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How Time-Variant Pricing Affects HVAC Usage

When is the best time of day to run your A/C? The obvious answer is, “When it’s hot.” However, that’s not the only factor in play. There’s also your power bill to think of. Many energy companies employ what’s known as time-variant pricing, in determining how much to charge you each month. That is, energy is more expensive at certain times of day than at others, depending on how many other people are using power at the same time.

There are several different forms of time-variant pricing. Let’s take a look.

Real-time pricing

On any given day, energy prices fluctuate from hour to hour, based on current grid usage. This model is usually reserved for large commercial and industrial customers, rather than residential.

Time-of-use pricing

The most common pricing model, particularly for residential customers. The day is broken up into several sections, and prices for each section are fixed based on average energy use at that time. It’s generally cheapest in the middle of the night, and most expensive in mid-afternoon, with prices for morning and evening usage falling somewhere in between.

Critical peak pricing

If energy usage surges across the grid, customers receive a notification from the power company that rates are about to increase to compensate for the higher demand.

Critical peak rebate

Similar to critical peak pricing, except instead of charging more for energy during these demand surges, power companies pay their customers for every kilowatt hour they’re able to reduce their usage, comparable to their average, as an incentive to conserve.

Contact your power company to find out which time-variant pricing model they use and how best to save money and energy under it. In any model, though, the most expensive time of day is also likely to be the hottest — when everyone on the grid is running their A/C. If you want to avoid massive energy bills, try using fans and other low energy methods to keep air flowing and stay cool during peak hours.

To learn more about energy efficient air conditioning, contact us at Arpi’s Industries today. We’re Calgary’s trusted source for quality HVAC solutions.

Our goal is to help educate our customers in Calgary, Alberta about energy and home comfort issues (specific to HVAC systems). For more information about other HVAC topics, download our free Home Comfort Guide.