What is a time-of-use electricity plan and is it really worth it?

Wednesday, 16 July 2025

From next year all energy companies will have to offer time of use plans to customers.

From next year, energy companies will have to offer time-of-use plans to customers in a series of energy sector changes announced by the Electricity Authority.

Energy Minister Simon Watts said companies would be required to offer the plans from June 30, 2026, in what he called a “simple” solution to help Kiwis with the cost of living.

He said time-of-use plans will provide “better options” for customers to save money by moving their electricity use from peak periods.

But what is a time-of-use plan, when are peak periods for power use, and can I actually save some money?

Time-of-use plans

If you are on a flat-rate power plan, you pay the same electricity price regardless of the time of day. However, there is also something called a time-of-use plan, which allows people to get cheaper power during off-peak times.

The Electricity Authority, a Crown entity that regulates the electricity market in New Zealand, says time-of-use plans can benefit households that are able to shift their power use to those off-peak times when electricity is in less demand.

The Electricity Authority says people could save up to $150 a year by shifting their power use away from peak periods.

Such plans, they say, can be helpful for people who own an electric vehicle, pool, or use an electric hot water cylinder - items which can be run or charged during off-peak hours.

When are peak and off-peak times?

Demand for electricity is highest during what are known as peak hours - weekday mornings, for example - making it harder for the system to keep up.

This means the energy sector has to rely on more expensive ways to generate electricity, usually resulting in price increases for customers.

However, during those off-peak, quieter times - such as nights or on weekends - it is cheaper to generate electricity as there is a lower demand for it.

As a result, during off-peak periods, energy companies can buy electricity at lower rates and pass those savings on to the consumer in the form of time-of-use plans.

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The Electricity Authority says peak times for electricity use are usually between 7 and 10am and 5 and 9pm on weekdays.

Demand then drops off between 10am and 5pm and 9 and 11pm, before demand reaches its lowest point between 11pm and 7am.

OK, so will I actually save money?

It depends on how much you can shift your electricity use to off-peak times.

If the task of doing that is difficult - for example, if you have a large family who uses a lot of power - then maybe a time-of-use plan will not be suitable and could in fact lead to an increase in your power bill, according to the Electricity Authority.

Ways you can save money, though, include charging your electric vehicle only at night or during the weekend, putting on the dishwasher or washing machine at night, or using a timer for things such as pools so they run during off-peak times.

Energy Minister Simon Watts announced changes to the energy sector on Wednesday.

Prices are typically highest during peak times, then drop into a middle range during off-peak periods, and are at their cheapest at night.

The Energy Efficiency and Conservation Authority (EECA) estimates households on time-of-use plans can save up to $150 a year by shifting their power use away from peak periods.

However, according to the Electricity Authority, retailers report only about 10% of all households (220,000 homes) are currently on a time-of-use plan.

They said the more people who shift their electricity use away from peak periods, the more it benefits the system and keeps power prices down for everyone.