Should You Change Your Heating Habits When You Switch to Time-of-Day Rates? Here’s What We Tell Our Customers

If you’ve recently switched to a time-of-day (TOD) or time-of-use (TOU) electric rate, or you’re thinking about it, the first instinct most homeowners have is to try and game the system. Set the thermostat back during peak hours. Crank it up overnight when rates are cheaper. Maybe pre-heat the house before the expensive window kicks in.

It makes sense on paper. But in practice, with a time of day heat pump is different.

We see this come up a lot with customers in towns served by municipal light plants like Concord Municipal Light Plant (CMLP), which has rolled out time-of-day pricing for residential customers. And while CMLP is ahead of the curve, this shift is happening across Massachusetts. National Grid, Eversource, and municipal utilities throughout the state are moving toward rate structures that charge more during high-demand periods, typically late afternoon and evening on weekdays, and less overnight and on weekends.

Understanding how these rates work, and how your heat pump fits into them, can make a real difference in what you pay.

How Time-of-Day Electric Rates Actually Work

The basic idea is straightforward. Electricity costs more when everyone’s using it at the same time. Utilities charge peak rates during those high-demand windows, usually something like 4 PM to 8 PM on weekdays, and lower off-peak or super off-peak rates the rest of the time, including overnight.

For most appliances, the math is simple: shift usage outside the peak window and you save money. Run your dishwasher at 10 PM instead of 6 PM. Do laundry on Saturday morning. Charge your EV overnight.

Heat pumps are a little different, and that’s where homeowners get into trouble.

Why Heat Pumps Don’t Respond Well to Thermostat Setbacks

A heat pump is not a furnace. A furnace blasts heat and shuts off. A heat pump works by moving heat steadily and efficiently over time, maintaining a consistent indoor temperature without large swings in energy draw. The system is designed to run in longer, lower-intensity cycles, not to spike up, slam the house with heat, and then sit idle for hours.

When you try to pre-heat your home aggressively before peak hours, or let the temperature drop significantly during the peak window and then recover after, a few things happen that work against you. First, the system has to work harder to recover from that temperature drop, especially on cold days. Second, on the coldest nights in a Massachusetts winter, when you’re trying to recover at 8 PM or later, your heat pump may start leaning on its backup electric resistance heat, which is far less efficient and costs significantly more to run. Third, the overall energy consumed to make those big swings typically ends up higher than if you’d just left the thermostat alone.

The efficiency of a heat pump comes from consistency. Small, steady adjustments to maintain a setpoint use far less energy than big recoveries from big setbacks.

The Most Cost-Effective Strategy for Heat Pump TOD Rates: Leave It Alone

This is the advice we give to almost every customer with a heat pump on a time-of-day rate: set a comfortable temperature and let the system run. Don’t try to pre-heat. Don’t drop back aggressively during peak hours.

Yes, you’ll use some electricity during peak pricing windows. But because your system is running efficiently the whole time, your overall energy consumption stays lower, and that typically more than offsets the higher per-kilowatt-hour cost during those peak hours. Seasonal costs remain efficient when you let the system do what it’s designed to do.

If you want to do any temperature adjustment at all, keep it modest. A one or two degree setback during peak hours won’t force your system into recovery mode the way a five or six degree drop will. But honestly, for most homes, leaving the thermostat steady is the simplest and most effective approach.

What About Utility Connected Thermostat Programs?

Some utilities offer programs worth paying attention to, and CMLP’s Connected Homes program is a good example of how these are structured when they’re done right.

Programs like this ask homeowners to enroll their smart thermostat and allow the utility to make small adjustments during rare, high-stress grid events. We’re talking about a handful of times per year, not daily, not every peak window. The adjustments are minor, and participating households typically earn a monthly credit for each enrolled device.

The key distinction is that these programs are not asking you to manually manage your thermostat around peak pricing. They’re designed specifically to protect efficiency while giving the utility a small tool for grid management when it’s really needed. If your utility offers something similar, it’s worth looking into. The combination of baseline TOD savings and program incentives can add up over the course of a year.

Why Utilities Are Moving This Direction

Time-of-day pricing isn’t just a billing change. It reflects something real about how the electric grid works. The grid has to be sized for its highest demand moments. When too many people use electricity at the same time, utilities either fire up expensive peaking plants or risk reliability problems. Spreading demand more evenly reduces that strain, lowers the need for fossil-fueled peakers, and makes it easier to integrate more renewable energy into the system.

For homeowners, that means the long-term trend is toward more control over what you pay, not less. The customers who understand their rate structure and let their heat pump operate efficiently will be better positioned as these rate designs become more common across the state.

What If Your Heat Pump Bill Didn’t Drop on a Time-of-Day Rate?

Every home is different. Insulation quality, home size, equipment efficiency, and how the system was installed all play a role in what you actually pay. If you’ve been on a time-of-day rate for a full season and your bills haven’t moved the way you expected, it’s worth doing a little digging before assuming the rate is the problem.

