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Time-of-use energy rates and demand charge prices

If you have a time-of-use (TOU) and/or demand charge pricing from your energy provider, you can use your Google Nest thermostat to schedule cooling or heating when it’s less expensive to help save money. Note that these pricing programs have many variants and names, such as: TOU, demand charge, and peak time savings.

Most peak pricing is only available for electric systems. If you have a natural gas, heating oil, or liquid petroleum gas (LPG) boiler then you likely don’t have a TOU plan, but you can check with your utility company.

When demand for electricity is especially high, like on a hot summer afternoon when many homes and businesses have the cooling turned up, this is called a “peak period.” During peak periods, utilities may have to turn to less efficient sources of power generation to meet demand, or bring a whole new generator online just to make a little extra electricity available for people to use.

Learn about peak pricing

Some utilities use peak pricing to incentivize customers to avoid using energy during these peak periods. The most common type is called a TOU rate, which means customers pay more for the electricity they use during peak times.

During the summer, peak times are usually mid-to-late afternoon, when offices are still cooling, people are arriving home and turning on the air conditioner, and, in areas with lots of solar energy, solar generation is dropping. Another type of peak pricing is called a “demand charge” which means customers are charged based on the most energy they use at once during a peak period. Although slightly different, customers with either type of peak pricing can save money with a similar approach.

How a Nest thermostat can save you money on a TOU rate

If you have peak pricing and an HVAC system that is powered by electricity, you can use your Nest thermostat to schedule heating or cooling when it’s less expensive. Optimize your schedule in one or two simple steps:

  1. Create a temperature schedule to condition your home during off-peak hours, typically before 4 PM and after 8 PM on winter and/or summer weekdays. Check your utility bill for peak hours in your area.
  2. Disable automatic switching for your thermostat when you leave or come home. In some cases, you can save more money (but less energy) by keeping your home closer to your preferred temperature while you’re away. This way your system doesn’t have to work as hard to condition your home when you come back during a peak rate period. Check with your energy provider to understand the specific times and rates for your TOU plan. After you disable automatic switching for your thermostat, you should also track your energy savings in the monthly Nest Home Report and compare them to your energy bill.
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