For most of the history of residential electricity, your utility charged you the same price per kilowatt-hour regardless of when you used it. That model is changing. Time-of-use (TOU) pricing — which charges different rates based on when you consume power — is now available or mandatory for millions of American homeowners. Here’s what it means for your bill, and how a home battery system turns the arbitrage opportunity into real savings.
Why TOU Rates Exist
Electricity is unique among commodities: it must be produced at the exact moment it is consumed, and it cannot economically be stored at utility scale. When millions of households all use electricity at the same time — typically weekday afternoons and early evenings when people return home from work — the grid must have enough generation capacity to meet that peak demand.
Building and maintaining that peak capacity is expensive. Peaker plants that run only 200–400 hours per year must recoup their capital costs during those limited operating windows. The cost of generating electricity during peak demand periods is genuinely higher than during off-peak periods.
TOU pricing reflects this reality by passing time-varying wholesale costs through to retail customers. The goal is to incentivize customers to shift flexible consumption — running dishwashers, charging EVs, doing laundry — to off-peak periods when generation is abundant and cheap.
Typical TOU Rate Structures
TOU structures vary by utility, but most follow a common pattern. Using Eversource Massachusetts as an example:
- Off-Peak (11pm–7am): ~14.8 cents/kWh
- Mid-Peak (7am–4pm): ~22.3 cents/kWh
- On-Peak (4pm–9pm weekdays): ~32.4 cents/kWh
In California, the spread is even more dramatic. PG&E’s summer peak rates reach 55 cents per kWh during the 4pm–9pm window, while off-peak rates are around 30 cents. The ratio between peak and off-peak can exceed 3:1 in aggressive TOU markets.
Who Is Eligible?
As of 2026, TOU rates are available in 38 states. In California, TOU enrollment is mandatory for all new residential customers and increasingly the default rate for existing customers who don’t actively choose a different plan. Massachusetts offers TOU as an opt-in option with clear enrollment benefits for battery storage owners. Texas deregulated markets often feature TOU-like dynamic pricing from retail electricity providers.
If you don’t know whether your utility offers TOU pricing, the answer is almost certainly yes. Look for "time-of-use," "time-varying rates," or "dynamic pricing" on your utility’s rate schedule page. If you have a smart meter (installed in most U.S. homes after 2015), you are TOU-ready.
The Problem With TOU Without Storage
TOU rates are designed to create incentives for flexibility. But most households have limited flexibility in when they consume electricity. The peak demand window — 4pm to 9pm — corresponds almost exactly to when people cook dinner, run the dishwasher, do laundry, and charge their phones after a day at work. Shifting all of this consumption to 11pm is both inconvenient and, for parents with young children, simply impractical.
Without storage, TOU rate plans can actually cost more than flat rates for households that can’t shift their consumption. Many families enrolled in TOU plans without storage end up opting back to flat rates within a year because the behavioral changes required to save money are too demanding.
Battery Storage: The TOU Arbitrage Machine
A home battery system changes the calculus entirely. Instead of requiring you to change your behavior, the battery changes when energy is consumed by the grid-connected portion of your home. The battery charges at 11pm (14.8 cents) and discharges at 6pm (32.4 cents). Your behavior doesn’t change. Your bill does.
The economics are straightforward. A 16 kWh battery that fully cycles once per day captures 17.6 cents per kWh in arbitrage (32.4 - 14.8 cents). Over a full cycle, that’s $2.82 per day — $1,030 per year in pure TOU arbitrage. In California with its more extreme TOU spreads, the same battery cycling on PG&E rates captures over $1,500 per year.
In practice, batteries don’t fully cycle every day, and not every kWh is perfectly optimized. Realistic TOU savings are typically 60–70% of theoretical maximum, putting actual annual savings for a 16 kWh system in the $600–$1,100 range for most markets. For a 32 kWh system, double those figures.
How Kora Optimizes TOU Savings Automatically
Kora’s AI engine imports your utility’s rate schedule from a database of 300+ utilities and uses it as a primary optimization input. The system determines the optimal charge schedule for each day based on:
- Current and forecasted battery state of charge
- Weather forecast and expected solar generation (if applicable)
- Historical usage patterns by hour of day
- Minimum reserve requirements you’ve set
- Pending demand response or VPP events
The result is a charge strategy that typically outperforms simple "charge at night, discharge at peak" rules by 15–25%, because the AI accounts for uncertainty (will it rain tomorrow and reduce solar? is a storm forecast that warrants higher reserve?) and seizes optimization opportunities that simple rules miss.
Switching to TOU: Practical Steps
If you have a battery system and are not yet on TOU rates, here’s how to evaluate and make the switch:
- Check your utility’s website for available TOU rate plans and their rate schedules
- Download 12 months of hourly usage data from your utility’s portal (most offer this)
- Run the analysis: Would your historical usage cost more or less under TOU vs. flat rate?
- Factor in your battery: With storage, peak-period consumption from the grid drops to near zero, which typically makes TOU attractive
- Enroll online — most utilities allow rate changes on their website with next-cycle effective date
The Direction of Travel
TOU pricing is becoming less optional, not more. The Federal Energy Regulatory Commission (FERC) Order 2222 encourages distributed energy resource participation in wholesale markets, which requires the granular demand data that TOU metering provides. State utility commissions are increasingly mandating TOU as the default rate for new customers.
Homeowners who install battery storage today are positioning themselves to benefit from this transition. Those who wait will face the same rate structures but without the ability to arbitrage them.