Xcel Time-of-Use Rates: How to Run Your AC Without Paying Peak Prices

If you are an Xcel Energy customer in Denver, Arvada, or anywhere along the Front Range, you are probably on a time-of-use (TOU) plan, whether you chose it or not. It is the default. And the most expensive hours of the day line up almost perfectly with when your air conditioner works hardest: weekday evenings after work.

The good news is that Denver’s climate makes it easier to beat peak pricing than almost anywhere else. This guide explains exactly how Xcel’s TOU rates work, what running your AC during peak hours actually costs, how to pre-cool your home the right way, and when opting out of TOU might make sense.

How Xcel’s time-of-use rates work

Since November 1, 2025, Xcel Energy’s residential TOU plan in Colorado has just two periods, according to the Colorado Public Utilities Commission:

• On-peak: 5 p.m. to 9 p.m., Monday through Friday, excluding holidays, year-round
• Off-peak: all other hours

Summer runs June 1 through September 30. The rest of the year uses lower “non-summer” prices, but the same 5 to 9 p.m. peak window.

The actual rates

These are the base energy rates published by the Colorado PUC for Xcel’s residential TOU plan:

Two important notes:

1. These are base energy charges. Your bill also includes a monthly Service and Facility charge of $7.10, plus other riders, fees, and taxes.
2. Rates change. The PUC approved an Xcel rate increase that raised the average residential bill by about 4.77 percent, or about $5.00 a month, starting August 29, 2026 (PUC announcement). Check Xcel’s current time-of-use prices for today’s numbers. The peak-to-off-peak ratio of about 2.7 to 1 is what matters most for the strategies below.

What does it actually cost to run your AC on-peak?

Let us use a realistic example: a typical 3-ton central air conditioner that draws about 3 kilowatts while running. On a hot July weekday, it might run about 80 percent of the time between 5 and 9 p.m.

• Energy used from 5 to 9 p.m.: about 9.6 kWh
• Cost at the on-peak rate: about $2.04
• The same energy at the off-peak rate: about $0.76
• Difference: about $1.29 per hot weekday

There are about 86 summer weekdays with an on-peak window each year. If 50 of them are hot enough to run your AC hard in the evening, the most you could save by moving all of that AC use off-peak is about $64 a summer in base energy charges. In practice, pre-cooling shifts part of the load, not all of it, so realistic savings from the AC alone are often roughly $25 to $50 a summer, depending on your home and system.

Our honest take: TOU savings from AC alone are real but modest. The bigger wins come from:

• Moving several loads at once (AC, clothes dryer, dishwasher, EV charging)
• Making your AC use less power in every hour through maintenance, sealed ducts, and a properly sized system
• Avoiding surprise bills when a heat wave hits on weekday evenings

Older, less efficient, or oversized AC systems draw more power, so the savings from shifting are larger for them. Newer high-efficiency systems use less power to begin with.

Why pre-cooling works especially well in Denver

Pre-cooling means cooling your home a bit more than usual before 5 p.m., then letting it drift warmer during the peak window. It works because your house stores “coolness” in its walls, floors, furniture, and air.

Denver has three built-in advantages:

1. Dry air. Denver’s low humidity means a pre-cooled house stays comfortable as it warms a few degrees. You will not get the sticky feeling that makes pre-cooling uncomfortable in humid cities.
2. Big day-to-night temperature swings. Summer evenings here often cool off quickly after sunset. By 8 or 9 p.m., the outdoor temperature is often dropping fast, so your house warms more slowly late in the peak window.
3. Basements. Many Denver-area homes have basements that stay naturally cool and slow down how fast the rest of the house heats up.

How to set your thermostat for Xcel TOU

Here is a simple summer schedule that works for most Denver homes:

Tips for getting it right

• Start pre-cooling a few hours before 5 p.m., not at 4:55. The goal is to cool the house itself, not just the air.
• Do not pre-cool too hard. Dropping the house to 68°F wastes energy and can backfire. A few degrees is enough.
• Use a smart or programmable thermostat so you do not have to remember. Some smart thermostats have utility-rate or “time-of-use” features built in. Our post on whether smart thermostats really save money in Denver covers setup.
• Do not shut the AC off completely on very hot days. A moderate setback is more comfortable and still saves money.
• Variable-speed systems prefer small changes. If you have a variable-speed AC or heat pump, a 2°F to 3°F setback often works better than a large one.
• Close blinds on west-facing windows in the afternoon. Late sun is a big heat source during the peak window.
• Use ceiling fans during 5 to 9 p.m. They use very little power and make a warmer setting feel cooler. Turn them off in empty rooms.

