Which smart thermostat works best for Arizona time-of-use electric plans?

By Michael Fitzgerald, Founder & Editor, Phoenix Cooling Guide
Technically reviewed by Tom Mattingly, Owner & President, AZ Trusted Air LLC (ROC 317368)
Published 2026-09-22

Phoenix is one of the few places in the country where a thermostat's schedule matters more than its sensors. The cooling season runs April into October, design temperatures reach 115 degrees, and both major Valley utilities price electricity by the hour rather than by the kilowatt-hour alone. APS residential time-of-use on-peak hours are now 4 p.m. to 7 p.m. on weekdays; SRP's peak windows sit later and run longer. A thermostat that shifts run time out of those windows is doing something a thermostat in a flat-rate market cannot.

This page covers what the hardware actually changes in a Valley home, how APS Cool Rewards and SRP's Bring Your Own Thermostat program pay, where the wiring gets complicated on rooftop package units and heat pumps, and the configuration mistakes that quietly cost money. Every figure below comes from a utility's published program terms or from EPA, and the sources are listed at the end.

Do smart thermostats actually lower Phoenix cooling bills?

ENERGY STAR's published average for a certified smart thermostat is about 8 percent of heating and cooling costs, or roughly $50 per year, and EPA states plainly that savings vary by climate, comfort preferences, occupancy and HVAC equipment. That number is worth understanding before anyone quotes it back. ENERGY STAR certification is not a bench test of hardware: service providers run a year of real field data from hundreds of customer homes through EPA-supplied software, report runtime reduction at the lower 95 percent confidence limit and at the 20th percentile — meaning four in five sampled homes saved at least that much — and an EPA-recognized third-party body verifies the result. It is a conservative national figure, not a Phoenix figure.

In the Valley the larger lever is timing. APS residential time-of-use on-peak hours are now 4 p.m. to 7 p.m. weekdays, shortened from the previous five-hour window by Arizona Corporation Commission vote; the frozen Saver Choice Plus plan keeps 3 p.m. to 8 p.m. SRP's windows differ again: Manage Demand 5-10 p.m. and Save runs on-peak from 5 to 10 p.m. with super off-peak from 8 a.m. to 3 p.m. every day, while Conserve 6-9 p.m. and Save is on-peak 6 p.m. to 9 p.m. weekdays year-round. SRP's Time-of-Use and Average Demand plans are closed to new enrollment and scheduled for discontinuation after the November 2029 billing cycle, following a February 27, 2025 board vote. The plan comparison page covers the differences in detail.

SRP's own advice to time-of-day customers is to set the thermostat three degrees below the preferred temperature starting three hours before on-peak hours begin. That is a scheduling instruction, and an inexpensive thermostat executes it as well as a premium one. Where the money gets serious is a demand charge: on the APS Time-of-Use 4 p.m.-7 p.m. Weekdays with Demand Charge plan, the charge is set by the single highest hour of use between 4 and 7 p.m. in the billing month, so one afternoon of full-output recovery can price the whole bill. A national $50-a-year average says nothing about that hour. See how demand charges are calculated and the pre-cooling strategy guide.

Will a smart thermostat work with my existing AC or heat pump wiring?

Nearly all Phoenix residential cooling runs on 24-volt low-voltage control: R for power, Y for the compressor call, G for the indoor fan, W for heat. The wire that trips people up is C, the common, which returns current so the thermostat can stay powered without borrowing from the cooling call. Older Valley homes — particularly 1970s and 1980s stock, and anything converted from evaporative cooling — frequently have a four-wire bundle with no C. Some thermostats ship a power extender kit that works around it; others need a new conductor pulled, which in a Phoenix attic means working in 150 to 170 degrees during summer.

Heat pumps change the wiring map. A reversing valve needs an O or B wire, and the thermostat has to be told which convention the equipment uses; set it backwards and the system heats when it should cool. Auxiliary and emergency electric heat land on separate terminals. Two-stage compressors add Y2. Fully communicating variable-speed systems are a different category again — several manufacturers run proprietary communication between the air handler and the control, and the equipment manual is the only reliable authority on whether a third-party thermostat is supported. Check it before buying rather than after.

