APS R-3 Rate Plan Explained: Time-of-Use with Demand Charge

If you have solar on an APS account, you're almost certainly on a time-of-use plan with some version of a demand charge baked in. Most people don't figure this out until they get their first summer bill and wonder why a 5 kW solar system didn't save them more money.

This post breaks down the actual plans, the actual rates, and what you can do about it.

Which Plan Are You On?

APS puts most residential solar customers on one of two plan families:

• R-3 (TOU with Demand Charge): The default for most solar customers. You pay time-differentiated energy rates and a separate monthly demand charge based on your peak draw.
• TOU without demand: A time-of-use plan with higher per-kWh on-peak rates but no demand component. Some customers were grandfathered into this structure or opted out during enrollment.

Your rate plan is printed on page 2 of your APS bill, listed next to "Rate Schedule." If it says R-3, keep reading — this one has the most moving parts.

The R-3 Rate Breakdown

R-3 is APS's residential TOU plan with demand. The peak window is 4–7 PM on weekdays (no holidays). Three hours. That's it. But those three hours do most of the damage.

Energy rates

The table below shows the R-3 rate structure as it stood before the most recent rate case — verify current figures against the APS R-3 tariff schedule, and check your bill for regulatory riders that may add to these:

Summer on-peak is nearly three times the off-peak rate. Running your AC hard at 5 PM costs about $0.14 per kilowatt-hour; running it at 8 PM costs about $0.06. That spread is where TOU optimization actually pays off.

The demand charge

This is the part that catches people off guard. On top of everything above, APS measures your peak demand — specifically, the highest one-hour average power draw that occurs during any on-peak window across the entire billing month. That single worst interval gets multiplied by the demand rate.

The current R-3 demand charge per the APS tariff (effective March 8, 2024, Decision 79293) is $19.585/kW in summer and $13.747/kW in winter. If APS's pending 2025 rate case results in new approved rates, verify the updated figures against the APS R-3 tariff schedule.

If your house pulls 4 kW during peak hours once all month (say, the oven and AC running hard for 20 minutes on a Tuesday), you'd owe an extra $23.44 that month in demand charges at that rate. Hit 8 kW once and that's $46.88 added to your bill before you've counted a single kilowatt-hour of energy charges.

One bad interval sets the whole month's charge. It doesn't matter if it happens once or a dozen times.

Solar export credits (RCP)

When your panels overproduce and push power back to the grid, APS credits you at the Renewable Credit Price (RCP). The RCP — which APS updates annually — has typically run well under $0.10/kWh; check the current APS tariff posting for the figure active on your bill. That's less than a third of what you'd pay to pull that same power back during peak hours. This is why self-consuming your solar production, and storing the excess in a Powerwall for the evening peak, makes more financial sense than exporting everything and buying it back later.

Fixed charges

APS also bills a fixed basic service charge each month regardless of usage — around $10 under the previous rate schedule. Check your bill or the current APS R-3 tariff for the updated amount.

TOU Without the Demand Component

If your bill shows a TOU plan but no demand line item, you're likely on APS's standard TOU rate — sometimes an older grandfathered plan. You get the same 4–7 PM peak window but higher per-kWh on-peak rates. Summer on-peak rates on these plans have historically run well above R-3's on-peak energy rate, with no separate demand charge.

Whether this beats R-3 depends almost entirely on whether you have a Powerwall. Without storage, a demand charge is hard to control since you can't predict every appliance cycling during every peak window. With storage, you can cap your grid draw to near zero during peak hours. That makes R-3 competitive again: you pay the lower on-peak energy rate and your demand charge stays small.

If you're on TOU without demand and you've added a Powerwall since enrolling, it's worth running your last six months of bills through both rate structures. Switching to R-3 with proper Powerwall management often comes out ahead.

What the 2026 Rate Increase Actually Means

APS filed a general rate case with the Arizona Corporation Commission in June 2025. For a typical residential customer using 1,000 kWh per month, APS described the impact as roughly $20/month. The case is pending ACC approval, with new rates not expected before the second half of 2026. Whatever the final approved amount, the effect on R-3 customers follows a predictable pattern.

Demand charges scale proportionally with any rate increase. A household that routinely peaks at 6 kW during summer afternoons sees that dollar amount climb directly with the demand rate — and that's before energy rate increases layer on top.

The math keeps getting worse for passive solar owners. The gap between what you export at the RCP and what you pay to pull that same power back during peak hours continues to widen. Peak avoidance is where the savings actually come from.

How to Set Up Your Powerwall for APS

A 13.5 kWh Powerwall is almost perfectly sized for the R-3 peak window. Three hours of moderate evening loads — AC, cooking, a few lights, and maybe a device charging — typically draws 6–10 kWh. One battery can carry most households through 4–7 PM without touching the grid at all.

The problem is that Tesla's default app behavior doesn't know anything about your demand charge. It manages state of charge and self-consumption, but has no concept of demand interval spikes. A microwave and AC compressor starting together can pull 5+ kW from the grid for 15 minutes, set your demand peak for the month, and you'd never know until the bill arrived.

DemandGuard

Grid Getter's DemandGuard feature monitors your live grid draw during the 4–7 PM window and dispatches your Powerwall to keep it below a target threshold you set — 1.5 kW, 0.5 kW, whatever makes sense for your setup. Instead of letting the Powerwall decide on its own when to discharge, DemandGuard actively watches the demand interval and increases discharge whenever your draw spikes toward the threshold.

The difference between a $5 demand charge and a $40 one often comes down to a handful of intervals where the Powerwall either stepped in or didn't. DemandGuard makes sure it steps in.

Pre-charge automation

DemandGuard works best when your battery actually has charge available at 4 PM. If you had a cloudy afternoon and you're sitting at 40% when peak hours start, you've got a shorter runway.

Grid Getter lets you set an automation that targets 100% state of charge by 3:30 PM on weekdays. If solar production isn't going to get you there, it switches to grid charging to top off — buying cheap off-peak power at $0.10/kWh to avoid paying $0.28/kWh during peak. Even in summer with solid solar production, this backstop matters on overcast days.

Shift what you can to after 7 PM

Automation covers a lot, but not everything. If you start the electric dryer at 4:30 PM, you're pulling 4–5 kW for 45 minutes. The Powerwall handles some of it, but it's also carrying your AC and baseline loads simultaneously. Some appliances are worth scheduling after 7 PM. Your APS app's usage data breaks down load by hour — use it to find which appliances are hitting hardest during peak.

Grid Getter is free to start. Connect your Powerwall, enable DemandGuard, set up your pre-charge automation, and see what it does to next month's demand charge — no cost to get started. Get started at gridgetter.com/free/.

Your first action: pull up your most recent APS bill and find the line that says "Demand" with a kW figure next to it. That's your peak 15-minute interval from last month. Write it down. If it's above 3 kW, there's meaningful money to recover.

If you're in the Phoenix metro, Grid Getter's Phoenix page has APS and SRP rate plans preconfigured.