What is a time-of-use program and how does it work with power companies?

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Home Appliances

Almost all power companies offer a time-of-use program, and Carolina Power and Light (CP&L) in Raleigh, NC, is one such example. The idea behind the program is to install a special power meter that allows the power company to bill customers differently based on the time of day. Most people pay a flat rate for their power, but with a time-of-use program, there are “on-peak” and “off-peak” hours that determine the billing rate.

For CP&L, there are two time periods: “on-peak” and “off-peak.” During the summer (April to September), on-peak hours are 10 a.m. to 9 p.m. on weekdays and off-peak hours are nights, weekends, and vacations. The winter on-peak hours are slightly different: 6 a.m. to 1 p.m. and 4 p.m. to 9 p.m. on weekdays. There are two programs in the CP&L time-of-use plan, and under the simpler program, customers pay $9.85 per month to join and 14.5 cents per kilowatt-hour for on-peak power and 2.9 cents per kilowatt-hour for off-peak power.

The objective of a time-of-use program is to encourage customers to use as much power as possible during off-peak hours. Doing laundry, washing dishes, and taking showers during off-peak hours can be done without much inconvenience. If a customer uses 1,000 kilowatt-hours in one month, of which 333 are on-peak and 667 are off-peak, the total bill is $64.83, for a savings of $9.17 (12%).

To determine if a time-of-use program is suitable for a customer, they need to know their monthly power consumption, appliances, and their tolerance for inconvenience. The monthly power consumption should be at least 700 kilowatts or more to make the $9.85 monthly fee worthwhile. Large power-consuming appliances like electric dryers and water heaters can be shifted to off-peak hours, but refrigerators are difficult to shift. If waiting until 9 p.m. to do laundry or turning off the air conditioner in the middle of the day is a hassle, the time-of-use program may not be suitable.

So, what does the power company gain from offering this program? The power company cannot store power, and during peak hours, there is a huge load on the power company. The company has to build more power plants to meet the peak load, which is expensive. With a time-of-use program, the power company can reduce the peaks and avoid building extra power plants. It is more cost-effective to offer discounts to customers than build new power plants.

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FAQ

1. What is a time-of-use program with the power company?

A time-of-use program is an electricity rate plan offered by power companies that charges customers different prices for electricity based on the time of day and day of the week. This means that electricity is more expensive during peak hours when demand is high and cheaper during off-peak hours when demand is low.

2. How does a time-of-use program save customers money?

If customers can shift some of their electricity usage to off-peak hours, they can take advantage of the cheaper rates and save money on their electricity bills. This can be done by running appliances like dishwashers, washing machines, and dryers during off-peak hours, and by adjusting thermostats to use less energy during peak hours.

3. How do customers enroll in a time-of-use program?

Customers can usually enroll in a time-of-use program by contacting their power company and requesting to switch to the program. Some power companies may require customers to have a smart meter installed in order to participate, as the smart meter will track the customer’s electricity usage during different times of the day.

4. What are the peak and off-peak hours for a time-of-use program?

The peak and off-peak hours for a time-of-use program vary depending on the power company and location. Generally, peak hours are during the day, usually in the late afternoon and early evening, and off-peak hours are during the night and early morning.

5. How does a time-of-use program benefit the power company?

A time-of-use program can benefit the power company by reducing the overall demand for electricity during peak hours. By encouraging customers to shift their electricity usage to off-peak hours, the power company can avoid having to build additional power plants or buy expensive electricity from other sources during times of high demand.

6. What are some drawbacks of a time-of-use program?

One potential drawback of a time-of-use program is that customers may not be able to shift all of their electricity usage to off-peak hours, especially if they work during the day or have children who need to do homework in the evening. Additionally, if customers do not adjust their usage patterns, they could end up paying more for electricity than they would on a standard rate plan.

7. Are time-of-use programs available in all areas?

No, time-of-use programs are not available in all areas. Availability depends on the power company and location. Customers should check with their power company to see if a time-of-use program is available in their area.

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