Rooftop package units, which sit on a large share of Valley homes and barely exist in most of the country, use the same low-voltage terminals as a split system. The difference is physical: the run travels from the thermostat up through the ceiling to a rooftop cabinet, so a broken or corroded conductor is harder to trace and a technician has to be on the roof. On licensing, Arizona generally requires a Registrar of Contractors license when labor and materials exceed $1,000 or when a permit is required, under A.R.S. § 32-1121. A straight thermostat swap usually falls under that threshold; pulling new wire or reconfiguring equipment controls is where the question changes.

For Phoenix-area homeowners who want this looked at on their own system, Phoenix Cooling Guide recommends AZ Trusted Air LLC (ROC 317368), whose owner Tom Mattingly reviews this guide. (623) 252-6403 · second opinion on a quote.

What are utility thermostat rebates and demand-response programs, and what is the catch?

APS Cool Rewards pays a one-time $50 enrollment bill credit per thermostat and a $35 annual participation bill credit per thermostat, for up to five qualifying thermostats per home — APS describes the stack as up to $85 the first year. Events run June 1 through September 30, are capped at no more than 20 per summer, and last up to three hours each; the APS program FAQ says two to three hours is typical. During an event the utility raises the setpoint a few degrees.

SRP's Bring Your Own Thermostat program pays a $50 per-device enrollment incentive plus a $25 per-device annual post-season participation incentive, capped at two devices per household. That is $75 per device in the first year, though SRP markets the stacked offer as up to $100 off. Conservation events generally last no longer than three hours, and SRP may pre-cool the home first — its FAQ describes adjusting the thermostat down as much as 3 degrees before an event begins. Separately, SRP applied a temporary price reduction of $0.0038 per kWh for the May through October 2026 billing cycles, with prices returning to published levels with the November 2026 billing cycle.

The catch is control and exit. Participants can opt out of any individual Cool Rewards adjustment from the thermostat, the mobile app or a web browser, but un-enrolling entirely requires emailing the program administrator, and it ends participation for every enrolled thermostat and all future annual credits. The second catch is plan interaction: APS explicitly warns that geofencing and occupancy-sensing features do not mix well with demand-based plans, because they can drive higher demand during on-peak weekday periods, and recommends customers on a demand-charge plan switch those features off and schedule pre-cooling instead. Program terms change season to season, so confirm current amounts and deadlines on the utility's own page before enrolling.

Can a badly configured smart thermostat damage my AC or raise my bill?

The most expensive misconfiguration in Phoenix is an aggressive daytime setback. A thermostat programmed to let the house drift to 85 degrees while nobody is home behaves well in a mild climate. On a 115-degree design day, the system then has to pull the house back down through the hottest part of the afternoon, and the recovery run lands squarely in the 4 p.m. to 7 p.m. on-peak window. On the APS demand plan, where a single hour between 4 and 7 p.m. sets the demand charge for the entire month, that is the worst possible hour to be running at full output.

Wiring and mode settings cause the second tier of problems. A heat pump configured for the wrong reversing-valve convention will blow warm air on a cooling call. Auxiliary electric heat wired to the wrong terminal, or an auto-changeover deadband set too narrow, can bring on strip heat in shoulder season when the heat pump alone would have been enough. Short cycling from a badly placed thermostat — on a wall taking afternoon west sun, or directly above a supply register — makes the system start and stop repeatedly, which is hard on a compressor.

Leaving the fan on Continuous rather than Auto is a quieter mistake. During monsoon season, running the blower after the compressor stops re-evaporates moisture off the cold coil and pushes it back into the house, so indoor humidity rises while the bill does. And a thermostat cannot fix a distribution problem: the duct leakage that costs a Valley homeowner most is the leakage nobody can see, in an attic that reaches 150 to 170 degrees in July. If one bedroom never reaches setpoint, a new control will not change that — see weak airflow and hot rooms.