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When Is Electricity the Cheapest?


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Electricity rates can vary from day to day and even by hour. The rates charged by energy providers are affected by factors such as the wholesale cost of electricity, energy demand, and seasonality.

When energy demand is low, the price of electricity is normally cheaper. Seasonally, energy demand is often lower during the spring and fall months when temperatures are milder in many areas. During summer and winter, energy usage increases due to heating and cooling needs, leading to more expensive electricity rates.

Let’s use Texas as an example. In the summer months, energy rates in Texas normally go up because hot temperatures lead to higher energy demand. And during the cooler months, energy rates in Texas are usually lower. However, when a winter storm hit Texas in February 2021, energy demand surged, causing electricity prices to spike dramatically. The chart below shows how Texas electricity rates fluctuate throughout different times of the year.

Cheaper energy rates during off-peak hours

Some energy providers offer time-of-use plans that charge you based on the time of day you use electricity. Lower rates are available during off-peak hours and higher rates are charged during peak hours. Specific peak and off-peak hours vary by provider, but off-peak hours tend to be at night or in the middle of the day, while peak hours occur in the mornings and evenings.

If your energy provider offers a lower rate during off-peak hours, you could significantly lower your energy bill by doing chores during those hours. For example, charging your devices or running your appliances at night when energy is cheaper could lower your average electricity bill.

Plans with free energy usage periods

Some providers offer energy plans with free usage periods, such as at night or on weekends. With these plans, you won’t be charged for electricity you use during the free usage period. The SaveOnEnergy marketplace lets you filter for plans with free usage periods in your area when you enter your ZIP code.

When signing up for an energy plan with a free usage period, be sure to read the details in the plan’s Electricity Facts Label (EFL). The EFL will explain the exact hours that your electricity is free and the terms of the free usage period. If you have questions about the terms of an energy plan featured on the SaveOnEnergy marketplace, contact us and one of our energy experts can answer your questions.

 

Caitlin Ritchie is a writer and editor within the energy industry, specializing in deregulation, energy efficiency, and solar power. Her writing and research have been cited by Snopes, The Washington Post, The American Solar Energy Society, and other major sources. Find more of Caitlin’s work at ChooseEnergy.com.