Portland General Electric has proposed coupling one or more water tanks with two heat pumps in order to perform load-shifting in residential customer heating and cooling applications. By using the water tanks as a thermal storage unit, this project attempts to partially decouple energy consumption from generation to provide peak demand reduction and to better facilitate the integration of variable renewable energy resources. A scoping study was performed to evaluate the potential impact of this project if implemented in single family homes in Portland, Oregon. This study revealed that the system could provide meaningful savings in the cost of electricity to both the customer and utility. Additionally, an optimization algorithm was developed to dictate system operation and to maximize gains to the utility. Evolutionary algorithms were explored in an attempt to increase the effectiveness of the algorithm's search in limited computation time. Ultimately, an evolution strategy was selected as the most suitable based on tests run in winter and spring months. A genetic algorithm was then developed to handle fixed-speed heat pump operation for compatibility with an alpha-system prototype that has been developed by the research team.