Home Comfort and Energy Bills: Time-Variant Pricing

Using time-variant pricing to your advantage can help save on cooling and heating costs. While your HVAC system produces consistent cooling and heating, the cost of electricity it uses isn’t consistent.

Many people are surprised to learn that the price of producing electricity varies significantly per time of day and the power demand on the grid. Increasingly, utilities are pricing and billing electricity accordingly, offering fluctuating rates keyed to the actual cost of generating power at a specific time.

Taking steps to synch the power consumption of your home with lower-cost periods provided by time-variant pricing can result in substantial savings on your electric bill as well as even out the demand on your local utility, reducing emissions. Here are three common time-variant price methods:

Time-of-use pricing

Also called TOU, this method divides the 24-hour period into two or three large spans, with different rates for each. Off-peak prices are least expensive and usually extend from midnight through early morning. Semi-peak prices are during daytime and evening and peak prices, the most costly span, happen during highest demand on the grid from afternoon into the early evening.

Real-time pricing

RTP continuously adjusts pricing to meet shifting power demands over briefer time spans, often as short as hour-to-hour. Signals that price is adjusting are usually received by a smart meter installed at the address which must be monitored. Since it’s somewhat inconvenient to monitor data and adjust household power consumption on an hourly basis, the RTP method is more frequently utilized by large commercial accounts.

Critical peak pricing

Known as CPP, this method alerts consumers of impending dramatic price increases on the grid—within a day or sometimes only hours—due to expected high consumption. Notification may be by text message, email or phone. A typical scenario might be an extreme heat wave predicted to strike the next day, causing electricity demand to soar. In municipalities where CPP is utilized, customers have used the information to reduce household demand by as much as 50% with commensurate savings.

Ask the professionals at Rinaldi’s Energy Solutions for more information about potential savings from time-variant pricing.

Our goal is to help educate our customers in Orlando, Florida and surrounding areas about energy and home comfort issues (specific to HVAC systems).