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Why are Electric Utility Companies Switching to Time-based Pricing?

March 3, 2023

What is Time-of-Use (TOU) Pricing?

Across the globe, electric utilities are introducing new billing structures called, Time-of-Use (TOU) or Time-of-Day (TOD) rates. As the name suggests, the rates vary based on the time that energy is consumed. A traditional utility rate has the same cost per kilowatt hour no matter when electricity is used. It is therefore simple to multiply the rate by consumption to arrive at the monthly bill. In contrast, a TOU customer will have different charges for using electricity at different times of the day.

How the DTE Time of Day 3 p.m. – 7 p.m. Rate Works



Why are these rates being used?

Energy providers have varying costs for generating electricity during different times of the day which is closely tied to demand. The hope in introducing these rates is to change the behavior of the consumer to use electricity when the cost of generating electricity is lower and demand is lower. In areas where there are generation capacity shortages, the ability to change consumer behavior is even more important.

“It’s really designed to send pricing signals to the customers to demonstrate when electricity is most expensive,” said Trevor Lauer, President of DTE’s electric company. “And why it’s more expensive is because you’re using more expensive generating units to provide the electricity that’s needed.”1

The benefit of reducing electricity usage during peak demand times is:

  • Lowered greenhouse gas emissions
  • Improved energy efficiency
  • Cleaner power grids
  • Better air quality

Who do they affect?

Consumers who are willing and able to change their behavior will see the biggest savings when switching to a TOU rate. Having the knowledge and willingness to do laundry on the weekend or charge an electric vehicle in the middle of the night will introduce significant cost savings to those willing to alter their consumption patterns. However, those who work from home or need to use electricity during peak periods will likely see a negative effect on their bill by participating in a time varying rate.

What can you do?

The first thing anyone can do is to get informed. Take time to understand what time of day energy costs change and take steps to alter your behavior to save money. Most utility companies offer assistance in understanding how rates differ and can do “what-if” analysis of your bill to determine the best rate for you to be on. Once you understand how the rate is structured, you can take proactive steps to save on your electricity bill.

DTE Insight App with Real-Time Time-of-Use Energy Usage Example

Then, take proactive steps to save on your electricity bill by using an energy management app built by Powerley and provided by your utility company.

For example, the DTE Insight App is operated by Powerley and allows DTE Energy customers to see rate changes layered on top of their energy usage. With the DTE Insight App, you can track when energy prices are higher or lower and adjust your usage, potentially saving you money on your utility bills, right from the palm of your hand. Read more about how DTE and Powerley enabled an entirely new consumer relationship with energy.

Benefits of using an app that shows time-of-use rates:

Save Money:By tracking the TOU rates, you can shift your usage to off-peak hours when rates are lower, potentially reducing your energy bill.

Real-Time Data: The app can provide you with real-time information about energy rates, allowing you to make informed decisions about your energy consumption.

Control Your Energy Usage: With the app, you can control and monitor your energy usage from anywhere, anytime. You can set a budget and energy usage goals, then monitor your progress toward achieving them.

Powerley App with Rate Change Notification

Eco-Friendly: Reducing your energy consumption during peak hours can also help reduce carbon emissions, making the app an eco-friendly option for customers who want to reduce their carbon footprint.

Easy to Use: The app is user-friendly, allowing customers to easily track their energy usage and make informed decisions about their energy consumption.

Go to your electric utility company’s website to start exploring your options and take control of your energy usage today!

If you live in Michigan and have DTE as your electricity provider, then you can download the app now!

Download from Apple App Store

Download from Google Play

Click here to learn more about the DTE Insight App.




DTE Time-of-Day Plan (D1.2) Source:



DTE Dynamic Peak Pricing Plan (D1.8) Source:


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