utility. PG&E, for example, offers time-of-use plans with different schedules; its public explanation supports checking the selected plan rather than assuming one universal peak window.
Separate weekdays, weekends, holidays and seasons wherever your plan distinguishes them. If a rate changed during the billing period, apply each version to the dates when it was in force. An annual or state-average rate cannot reproduce those details.
Estimate savings for a specific shift
For unchanged energy, savings equal shifted kWh multiplied by the old rate minus the new rate. In the example, 50 × ($0.40 − $0.20) = $10. That calculation does not require changing the amount of electricity consumed.
If shifting changes consumption, calculate both complete cases. A new schedule that uses 60 kWh off-peak instead of 50 kWh peak costs $12 instead of $20, saving $8 rather than $10. Avoid assuming every load keeps the same energy after rescheduling.
Check the whole bill before choosing a plan
Add fixed charges, minimum bills, credits and any other applicable tariff components separately. Demand charges, if your plan has them, cannot be reconstructed from monthly kWh alone. Obtain the plan definition and the required interval data.
Use a representative year if comparing plans. One mild month may not capture cooling or heating patterns. The example teaches arithmetic and does not recommend a particular utility tariff for your household.
Frequently asked questions
Is off-peak always overnight?
Can I calculate exact time-of-use cost from total monthly kWh?
Sources and assumptions
The worked examples are HomeCost Radar calculations from the stated inputs. Sources below support the concepts identified beside each link; they do not certify our assumed wattages or product savings.
- PG&E: time-of-use plans — Rates vary by time period and the selected plan.