Time-of-Use vs Tiered vs Flat Electricity Pricing: Which Costs More, and When

Two buildings on the same street can pay very different amounts for the same kilowatt-hour, and the difference often comes down to one choice: the price plan. In Ontario, eligible households, farms, and small commercial accounts under the Regulated Price Plan (RPP) can pick between time-of-use, tiered, and ultra-low overnight pricing. Each plan charges for the exact same electricity, but it charges by a different rule. Pick the plan that fits your load shape and you save real money. Pick the wrong one and you overpay every month without a single meter error in sight.

This guide breaks down how each structure works, uses the current Ontario Energy Board (OEB) prices in effect from November 1, 2025 through October 31, 2026, and shows when each plan wins. The logic applies well beyond Ontario: any market with time-varying or block pricing rewards the same discipline of matching your rate to when and how you actually use power.

The three regulated price plan structures

The OEB sets RPP prices twice a year based on the forecast cost of supplying power. For the period starting November 1, 2025, the average RPP supply cost is $127.91 per MWh, or about 12.79 cents per kWh, up 29 percent from the prior estimate. That average is the same pool of money the regulator needs to recover no matter which plan you choose. What changes between plans is how the bill is sliced: by the clock, by the pile, or by a mix that rewards overnight use.

Flat pricing, where every kWh costs the same regardless of time or volume, is the simplest structure and still common for many commercial accounts on utility-specific or competitive supply contracts. The RPP does not offer a pure flat option, but tiered pricing behaves like a near-flat plan for smaller users, so it is the closest regulated stand-in and a useful baseline for comparison.

Time-of-use: paying by the clock

Time-of-use (TOU) pricing charges different rates depending on the hour and the day. The premise is straightforward: power costs the grid more to deliver when everyone wants it at once, so the price is higher during peak hours and lower when demand is slack. Under the RPP, TOU has three periods. As of November 1, 2025 the off-peak rate is 9.8 cents per kWh, mid-peak is 15.7 cents, and on-peak is 20.3 cents.

The windows shift with the season because Ontario's demand pattern shifts. In summer the grid peaks midday when air conditioning runs hardest, so the single on-peak block sits in the afternoon. In winter the grid peaks in the morning and early evening when people wake, cook, and come home, so on-peak splits into two blocks. Off-peak covers nights and all weekends and holidays in both seasons.

TOU rewards anyone who can move consumption into evenings, nights, or weekends. Those hours make up the larger share of the week, so a building that runs its heaviest loads off-peak can land an effective rate close to the 9.8 cent floor. A building that runs hard through weekday afternoons pays the 20.3 cent ceiling for those hours, which is more than double. The season windows come straight from the OEB rate schedule.

Tiered: paying by the pile

Tiered pricing ignores the clock entirely and charges by how much you use in a month. You pay a lower Tier 1 rate up to a monthly threshold, then a higher Tier 2 rate on everything above it. As of November 1, 2025 the Tier 1 rate is 12.0 cents per kWh and Tier 2 is 14.2 cents. The thresholds differ by customer type and season: residential customers get the first 1,000 kWh at Tier 1 in winter and the first 600 kWh in summer, while non-residential customers get the first 750 kWh year round.

The spread between tiers is narrow, only 2.2 cents, so for a small user tiered pricing behaves almost like a flat rate near 12 to 14 cents. That flatness is the point. Tiered pricing does not punish you for using power at 5 p.m. on a weekday, which makes it the natural home for loads that cannot move. If your demand is steady and concentrated in daytime hours, tiered can beat TOU because you never touch that 20.3 cent on-peak rate.

Ultra-low overnight: the plan built for load shifting

Ultra-low overnight (ULO) pricing is TOU taken to an extreme. It carves out a deep overnight discount in exchange for a steep evening premium. As of November 1, 2025 the ULO overnight rate is 3.9 cents per kWh from 11 p.m. to 7 a.m. every day, while the on-peak rate is 39.1 cents from 4 to 9 p.m. on weekdays. Between those extremes sit a weekend off-peak rate of 9.8 cents and a mid-peak rate of 15.7 cents. The overnight rate is the cheapest regulated electricity in the province, and the on-peak rate is the most expensive, a tenfold spread on the same meter.

