What factor determines the cost of electricity in time of day pricing?

The factor that determines the cost of electricity in time of day pricing is primarily the time of day. This pricing structure is designed to reflect the actual demand for electricity at different times. During peak hours, when demand is high, the cost of electricity tends to be higher. Conversely, during off-peak hours, when demand is lower, rates are typically reduced. This model encourages consumers to shift their electricity usage to off-peak times, helping to balance the overall demand on the electrical grid and optimize the distribution of energy resources. By aligning prices with consumption patterns throughout the day, utilities can manage supply more efficiently, ensuring reliability while promoting cost savings for consumers who adjust their usage habits accordingly.