Time-of-Use Power Pricing Starts Now: How to Run Your Heat Pump Without Paying Peak Rates (NZ Winter 2026)

From today — 1 July 2026 — every large electricity retailer in New Zealand has to offer a time-of-use power plan. That sounds like a win, and for some households it is. But there's a catch that nobody selling you the plan will lead with: the expensive "peak" hours land squarely on the coldest parts of a winter day, which is exactly when your heat pump is working hardest. Switch to a time-of-use plan and change nothing else, and you can end up paying more to stay warm. This article shows you how to run your heat pump so the new pricing works for you, not against you — and how to tell whether you should switch at all.

At a Glance

• From 1 July 2026, retailers with 5% or more of the market (Contact, Genesis, Mercury, Meridian and others) must offer at least one time-of-use (ToU) plan. Full compliance is required by 30 October 2026.
• It's an offer, not an automatic switch. Nobody gets moved onto a ToU plan without opting in. If you do nothing, you stay on your current plan.
• Peak hours collide with heating demand. A typical winter ToU plan charges the most on weekday mornings (roughly 7–11am) and evenings (roughly 5–9pm) — the two windows most Kiwis run their heat pump flat out.
• The fix is load-shifting, not freezing. Pre-heat your home during the cheap off-peak window, then let a well-sealed house coast through the peak. Done right, a ToU plan can beat a flat rate. Done naively, it costs you ~20–25% more.
• A heat pump is harder to shift than a hot water cylinder — a house doesn't hold heat as well as an insulated tank — but insulation and draught-stopping close that gap.

For the buying side of heat pumps — sizing, brands, and install costs — start with our complete heat pump guide. For the raw running-cost numbers, see what a heat pump costs to run this winter.

What actually changed on 1 July

The Electricity Authority now requires every large retailer to offer at least one time-of-use plan. A ToU plan drops the single flat rate you're used to and replaces it with different prices depending on when you draw power:

• Peak — the most expensive. Typically weekday mornings (about 7–11am) and evenings (about 5–9pm) in winter, when the whole country's demand spikes.
• Off-peak / shoulder — cheaper. Usually the middle of the day and later evening.
• Night — cheapest of all. Usually the overnight window, roughly 11pm to 7am, plus all weekend on many plans.

Every retailer sets its own windows and rates, so the hours above are a common shape, not a rule — check your specific plan's peak times before you change anything. Off-peak and night rates on NZ ToU plans currently sit around 13–20c/kWh, while peak rates run well above a flat rate.

One thing worth repeating, because a lot of the coverage gets it wrong: this is an offer. You will not be shifted onto a ToU plan automatically, and the rule doesn't set a minimum price. It creates the option — the outcome is up to you. (We unpacked the same "mandate myth" from the solar side in our piece on the 1 July time-of-use and solar buy-back changes.)

The heat pump trap

Here's why a ToU plan is riskier for a heat-pump household than for almost anyone else.

Your heaviest heating demand happens at two moments: the cold morning, when you're getting up and the house has dropped overnight, and the dark evening, when everyone's home and dinner's on. In a NZ winter that's roughly 7–9am and 5–9pm — and those are precisely the peak-price windows.

So if you switch to a ToU plan and keep running the heat pump exactly as you do now, you've moved most of your heating consumption onto the most expensive rate of the day. The cheap overnight and midday rates are lovely, but you're barely using power then. The result: a bigger bill, for the same warmth.

This is the opposite of a hot water cylinder, which is the poster child for ToU savings. A cylinder stores heat — you can heat the water at 3am on the cheap night rate and it's still hot at 7pm. A house doesn't store heat nearly as well. Turn the heat pump off at 5pm to dodge the peak and the room is cold by 6pm. That's why you can't just "avoid" the peak with a heat pump — you have to be cleverer about it.

How to run your heat pump on a ToU plan

The trick is load-shifting: doing your heating in the cheap windows and coasting through the expensive ones. A heat pump can't shift as cleanly as a cylinder, but you can move a meaningful chunk of its work — often 30–40% — off peak. Here's how.

1. Pre-heat before the peak, not during it

Use the heat pump's timer to warm the house before the peak window starts, then ease off once you're paying peak rates.

• Morning: heat hard from about 6–7am (still on the cheap night rate on most plans) so the house is warm by the time peak begins at 7am. Then hold a lower set-point through the peak instead of blasting.
• Late afternoon: pre-heat from about 3:30–5pm (off-peak, and the outside air is at its warmest for the day, so the heat pump is at its most efficient) so the house enters the 5pm peak already warm.

You're not heating less overall — you might even use slightly more kWh — but you're buying most of it at 17c instead of 44c. That's the whole game.

2. Actually use the weekly scheduler

Almost every heat pump sold in NZ in the last decade has a 7-day timer built into the remote. Almost nobody uses it. On a flat plan that's a missed convenience; on a ToU plan it's the single most valuable feature on the unit. Programme the pre-heat blocks above once, and the shifting happens automatically every day. If you're setting it manually each night, you'll forget, and you'll end up heating on peak.