Two-story homes

Upstairs rooms heat up fastest. If your upstairs is hot by early evening, pre-cooling with the thermostat downstairs may not be enough. Consider lowering the setting a little more before 5 p.m. or running a ceiling fan upstairs. If upstairs is always much hotter, there is likely an airflow or duct issue. See why your AC runs constantly but never cools the house.

After 9 p.m.: open the windows

On many Denver summer nights, the outdoor air is cooler than your house by 9 or 10 p.m. Turning the AC off and opening windows, or using a whole-house fan, can cool the house for almost nothing. See should you run a whole-house fan instead of AC on mild Denver nights?.

Should you opt out of TOU and switch to the flat rate?

Xcel customers can opt out of TOU and choose a seasonal flat rate. At Xcel’s published prices, the residential flat rate is about 10.4¢ per kWh in summer and about 8.6¢ per kWh in winter, the same price at every hour.

Here is a useful rule of thumb based on those published base rates:

• Summer: TOU is cheaper for you if less than about 19 percent of your summer electricity use happens on weekdays from 5 to 9 p.m.
• Winter: TOU is cheaper if less than about 15 percent of your winter use happens in that window.

The on-peak window covers only about 12 percent of the hours in a year, so many households come in under those numbers, especially if they shift some use. The PUC says the average customer pays about the same over a year on either plan.

Opting out might make sense if:

• Someone in your home has a medical need for steady cooling in the evening
• You work from home and cannot shift your evening use
• You have checked your usage in your Xcel account and your on-peak share is consistently high

You can compare your actual hourly usage in your Xcel online account, which has a Rate Comparison Tool. To opt out, contact Xcel directly. Customers with a verified medical condition may have other rate options, according to the PUC.

Winter and heat pumps: the peak window does not go away

The 5 to 9 p.m. weekday peak applies all year. If you heat with a gas furnace, this matters less because your main heating fuel is gas. Only the blower runs on electricity.

But if you heat with a heat pump, or use electric heat strips as backup, the same strategy applies in reverse:

• Pre-heat slightly in the afternoon (a small 1°F to 2°F bump)
• Avoid big setbacks that force electric backup heat to run during the peak window
• Make sure your backup heat is set to lock out when the heat pump can do the job

We explain how heat pumps perform in Denver’s cold, including backup heat settings, in do heat pumps actually work in Denver winters?.

The most reliable way to lower peak costs: use less power every hour

Scheduling helps, but an efficient system saves money in every hour, on-peak and off. The biggest factors:

• Clean coils and correct refrigerant charge. A dirty outdoor coil or a system low on refrigerant runs longer and draws more power. A yearly AC tune-up keeps it in shape.
• A clean filter. Poor airflow makes the whole system work harder.
• Clean, sealed ducts. Leaky or dirty ducts in attics or garages can waste a large share of your cooling. See how dirty ducts raise your energy bills.
• Correct sizing for altitude. Air conditioners lose capacity at Denver’s elevation. An undersized system cannot catch up after a setback. See how Denver’s altitude affects your AC.
• An efficient system. If your AC is 12 to 15 years old, it likely uses much more power than a new one. See signs your AC needs replacing.

Other appliances to move out of the peak window

Your AC is not the only thing that costs more from 5 to 9 p.m. Easy wins:

• Run the dishwasher after 9 p.m. using its delay-start button
• Do laundry (especially the dryer) on weekends or in the morning
• Set EV charging to start after 9 p.m.
• Avoid running pool pumps or heavy electric water heater use in the evening peak where possible

Want your system ready for next summer?

Comfy Cave Heating & Air helps Denver-area homeowners get more cooling from less electricity, through tune-ups, duct and airflow fixes, and right-sized, high-efficiency AC and heat pump systems. We are based in Arvada and serve Denver and the surrounding metro.

Call 303-645-4889 or see our cooling services. You can also bundle your spring AC and fall furnace service with one of our maintenance plans.

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