Time-Varying Pricing Pilots: Lessons from Early Adopters (2026)

Time-varying electricity rates — plans where the price per kWh changes based on time of day, day of week, or grid stress conditions — have been running in pilot programs for over a decade. The findings from early adopters in Illinois, California, New York, and several European markets now provide a clear picture of who wins, who struggles, and what behavioral and infrastructure changes are necessary to capture the savings available on dynamic pricing plans. If you’re considering a time-of-use or critical-peak pricing plan, the data from these pilots is far more useful than any theoretical model.

The Core Premise of Time-Varying Pricing

Electricity is not a commodity that can be stored at scale. The cost of generating and delivering power swings dramatically across a 24-hour period — from near-zero during overnight low-demand hours to multiples of the average rate during hot summer afternoons when every air conditioner in the region is running simultaneously. Flat retail rates hide this volatility from consumers, eliminating the price signal that would otherwise encourage load shifting.

Time-varying pricing exposes some of that volatility to customers. The expectation is that price-responsive customers will shift discretionary loads — dishwashers, laundry, EV charging, water heating — away from expensive peak periods, reducing peak demand, deferring infrastructure investment, and passing savings back to participants.

Illinois: ComEd’s Hourly Pricing Program

ComEd’s Hourly Pricing program, running since 2007, is one of the longest-running residential real-time pricing programs in the United States. Participants pay next-day hourly prices derived from PJM day-ahead wholesale market rates, plus a fixed delivery charge. Over a long-run sample, median participants saved 10–15% versus the standard rate, with engaged participants (those who actively shifted laundry, dishwasher runs, and EV charging) saving 20%+ in some years.

The key finding: automation matters enormously. Customers who enrolled smart thermostats in the program’s automated demand response feature saved consistently; customers who relied on manual behavior change saved erratically and often dropped off the program. The cognitive load of checking tomorrow’s hourly prices each evening and adjusting behavior accordingly proved unsustainable for most households without automation.

California: PG&E and SCE Time-of-Use Pilots

California has been the most aggressive U.S. market for time-of-use (TOU) rate deployment, with PG&E and SCE transitioning millions of customers to default TOU rates over the past several years. The California pilot research from the 2010s — the Statewide Pricing Pilot being the landmark study — found average bill savings of 3–5% on standard TOU (two-price peak/off-peak) and 8–12% on critical peak pricing variants, with high-engagement customers achieving 15–20%.

The California experience also identified a clear losers group: households with inflexible usage profiles — typically those with medical equipment dependencies, non-shifting occupancy patterns (e.g., retirees home all day), or poor housing insulation — saw bill increases on TOU rates. This finding shaped subsequent California tariff design, which now includes baseline protections and opt-out provisions for vulnerable customers.

New York: CLCPA and the NYC Demand Flexibility Pilots

New York’s 2019 Climate Leadership and Community Protection Act created urgency around grid flexibility, driving Con Edison and NYSEG to launch demand flexibility pilots with enrolled smart thermostats and water heaters. Preliminary results show that enrolled thermostats reduced peak demand by 1–1.5 kW per household during critical summer events, consistent with academic estimates. The NYC pilots also tested battery storage integration, with participants receiving bill credits for allowing utilities to dispatch their home batteries during peak events.

What Early Adopters Actually Changed

Across pilot programs, the behavioral and infrastructure changes that drive meaningful savings cluster into a few categories:

EV charging: EV owners on TOU rates consistently achieve the largest savings by simply scheduling overnight charging. Off-peak electricity for EV charging can be 40–60% cheaper than peak-period rates, and because EV charging is large (7–11 kW), even modest time shifts translate to significant bill reductions.

Smart thermostats: Pre-cooling a home by 1–2°F before peak hours begins, then allowing temperature to drift during peak, is the most common automated strategy. Well-programmed thermostats do this invisibly. The comfort tradeoff is minimal; the savings are consistent.

Water heater scheduling: Heat pump water heaters with time-of-use scheduling are particularly effective. A 50-gallon HPWH running during off-peak hours can store 12+ hours of hot water supply, essentially eliminating hot water’s contribution to peak demand.

Dishwasher and laundry shifting: High engagement, but high dropout. These require daily behavioral reminders. Most pilot programs found that initial participation rates of 70–80% dropped to 30–40% within six months without automation support.

Why Some Participants Don’t Save

Pilot data consistently identifies profiles where time-varying pricing either fails to save or increases bills:

Households with work-from-home or stay-at-home patterns have fundamentally inflexible peak-period loads — their air conditioning, lighting, and kitchen appliance use is anchored to peak hours. Flat-rate plans protect these customers from price volatility they can’t manage.

Older housing stock with poor insulation responds poorly to pre-cooling strategies — the thermal mass isn’t there to hold a pre-cooled temperature through peak hours.

Customers without smart devices, programmable outlets, or smart thermostats achieve at best 50% of the savings potential of equivalently sized households with automation.

Design Lessons for Regulators and Utilities

The clearest lesson from a decade of pilots: default enrollment into TOU rates works if opt-out is easy and protections exist for vulnerable customers. Voluntary-only programs attract early adopters who are already motivated and technologically equipped — they produce positive average results but aren’t scalable. Mandatory default TOU with opt-out rights captures the broader population and generates grid benefits at scale, but requires careful tariff design to avoid bill increases for inflexible households.

The second lesson: price signal alone is insufficient without enabling technology. States and utilities that co-deploy smart thermostats, smart water heaters, and EV managed charging with their TOU programs achieve 3–5x the load shifting of price-signal-only approaches.

Frequently Asked Questions

Should I sign up for a time-of-use plan today?

If you own an EV, have a smart thermostat, and can shift dishwasher and laundry loads to overnight hours, a TOU plan is almost certainly a net positive. If you work from home, have medical equipment with 24/7 power draws, or have no smart devices, a flat-rate plan is likely safer.

What’s the typical spread between peak and off-peak rates?

Varies widely by utility and program design. Common structures in deregulated states have peak rates of 2–3x the off-peak rate. For example, a utility might charge $0.08/kWh off-peak and $0.22/kWh during peak hours. The higher the spread, the more value there is in shifting loads.

How do real-time pricing plans differ from time-of-use plans?

TOU plans have fixed peak/off-peak prices set seasonally or annually in advance. Real-time pricing (RTP) exposes customers to actual wholesale market prices on a day-ahead or hourly basis. RTP offers higher upside savings potential but more bill volatility. ComEd’s Hourly Pricing is the most accessible U.S. residential RTP program.

What smart devices are most useful for participating in TOU programs?

In order of impact: EV smart charger (highest dollar savings per device), smart thermostat, heat pump water heater with scheduling, smart outlets for window AC units, smart dishwasher or delay-start setting. All of these require minimal ongoing manual intervention once configured.

Can renters participate in TOU programs?

Yes — in deregulated states, the electricity account is often in the tenant’s name, and the tenant can switch to a TOU or hourly pricing plan. The main constraint is that renters typically can’t replace a landlord’s HVAC system or water heater. Smart thermostats and plug-in EV charging are the highest-leverage options available to renters.