Many residential energy customers pay a flat rate for electricity no matter the season or time of day that they use it. But did you know that electricity production costs vary during the day? That's why some suppliers also offer time-variant pricing. Here's what you need to know about this form of electricity pricing.
The Basics of Time-Variant Pricing
Electricity demand increases production costs. Therefore, suppliers charge higher prices during high-demand periods to cover their costs and incentivize customers lower their use of electricity during those times.
The common types of time-varying pricing include:
- Time-of use — The supplier sets separate prices for different periods, such as off-peak, peak, and interim periods. These rates remain the same every day.
- Variable peak — Also includes several pricing periods. However, for one of the periods, the supplier adjusts the price daily based on the costs incurred and system conditions.
- Critical peak rebate — The supplier provides a rebate to customers if they reduce the electricity they use during a particular daily period.
How to Get the Most out of Time-Variant Pricing
If your power company offers time-varying pricing, you can adopt some new habits to take full advantage of it and save money. These include:
- Adjust the schedule of your programmable thermostat to match the company's period prices.
- In the summer, turn the thermostat up by a few degrees during peak hours, such as around the time when consumers usually arrive home from work and crank up their A/C systems. At night, you can lower the temperature setting to cool off the house. If you have a well-insulated home, it can stay cool for the better part of the following day, making your air conditioner turn on minimally.
- During the colder months, raise the temperature setting during those times when heating charges reduce.
- Wait until the off-peak hours to use energy-intensive appliances like the washing machine, clothes dryer, and dishwasher.
Besides reducing your energy bills, utilizing time-variant pricing also helps lower air pollution and benefits other local electricity consumers by aiding grid stability. For more information on this energy solution and any other energy-saving techniques, contact us at Hartman Brothers Heating & Air Conditioning. We've been helping Fort Wayne homeowners optimize their heating and air conditioning since 1963.