A few things to check: Is your backup heat running more than it should? That’s often a sign of a low balance point setting or a system that wasn’t sized correctly for your home. Are there rooms that can’t hold temperature, which causes the system to work overtime? Is your insulation or air sealing letting conditioned air escape faster than your heat pump can replace it?

Most utilities that offer TOD rates also give customers the ability to opt out and return to a flat rate if it genuinely doesn’t fit your situation. But in our experience, the more common issue is that the heat pump wasn’t set up correctly to begin with, not that the rate structure itself is a bad fit.

What’s the Difference between Time of Day Rates vs. Massachusetts Heat Pump Rates?

Time of day rates and Massachusetts heat pump rates are both utility pricing structures designed to reduce electricity costs, but they work differently. Time of day (or time of use) rates charge you different prices depending on when you use electricity, typically lower rates during off-peak hours like nights and weekends, and higher rates during peak demand periods like weekday afternoons. The idea is to shift consumption away from times when the grid is most strained.

Massachusetts heat pump rates, offered by utilities like Eversource and National Grid, are a separate program specifically for homes that use electric heat pumps as their primary heating source. Instead of varying by time of day, these rates offer a discounted per-kilowatt-hour price year-round, or seasonally during the heating months, recognizing that heat pump customers are running a high-consumption appliance for an essential need. In practice, many Massachusetts homeowners can stack both programs together, pairing the heat pump rate with a time of use plan to maximize savings by running their system during off-peak hours whenever possible.

The Bottom Line

The easiest way to maximize savings on a time-of-day rate with a heat pump is to stop trying to outsmart it. Set your thermostat to a comfortable temperature. Let the system run the way it was designed to run. Take advantage of overnight super off-peak rates for other high-draw appliances in your home. And if your utility offers a connected thermostat program, consider enrolling. It’s passive savings with no behavior change required.

Simple, steady, and consistent beats clever every time when it comes to heat pump efficiency.

To learn more about heat pump maintenance or heat pump repairs, self-schedule an appointment online or give us a call at 508-501-9990

Time of Day HVAC Usage Frequently Asked Questions

Will my electric bill automatically go down when I switch to a time-of-day rate?

Not automatically, no. Switching to a TOD rate gives you the opportunity to save, but the savings depend on when you use electricity and how your home is set up. For heat pump households that let their system run consistently, most see overall costs stay flat or improve. The bigger wins usually come from shifting other appliances, like your dishwasher, washer and dryer, and EV charger, to overnight or weekend hours.

Can I pre-heat my home before peak hours to avoid running my heat pump during expensive times?

You can try, but it usually doesn’t work out the way you’d hope. Heat pumps are designed to maintain a temperature, not to store large amounts of heat in a home’s structure. Pre-heating by a few degrees before peak hours requires extra energy to get there, and most homes lose that heat within an hour or two anyway. You end up using more total energy, not less.

What’s the difference between time-of-day rates and time-of-use rates?

They’re essentially the same concept with different names depending on the utility. Both structures charge a higher rate during peak demand periods and a lower rate during off-peak hours. Some utilities add a third “super off-peak” tier for overnight hours, which is particularly valuable for households charging EVs or running high-draw appliances late at night.

My heat pump has a backup electric resistance coil. Should I be worried about that running during peak hours?

Yes, this is worth paying attention to. Electric resistance backup heat is far less efficient than heat pump operation and costs significantly more per hour to run. If your backup heat is kicking on frequently during peak hours, either because of large temperature setbacks or because your system’s balance point is set too low, it can meaningfully increase your bill. A properly sized and configured heat pump should rely on backup heat only on the coldest days of the year.

Does it make sense to get a smart thermostat if I have a time-of-day rate?

A smart thermostat can be helpful, but it’s not a magic fix. The main benefit is convenience and the ability to participate in utility demand response programs. Where people get into trouble is using smart thermostat scheduling to create aggressive setbacks during peak hours, which, as we’ve covered, tends to hurt efficiency more than it helps. If you get one, use it for modest adjustments and enroll in any connected thermostat program your utility offers.

Are time-of-day rates available in my town?

That depends on your utility. CMLP customers in Concord are already on TOD rates. Many other municipal light plants in Massachusetts are moving in the same direction. Eversource and National Grid both offer optional time-of-use rates in Massachusetts, though they aren’t always the default. Check your utility’s website or call them directly to find out what rate options are available to you.

What if TOD rates just don’t work for my household?

Most utilities offer an opt-out option that lets you return to a standard flat rate. If your schedule makes it genuinely difficult to shift any usage away from peak hours, or if you’ve been on TOD pricing for a full year and aren’t seeing any benefit, it’s worth calling your utility to discuss alternatives. That said, before opting out, it’s worth having someone look at your heat pump setup. In our experience, the rate isn’t usually the problem.

Want Help Getting More From Your Heat Pump?

At Endless Energy, we help homeowners across Massachusetts optimize their heat pump systems, lower heating and cooling costs, and make sense of new electric rate structures. Whether you’re on a municipal light plant like CMLP or a major utility like Eversource or National Grid, we can walk you through what’s actually driving your energy costs and how to bring them down.

Schedule a free home energy consultation and get recommendations specific to your home, your equipment, and your utility rate.

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