Residential Time-of-Use Rates Changing in the Fall

Beginning in October 2025, the default rate for Xcel residential customers will be changing to simplify the existing schedule and better indicate the hours when power is expensive to produce.  This indicates to customer how to save money and reduce the need to build more of the most expensive “peaker” power plants.

​Most customer are currently on a rate where electricity is more expensive from 1PM to 7PM on weekdays. The new rates will be highest from 5PM to 9PM on weekdays. This expands the low rate to cover 89% of the total hours in the year with the higher rate 11% of all hours. 

New TOU Times:

• On-Peak: 5 PM to 9 PM on non-holiday weekdays, year-round 
• Off-Peak: all other hours

Similar changes were made for all rates, including commercial and industrial rates, to better align with the actual production costs of electricity on the grid. These rates also have the potential to shift power use towards hours with high renewable content on the grid.

In the decision, the Public Utility Commissioners stated: “We conclude that the purpose of TOU rates as the default rates for electric utility service is to provide an opportunity for customers who can change their behavior in ways that benefit the system to do so and lower their rates and to limit future infrastructure expenses on the system, as well as their resulting rate increases, through this customer involvement.”

CRES was a formal participant in these proceedings and focused on advocating in favor of schedules that meet the goal of reducing power use at the most expensive times but also maximize the efficient use of clean, renewable energy. The argument was to have a low rate during daytime when there is often excess renewable power on the grid that can be used. This would complement the message for when to reduce power by also saying when power is least expensive and cleanest. This goal was also pursued by the Colorado Solar and Storage Association and Western Resource Advocates in this case.

While the commissioners chose the simpler plan with low rates from 9 PM to 5 PM the next day (on weekdays), CRES is satisfied that the twenty low-cost hours per weekday include the cleanest hours on the grid, 8 AM-4 PM, allowing customers with a preference for clean energy to also save money at the same time.

The rates are designed to lower customer bills in three ways. First, anyone who can shift some power use out of the peak hours during weekdays to the lower-cost hours will see a lower bill that month. When this results in less total residential power use at peak times, the cost of providing power to the residential customers drops for every residential customer. In the longer term, residential customers will pay a smaller fraction of the cost of providing energy relative to commercial and industrial customers by using less power during peak hours, and fewer of the most expensive peaker power plants will need to be approved and built. These last two factors lower the cost of power for all residential customers, whether individual households can change their hourly power-use schedule or not.

Customers can opt out to a “flat rate” that is the same during all hours. However, the TOU rate is lower than the flat rate 89% of all hours and higher only 11% of the time. The PUC ruling specified that there will be a tool that customers can use to see which rate makes the most sense and what actions might result in lower bills.

Customers with EVs will save money on this TOU rate by charging the EV outside of the peak hours on the lowest-cost rate. Observations of data from residential customers indicate that those with heat pumps for space heating also save money on the TOU rates. In the proceeding, calculations showed that a majority of all residential customers, including those with lower incomes, will save money on the new rate schedule with their historical power use, but will also have the opportunity to lower costs if shifting any power use outside of the identified peak hours is possible. 

CRES recommends that members shift power use into the daytime hours whenever possible. Power use during daytime is now 60% renewable (8 AM-3 PM) due to the extensive PV that was installed in 2023 from the Xcel resource plan approved in 2018. This compares to the power that is about 40% renewable during low-cost hours at night.

A more sophisticated optimization will be possible soon. In another proceeding, the Transportation Electrification Proceeding, the commissioners ruled that Xcel should provide the day-ahead and week-ahead predictions for hourly renewable energy on a public website.  This will allow people (or automation) to shift power use to windy hours of the night and avoid the calm hours when power is provided primarily by fossil fuel. This is also scheduled to roll out in the 3rd quarter of 2025. These day-ahead predictions could enable EV charging from the grid that is 90% renewable by charging during the best hours today or tomorrow, once this is known in advance.

For more information, contact:

​Ron Sinton ([email protected]) 
Vince Calvano ([email protected]) 
Or: https://puc.colorado.gov/time-of-use-rates