Colorado Springs Utilities will begin transitioning customers to a new electricity rate system in October, with bills based on what time of the day customers run their power.

The Energy Wise Rates are a time-of-use rate system that will be the default billing option for Colorado Springs residents. Residents will be charged about twice as much for the power used between 5 p.m. and 9 p.m. on weekdays than any other time.

The new rate system was approved by the Colorado Springs City Council last fall. Utilities will begin the process by enrolling new customers in the Energy Wise rates beginning in October. Existing customers will be switched over to the system during the first few months of 2026.

Utilities staff said the new system was meant to make the cost for using power more proportional to the times that see the most demand and to encourage residents to shift some of their behaviors to save money on their bills. Utilities estimated that the change will initially result in half of customers paying more for their bills and half paying less. 

“We feel like this is the right thing for us to be looking for with our customers. We’re getting out enough information so they can decide if they want to be in that 50% up or 50% down,” Utilities Chief Financial Officer Tristan Gearhart said.

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The difference for most customers will be around $4 per month either way, which Gearhart said may still be enough to have customers move some activities out of the evening peak hours.

A sample bill shown during a media briefing Monday stated that not running the dishwasher and laundry machines between 5 and 9 p.m. was enough for a customer to save money with the new rates.

Gearhart said the peak hours were the natural time for people to use energy at home during the evenings. The high demand also increased the base level of power Utilities needed to provide and made the options for the power more expensive. Earlier in the day, solar and wind power sources play a larger role and lower the systemwide costs to generate power.

“It drives the prices down during the sunniest middle part of the day. And when those renewable resources become less available in the evening time and our customer usage increases, what we see is the cost increases so much more,” Gearhart said.

Beginning in October, Utilities will provide customers with an online usage tool to show how much power they are using during the peaks. The tool is part of the advance notice customers will get before they switch to Energy Wise rates.

There will not be an option for Colorado Springs customers to keep the current rate system. The closest option people can opt into will charge two rates: a higher price between June and September when there is more demand for power and a lower rate all other months. The seasonal rates are intended for small businesses and residents who cannot change their power consumption.

Customers can also opt into Energy Wise Plus, a more extreme version of the new rates. The Plus system will charge customers three or four times more during the peak hours but offer a larger discount between 9 a.m. and 1 p.m. Gearhart said the system was meant to reward customers who could make the most changes.

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Time-of-day at other Colorado utilities

Time-of-day rates had already been offered to some Colorado Springs customers with smart meters. Their popularity has grown over the last few years, with several utilities in Colorado making the switch to the variable rates during the last decade.

“We hear from a lot of people who are surprised that we are already charging a flat rate for the day, especially for people who move from other places that use this system,” said Biergit Landin, community education expert for Colorado Springs Utilities.

Fort Collins was one of the first cities in Colorado to switch rates on a large scale. Fort Collins Utilities held a pilot program to try the time-of-use on a small scale in 2015 and the city made the full switch in 2018. A report by the American Public Power Association used Fort Collins as an example of how to successfully roll out the time-of-day rates.

The pilot program found that the time-of-day rates decreased the majority of customer bills by around $1.38 per month. The switch also decreased Fort Collins’ power demand during the peak hours by around 7%.

Randy Reuscher, the utility rates manager for Fort Collins Utilities, said the pilot program provided a lot of strong data to the city leaders about the benefits. In the years since the change was made, Reuscher said that a lot of the same impacts had carried over.

“Under other rate structures, the only option to save money is to reduce their use but with time-of-day rates, they have two different levers. They can reduce their consumption or shift the times when they use that consumption,” Reuscher said.

The two energy companies regulated by the Colorado Public Utilities Commission, Xcel Energy and Black Hills Energy, both offer a version of time-of-day rates.

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Xcel has been rolling out the rates since 2022, and they are now the default billing system for its customers. Xcel’s rates set the peak between 5 p.m. and 9 p.m. on weekdays, which is the same window Colorado Springs Utilities will use. During the peak hours, Xcel’s cost for power will be nearly three times higher than it is during the rest of the day.

Black Hills Energy has taken the opposite approach, only offering the time-of-day rates as a voluntary option for customers to choose. Public affairs manager John Vigil said that while the state Utilities Commission was encouraging the adoption of the new system, the company had not seen a high demand for the rates.

“Those peak times are the times when most people want to cool their homes, most people want to cook their dinner. So it takes a very deliberate shift to benefit from those,” Vigil said.