3. Hold a lower set-point through the peak — don't switch off

The instinct is to kill the heat pump entirely during peak hours. Don't. A cold house is miserable, and reheating from cold the moment peak ends is its own expense. Instead, drop the set-point a couple of degrees (say from 20°C to 18°C) during the peak window. A well-sealed house that was pre-heated will coast comfortably at the lower setting with the compressor barely ticking over.

4. Make the pre-heat last — insulation and draught-stopping

This is the part people skip, and it's what separates a ToU plan that saves money from one that doesn't. Pre-heating only pays off if the house holds that heat through the peak. A leaky, uninsulated villa bleeds warmth so fast that by 6pm you're heating from scratch again — on peak.

The cheapest fixes come first: draught-stopping is a $50–$300 weekend job that plugs the gaps letting your pre-heated air escape. After that, wall and ceiling insulation is what turns your house into something closer to that insulated cylinder — heat it once, and it stays warm long enough to ride out the peak. On a ToU plan, insulation isn't just a comfort upgrade; it's what makes the whole load-shifting strategy work.

5. Shift your other loads too

A ToU plan tips from "marginal" to "clearly worth it" when the heat pump isn't the only thing you're moving. If you also put your hot water cylinder on an overnight timer, run the dishwasher and washing machine after 9pm, and charge an EV overnight, those loads shift cleanly onto the cheap rate and pull your average price right down. The heat pump is the hard load to shift; the others are easy wins that make the plan pay.

6. Heat freely at weekends

Most ToU plans price the entire weekend at off-peak or night rates. That's your cheap warmth window — no need to ration heating on a Saturday. Save the discipline for weekday peaks.

The maths: flat plan vs ToU plan

Here's a worked example for a typical family with a 5kW lounge heat pump (COP 3.5), running it about two hours in the morning and four to five hours in the evening. Rates are illustrative winter 2026 figures: a flat plan at 33c/kWh, versus a ToU plan at 44c peak / 27c off-peak / 17c night.

The middle row is the trap: switching to ToU and changing nothing costs this household about $95 more across winter than staying on the flat plan. The bottom row is the prize: the same family, on the same plan, saves about $60 versus the flat rate — a ~$155 swing — purely by shifting when they heat and sealing the house so the pre-heat lasts.

These numbers are illustrative — your rates, windows, home, and habits will shift them — so run your own before deciding. Our savings calculator lets you plug in your figures.

Should you switch? A quick decision guide

A ToU plan rewards a heat-pump household only if it can shift load. Here's the honest split.

A ToU plan is likely worth it if you:

• Have a reasonably insulated, draught-stopped home that holds a pre-heat (or you're willing to fix that first)
• Will actually use the heat pump's weekly scheduler
• Have other flexible loads to move — hot water on a timer, an EV, or solar covering daytime use
• Are often out during the 5–9pm peak (shift workers, empty home in the evenings)

Stay on a flat rate if you:

• Live in a leaky, uninsulated home that goes cold the moment the heat pump stops — you can't coast through the peak, so you'll heat on peak regardless
• Are home and heating hard right through the evening peak with no other loads to shift
• Won't set up the scheduler and know you'll heat on demand

If most of your household life happens in that 5–9pm window and the house doesn't hold heat, a naive ToU switch is one of the easier ways to quietly grow your winter bill. There's no shame in staying flat — it's the right call for a lot of homes.

The upgrade angle

If your home falls in the "stay flat" camp because it's cold and leaky, that's a signal, not a dead end. The upgrades that make a ToU plan work — insulation and an efficient heat pump — are the same ones that cut your bill on any plan.

If you own a home built before 2008, you may be eligible for the Warmer Kiwi Homes programme, which covers up to 90% of insulation and heat-pump costs for qualifying households. Getting the ceiling and underfloor insulated, then fitting a modern heat pump, transforms a house that bleeds heat into one that holds it — at which point pre-heating and load-shifting actually work. Check your eligibility in a couple of minutes before you spend anything.

Running an older, less efficient unit? A modern heat pump not only sips less power per hour of heat, it modulates far better at low output — which is exactly what you want when you're holding a gentle set-point through the peak rather than blasting. If yours is 12+ years old or icing up, our running-costs guide covers when replacement is worth it.

What to do this week

1. Find your current plan and rate. Check a recent bill. Note whether you're on a flat rate today.
2. Look at the ToU plans your retailer has just published. Note the exact peak windows — they vary by retailer and network.
3. Be honest about your home. Does it hold heat for an hour after the heat pump stops? If not, draught-stopping and insulation come first.
4. Programme the scheduler for pre-heat blocks before the morning and evening peaks — this is free and takes ten minutes.
5. Run the numbers in our savings calculator before you switch. A ToU plan is a tool, not a free win.

Time-of-use pricing is a genuinely good change for households that can shift load — and a quiet trap for those that can't. The heat pump in your lounge is still the cheapest way to beat a NZ winter. The new plans just reward you for running it a little smarter.

If your home needs the insulation or heat-pump upgrade that makes load-shifting work, find verified heat pump installers in your area and get a couple of quotes.