The core opportunity: Time-of-use (TOU) electricity rates charge more during peak demand hours, often 4–9pm on weekdays. HVAC is your home’s largest energy consumer. A smart thermostat that pre-conditions your home before peak hours can reduce your peak-period HVAC runtime and cut costs without reducing comfort.

How Time-of-Use Rates Work

TOU electricity plans charge different rates based on when you use power:

Period Typical hours (varies by utility) Rate (relative)
On-peak Weekdays 4–9pm 2–4× off-peak
Mid-peak Weekdays 7am–4pm 1.5–2× off-peak
Off-peak Nights, weekends Base rate

These structures are common in California (SCE, PG&E, SDG&E) and Ontario (time-of-use option), and more utilities are rolling them out as they install smart meters across North America.

The savings math: If peak electricity costs 3× more than off-peak, and your AC runs 2 hours during peak instead of 0, you’ve paid for 6 equivalent hours of off-peak cooling. Shifting even half that runtime to pre-cooling saves real money.

The Pre-Cooling Strategy

How it works:
1. Cool your home to 1–2°F below your comfort temperature during cheap off-peak hours (before 4pm)
2. Allow the home to drift up during peak hours (4–9pm) without running HVAC
3. Home stays comfortable; HVAC doesn’t run (or runs minimally) during expensive peak window
4. Resume normal operation after peak hours

How much does it help?
In California, where peak rates can be 3–4× higher than off-peak, a household shifting 1.5 hours of AC runtime from peak to off-peak can save $150–300/year. In markets with less extreme TOU differentials (Ontario, for example), the savings are smaller but present.

Smart Thermostats With TOU Optimization

ecobee eco+: Detects and optimizes for TOU rate plans without setup. When you enroll your TOU plan in eco+, it learns your home’s thermal mass, weather forecast, and pricing windows to build a pre-conditioning strategy. It runs on its own; you don’t need to set pre-cooling times by hand.

Available utility TOU programs in eco+ vary by region. California’s SCE, PG&E, and SDG&E TOU plans are well-supported. Check the eco+ section of the ecobee app for your location’s available TOU programs.

Google Nest: Nest’s Energy History shows usage patterns by time of day; Nest partners with some utilities for TOU rate-aware scheduling. It’s less automated than ecobee’s approach, but functional.

Pairing With Solar

If you have rooftop solar, TOU optimization intersects with solar production in a useful way:

Peak solar production: Mid-day, often 10am–3pm, when off-peak rates apply (good: you’re earning net metering credits at full off-peak export rates)

Peak utility rates: 4–9pm, when solar production drops off and you’re drawing from the grid

The optimal strategy:
– Let solar run your HVAC mid-day (free cooling while sun is up)
– Pre-cool in the late afternoon before solar drops off (3:30–4pm)
– Coast through peak hours (4–9pm) on the thermal mass of your already-cooled home

A smart thermostat with solar integration (ecobee works with some solar monitoring platforms) can automate this or at least schedule for it.

TOU vs Demand Response: The Overlap

Both TOU optimization and demand response aim to reduce peak-period electricity usage. They’re often complementary:

  • TOU optimization is automatic and always-on: the thermostat adjusts scheduling around your rate plan daily
  • Demand response is event-based: the utility signals the thermostat during specific peak events, a few dozen times per year

You can enroll in demand response and run TOU optimization at the same time. ecobee’s eco+ handles both once you configure it.

The demand-response enrollment pays you credits; the TOU optimization saves you money on your bill. The two mechanisms differ, and both add value without conflicting.

See Smart Thermostat Demand Response Programs: How to Earn Bill Credits for the demand-response side.

Frequently Asked Questions

Does ecobee support time-of-use rate optimization?
Yes. ecobee’s eco+ optimizes for TOU rate plans without manual setup. Enter your utility’s TOU plan in the eco+ settings, and ecobee pre-conditions your home during cheap hours to minimize peak-period runtime.

Can a smart thermostat work with a solar panel system?
Smart thermostats can optimize for solar production by scheduling cooling/heating during mid-day peak production periods. Some smart home integrations (through Apple HomeKit, Home Assistant, or direct solar inverter APIs) allow more automated coordination. ecobee doesn’t natively integrate with solar inverters, but eco+ TOU optimization runs during solar production hours by design.

What are TOU rates and do they apply in Canada?
Time-of-use rates charge more for electricity during peak demand hours. In Ontario, TOU rates are an option for homeowners with smart meters (typically 7–11am and 5–7pm weekdays as on-peak). BC’s TOU options are more limited. US states like California have TOU as a default or major option for most customers.

Is pre-cooling bad for a heat pump?
No, not in summer (cooling mode). Heat pumps in cooling mode stay efficient regardless of outdoor temperature below ~35°C. Pre-cooling before peak hours doesn’t stress the system.

How much can TOU optimization save me?
Savings depend on your rate differential and HVAC usage. California homeowners on TOU rates can save $100–300/year with active pre-cooling strategies. Ontario and other markets with more moderate TOU differentials: $30–100/year. The savings are real but modest in lower-differential markets.