Keeping up with all the changes occurring in the electric utility industry these days can become rather bewildering. Not only are of dozens of new “smart” and “connected” gadgets available (e.g., thermostats and meters), but also at least as many new, uber-cool software technologies for managing your energy use. And pricing structures for utility rates are also in a state of flux. For example, the California Public Utilities Commission (PUC) recently adopted radically new pricing structures for residential users and will surely be modifying industrial and commercial rate structures as well.
Generalizing what’s happening in California to the rest of the country, it looks like time-of-use (TOU) pricing is really becoming a “thing.” TOU pricing is similar to “demand” pricing, but is also distinctly different. TOU pricing rates vary based on the time of day and season, which more closely reflects the actual time-varying cost of electricity. It usually has a three-tier daily rate structure as well as seasonal rates.