Palo Alto proposes voluntary electric time of use rates starting January 2026

Palo Alto's Utilities Advisory Commission has proposed a significant shift in residential electric rates, recommending a voluntary time-of-use (TOU) program set to launch on January 1, 2026. This initiative aims to encourage residents to adjust their electricity usage to align with periods of lower demand and reduced carbon intensity, ultimately benefiting both the environment and customer bills.

During the meeting on June 4, 2025, staff presented updates on the TOU rates, which were initially scheduled for implementation in July 2025 but have now been postponed to allow for further preparation and public engagement. The phased approach will limit initial enrollment to ensure a smooth transition for customers and accurate billing.

Key features of the proposed TOU rates include higher charges during peak hours—specifically from 4 PM to 9 PM—when demand is at its highest, and lower rates during off-peak hours, particularly in the middle of the day when solar energy generation is abundant. The goal is to provide customers with financial incentives to shift their energy usage to these lower-cost periods, potentially saving them between $6 and $77 per month, depending on their usage patterns.

The commission also discussed the importance of effective communication strategies to promote the program and ensure customer understanding of the benefits. Staff plans to present an implementation plan in October, detailing how they will inform residents about the new rates and encourage participation.

Public feedback during the meeting highlighted the need for clear goals regarding the TOU program's impact on financial savings, sustainability, and emergency preparedness. Suggestions included exploring ways to enhance customer engagement and potentially adjusting the peak hours to better accommodate residents' needs.

As Palo Alto moves forward with this initiative, the commission emphasizes the importance of monitoring the program's success and making adjustments based on real data once it is operational. The upcoming months will be crucial for finalizing the details and ensuring a successful rollout of the TOU rates, which aim to promote greener energy usage while providing financial benefits to residents.