Business TOU FAQ

What are Time-of-Use rates?
Time-of-use (TOU) rates are based on the time of day you use electricity and MGE's cost of supplying electricity to you during that time. If you use electricity when the demand for electricity from all MGE customers is low—known as off-peak hours—your rate will be discounted. Electricity used during periods of high demand—known as on-peak hours—will cost more.

Why do utilities offer TOU rates?
TOU rates offer customers more control over their electricity costs. The rates encourage customers to use more of their electricity during lower cost times, thus helping to balance the electric load on our system. TOU customers pay more when it is more expensive for MGE to buy or generate power to meet the needs of all customers.

How can business customers benefit from TOU rates?
Business customers will see the greatest benefit when they shift as much of their electricity use to the "off-peak" times as they can. Typically, customers who can use at least 60% of their use "off-peak" will save on their energy bills.

Is there anything else business customers can do?

  • Reduce overall energy use with energy conservation measures.
  • Improve the energy efficiency of your equipment and buildings.

What are the off-peak major holidays?

New Year's Day Labor Day
Memorial Day Thanksgiving Day
Independence Day Christmas Day

How are TOU rates charged?
All kWh electricity use is now charged a base energy, all kWh charge, no matter when the power is used.

  • During off-peak, the base all kWh rate is the only energy charge.
  • During the three on-peak periods, there is a peak charge added to the base energy, all kWh charge to reflect the higher cost to generate electricity for the higher electricity use times.

What is electric "demand"?
Electric demand is the rate at which you use electricity, measured in 1,000-watt increments, or kilowatts (kW). Your demand typically varies throughout the day, depending on how much equipment is drawing power at the same time.

What is the monthly on-peak kW demand charge?
The monthly on-peak demand charge covers the cost of providing adequate generation and transmission service during peak times. It is based on the greatest rate at which you have used electrical energy during any 15 consecutive minutes during on-peak hours in a specific billing period.

What is the customer maximum kW demand charge?
The customer maximum demand charge covers the cost to support, operate and maintain the local delivery system of wires and equipment necessary to move electricity from the transmission system to your business. It is based on the greatest rate at which you have used electrical energy during any 15 consecutive minutes in the current or preceding 11 billing periods.

Why are TOU rates higher in the summer?
Electricity rates are slightly higher from June 1 through Sept. 30 for all MGE customers, when electricity from more expensive generation sources is needed to supply the higher use of electricity from all customers.

The base energy, all kWh charge will not increase during the summer months for TOU customers. The higher cost of electricity is reflected in on-peak charges, with the on-peak period 2 slightly higher than on-peak periods 1 and 3, to mirror the extra cost to supply electricity for the highest summer energy demand period.

Do customers have a choice whether to use TOU rates or not?
TOU rates are mandatory for some customers:

  • All MGE business customers with a demand greater than 20 kW.

Any business or residential customer with 20 kW demand or less can choose to be served on TOU rates.

  • A customer choosing this option must stay on TOU rates for at least one year, but may shift back to the standard rate after one year.

Who can answer my questions?
Contact your MGE account representative (608) 252-7007 during business hours (8:00 a.m. to 4:30 p.m., M-F) or email We'll be glad to help.