Electrical Rate Structures are Changing
Washington households are already preparing for higher utility rates in 2026, as covered in our previous blog on rate hikes. But rising costs aren’t the only change ahead. Utilities are also piloting time-of-use (TOU) rates, where the price of electricity depends not just on how much you use, but when you use it.
This shift marks a major change in how Washington families will experience and manage their energy bills. In this blog, we’ll break down what TOU is, which utilities are leading the way, and how you can prepare with solar, batteries, and SPAN smart panel technology.
What Are Time-of-Use Rates?
Traditional utility rates are usually flat or tiered, meaning you pay the same price per kilowatt-hour (kWh) no matter when you use electricity. Time-of-use rates work differently. Under TOU, electricity is more expensive during peak hours—when demand is highest—and less expensive during off-peak hours like overnight or on weekends. Some programs also include a mid-peak category for transitional times of day.
The reason for this change is simple: utilities want to spread out demand on the grid. By charging more during busy hours and less when demand is low, TOU rates encourage customers to shift when they use appliances. For utilities, this helps balance the grid and integrate more clean energy. For households, it can mean savings—or higher bills—depending on how well you adapt.
Tiered Rates vs. Time-of-Use Rates
Washington households are mostly billed on tiered rates today, but utilities are exploring time-of-use (TOU) rates as an alternative. Here’s how they compare:
Tiered Rates
You pay a set price for the first “block” of energy you use each month, with higher prices kicking in as your consumption increases.
Pros:
- Simple and predictable bills
- Encourages overall conservation
- Easy to understand
Cons:
- Doesn’t reward shifting energy use to off-peak hours
- Limited ways to reduce costs once you cross into higher tiers
Time-of-Use (TOU) Rates
You pay different prices depending on when you use electricity. Rates are higher during peak demand (afternoons and evenings) and lower during off-peak times (overnight and mid-day).
Pros:
- Rewards customers who can shift usage to cheaper times
- Works well with solar and battery storage
- Encourages grid stability by reducing peak demand
Cons:
- More complex to manage
- Can increase bills if you can’t adjust your usage habits
- Not yet available to all customers in Washington
Seattle City Light (SCL) TOU Rates
Seattle City Light is among the first Washington utilities to bring a TOU pilot to homes. With a projected implementation date of Q1 2026, residential customers will have the option to switch to TOU rates.
- Peak hours: Weekdays from 7–10 a.m. and 5–8 p.m.
- Off-peak hours: Nights, weekends, and holidays.
To make room for TOU, SCL is phasing out its second-block residential rate. For households that use most of their power in the evening, this could increase costs unless energy use is shifted strategically.
NOTE: Net metered customers with solar energy systems will not be able to enroll in SCL’s TOU rate structure.
Puget Sound Energy (PSE) TOU Pilot
PSE launched its two-year TOU pilot in 2024 with a group of residential customers. The goal is to study how households respond to different price signals and how well TOU reduces peak demand.
- Peak hours: 7–10 a.m. and 5–8 p.m. on weekdays.
- Objective: Encourage load shifting, support EV adoption, and better integrate rooftop solar.
While enrollment is limited today, the program is expected to expand after the pilot concludes. PSE customers should be ready for TOU to become a more common option in the coming years.
NOTE: Net Metering customers are not able to enroll in TOU pricing plans at this time.
Snohomish PUD TOU Pilot
Snohomish PUD is currently testing a Time-of-Day (TOD) pilot program that runs through December 31, 2025. The program is open to selected commercial and industrial customers on Schedules 20, 25, and 36.
Under the pilot, customers see different billing adjustments depending on when electricity is used:
- Weekday Peak Hours (7–9 a.m. and 5–8 p.m.): Highest rates
- Weekday Non-Peak (6 a.m.–10 p.m., excluding peak): Moderate rates
- Nights & Weekends (10 p.m.–6 a.m., plus all day Sat/Sun/holidays): Lowest rates
For example, winter weekday peak hours add more than 10¢/kWh compared to non-peak, while nights and weekends reduce costs by about 1.5–1.6¢/kWh.
The pilot is designed to test whether shifting energy use away from peak times can improve system efficiency and reduce overall costs. While this option is currently limited to commercial customers, the findings could guide future rate designs that affect residential customers as TOU becomes more common in Washington.
Tacoma Power
Tacoma Power has not yet rolled out a TOU program for residential customers. However, the utility is closely monitoring results from SCL, PSE, and SnoPUD. Based on those outcomes, it’s likely Tacoma will follow with its own TOU option in the future.
Pros and Cons of TOU for Homeowners
TOU rates come with both benefits and challenges.
Pros:
- Opportunity to save money if you can shift energy use to off-peak hours.
- Ideal pairing with solar and batteries, which generate and store electricity for later use.
- Helps support a cleaner, more efficient grid.
Cons:
- More complex than flat rates—your bill depends not just on how much you use, but when.
- If you use most of your energy during peak hours, costs could rise.
- Limited availability today, with most utilities still in the pilot stage.
How Solar and Batteries Help with TOU
This is where renewable energy technology can make all the difference. Solar panels produce electricity during the day, often when rates are lower. By pairing solar with a battery storage system, you can store that excess power and use it later during expensive peak hours.
Smart panels, like those from SPAN, add even more control. They let you schedule appliances, monitor usage in real time, and automatically prioritize critical loads. With these tools, you can sidestep higher TOU charges while keeping your household running smoothly.
Your Next Step Toward Energy Independence
Time-of-use rates are coming to Washington, and they will change the way households think about electricity. While utilities are still rolling out pilots, now is the time to get prepared. With solar, battery storage, and smart energy management via SPAN smart panels, you can keep your bills predictable, avoid peak-hour costs, and take control of your home’s energy future.
Schedule a free consultation with Northwest Electric and Solar today to see how solar + storage can keep you ahead of the curve.