ULO is a specialist plan. It pays off spectacularly for anyone who can concentrate load overnight, such as EV charging, battery storage that charges cheap and discharges during the evening peak, or thermal storage that pre-cools or pre-heats a building. It punishes anyone who cannot avoid the 4 to 9 p.m. window. Before switching to ULO, be honest about how much of your consumption you can actually push past 11 p.m.

Which plan wins, and when

There is no universally cheapest plan, only the cheapest plan for a given load shape. The decision comes down to two questions: what does your consumption look like across the day, and how much of it can you actually move? A few common patterns:

• Flexible load, evenings and weekends available: TOU wins because most of your kWh land in the 9.8 cent off-peak block.
• Steady daytime load you cannot move, such as a small storefront open 9 to 5: tiered often wins because it avoids the on-peak premium entirely.
• EV charging, battery, or thermal storage: ULO wins decisively if you can push charging into the 11 p.m. to 7 a.m. window at 3.9 cents.
• Heavy weekday afternoon demand with no flexibility: tiered is usually the safest choice, since both TOU and ULO charge their highest rates in exactly those hours.
• Low, flat monthly usage: the differences shrink, and tiered near 12 cents is a reasonable default with no scheduling effort required.

Load shifting: the lever that changes the math

The plan comparison is only half the story. The other half is whether you can reshape when you draw power. Load shifting means moving consumption from expensive hours to cheap ones without cutting output: charging batteries overnight, pre-cooling a building before the afternoon peak, scheduling pumps and compressors for off-peak windows, or delaying EV charging until after 11 p.m. Every kWh you move from on-peak to off-peak under TOU saves 10.5 cents, and every kWh moved to the ULO overnight rate from ULO on-peak saves 35.2 cents. Those gaps are the entire reason time-varying plans exist.

The catch is that load shifting is only worth pursuing if you can prove where your load sits today. A plan change based on a hunch is a coin flip. A plan change based on a full year of interval data is an informed decision you can defend to finance. That is why the first step is always measurement, not the rate schedule.

Beyond the RPP: what larger facilities pay

The RPP applies to consumers below a defined consumption threshold. Larger commercial and industrial facilities in Ontario move onto the wholesale market price plus the Global Adjustment, where the bigger cost lever is often peak demand and Class A versus Class B treatment rather than the RPP time bands. The core discipline is identical: understand your load shape, know which hours are expensive, and shift what you can. Whether the expensive hour costs you 20.3 cents per kWh on a small meter or thousands of dollars in demand and Global Adjustment charges on a large one, the winning move is the same.

How MartinAI helps

Choosing a price plan well requires clean, complete, hour-by-hour data, and that is exactly what most organizations do not have on hand. Bills arrive as PDFs, interval data lives in separate exports, and account details drift over time. MartinAI turns those messy inputs into validated, whole-building data you can actually model against. Once the data is clean, comparing what TOU, tiered, and overnight pricing would each cost against your real consumption becomes a calculation rather than a guess.

The platform reads utility bills and interval data, checks them for gaps and errors, and produces a consistent record of how much you use and precisely when. From there you can see the share of consumption in each price period, test the impact of shifting specific loads, and quantify the savings before you commit to a plan change. No manual spreadsheet reconciliation, and no relying on a single month's bill to make a twelve-month decision.

The bottom line

Time-of-use, tiered, and ultra-low overnight pricing recover the same average cost of power, but they distribute it by completely different rules. TOU rewards flexibility, tiered rewards steadiness, and ULO rewards anyone who can live overnight. The right plan is the one that matches your load shape, and the only way to know your load shape is to measure it. Get the data clean first, then let the numbers pick the plan.