PSEG Shifting to Time-of-Day Electricity Rates

Homeowners are being offered an opportunity to save money on their electric bills and help reduce the costs of providing electricity to the entire region, thanks to a new program that PSEG Long Island has been rolling out over the last two years that incentivizes reducing electrical use during the hours when demand across the grid is highest.

As of this summer, all of PSEG Long Island’s customers will have the option of choosing a new rate system that charges higher rates for electricity during the peak late afternoon and early evening hours, lower rates during nonpeak hours and discounted rates during overnight hours, to encourage shifting high-energy appliances, like pool heaters and car chargers to run during times of lowest demand.

The peak rate hours will be from 3 to 7 p.m. each weekday. The rest of the day, and all hours on weekends and holidays, will be charged the off-peak rate. Customers who opt for the three-tier rates, will be have an even lower rate, which PSEG is calling super-off-peak, available to them between 10 p.m. and 6 a.m. when electricity will be discounted by 40 percent.

“The biggest users of energy are set-it-and-forget-it things, and they’re the easiest to set to avoid those peak hours,” Brian Kurtz, a project manager for PSEG told Southampton Town officials last week. “Set your car to charge from 10 p.m. to 6 a.m., with a level 2 charger that will give you a full charge, at 40 percent less. Pool pumps, set them not to run during the peak hours. A pool pump usually needs to run for 8 hours, so set it to run for 4 hours in the morning and 4 hours at night and avoid those peak times.

Kurtz also offered that cost-conscious residents could adjust their home air conditioning to avoid the afternoon peak rates as well by turning the temps down earlier in the afternoon, chilling the house, then shutting it off during the 3 to 7 p.m. period, allowing the temperature to rise until 7 p.m. then cooling down again.

Some customers have been opting into the time-of-day, or TOD, rates since 2023, and all homes on Long Island will be automatically shifted to the system by the end of this year. But residents have the option to remain on the flat rate plan or to choose between the two-tier rates or the three-tiered super-off-peak plan.

Because the spike in demand for electricity during the peak hours of summer afternoons puts more wear-and-tear on the electrical delivery system, PSEG officials said that reducing the demand during the peak hours, as they hope the new TOD rates will do, can help keep the delivery charges the utility must charge in check in the long term.

Because demand is so much higher in the summer, PSEG also increases rates between June and September, when it often has to bring supplemental “peaker” plants online to meet spikes in demand on especially hot days. If peaks are reduced, the foundational costs of delivering electricity across the island will be too.

“Customers will save directly on their bills in the short term if they shift from peak and off peak,” Faulk said. “But in the longer term, as all of our customers or the majority of our customers start making these small incremental changes, it’s going to reduce the costs for everybody.”