Economy 7 Tariff Guide: What it is and How it Works
Economy 7 tariffs charge different prices for your energy depending on the time of day. While costs at night can be significantly lower than on a regular tariff, rates are much more expensive during the day. Find out how you can save money on an Economy 7 tariff to decide whether it could be the right fit for you.
What is Economy 7?
Economy 7 is an electricity tariff that could help you save money on your overnight energy costs. A specially installed meter tracks day and night time energy usage separately and charges two different rates, depending on the time of day.
Economy 7 could particularly help keep your costs down if you run electric storage heaters and energy-sapping appliances such as washing machines, dishwashers and slow cookers at night.
The name ‘Economy 7’ comes from the seven-hour off-peak time slot when electricity is cheaper due to lower demand on the National Grid. The major downside to one of these plans is that electricity is a lot more expensive during the daytime.
Does Economy 7 still exist?Economy 7 is still available from a number of electricity suppliers, though its days looked numbered. Around 5 million UK households still have Economy 7 meters, however this number is falling as providers promote smart metering as the way forward.
Top 10 cheapest tariffs
Here at Selectra, we’ve scoured the UK energy market to find the cheapest Economy 7 tariffs out there. While it's difficult to give an exact quote without knowing your energy usage and hours, we’ve provided the estimates below based on an average household to give you an idea of the Economy 7 plans you can switch to.
|Supplier||Economy 7 tariff||Monthly cost||Annual cost||Early exit fees|
|Together Energy||Green Together Fixed May21||£44.52||£534.25||£30|
|EDF Energy||Simply Online 1 Year Fix Jul21||£51.37||£616.42||£35|
|Scottish Power||Super Saver June 2021 B1||£51.51||£618.17||£30|
|So Energy||So Alder Green||£51.65||£619.82||£5|
|People’s Energy||Fixed Tariff May 20 v2||£52.29||£627.51||£30|
|Octopus Energy||Super Green Octopus 12M Fixed||£52.57||£630.79||None|
|Pure Planet||100% Green 12m Fixed||£53.86||£646.37||£30|
|E.ON||Fix Online v39||£56.70||£680.36||£30|
|Shell Energy||Energy August 2021 plus Google Nest Hub||£57.08||£684.91||£50|
*Information correct as of June 2020. All quotes are fixed tariffs paid monthly by Direct Debit where possible and based on comparison for a three-bedroom house in the South East with an average annual electricity consumption of 2,400kWh during peak hours and 1,800kWh during off-peak hours.
How does an Economy 7 meter work?
Economy 7 meters have a special design that lets them measure electricity usage at two or more different rates. If you have an Economy 7 meter, you will see two readouts labelled ‘normal’ and ‘low’ or ‘day rate’ and a button that switches it to ‘night rate’. This is what allows these tariffs to work.
If you decide to switch to an Economy 7 tariff you may need to have a compatible dual-rate meter fitted. If you decide to switch back to a standard tariff, your meter may have to be changed over again. Depending whether you are switching energy suppliers or not, you may be charged to have a new meter installed, which can cost anywhere between £50 and £130.
It’s important to double-check if the potential savings from an Economy 7 tariff are likely to be undercut by electricity meter installation fees.
If you are moving into a new home with a dual-rate Economy 7 meter, you should be aware that some meters are on a radio-controlled system called ‘Radio-Teleswitch’. This allows the meter to be remotely switched over to the correct electricity rate for the time of day.
1.5 million British homes have this system in place to automatically turn on storage heaters or appliances running on a separate circuit. It allows electricity suppliers to stagger the time storage heating kicks in throughout the country, which prevents overloading the electricity grid.
What are storage heaters?
Electric storage heaters work by warming up internal ceramic bricks that can hold heat over time so that it can be stored and released when needed.
Households that have storage heaters can unlock savings with Economy 7 tariffs as they can be run during the night, at the cheaper off-peak rate, storing up heat that can be released when needed the next day.
Storage heaters can have a number of different controls. Older or basic models should have both an input dial, which controls how much heat will be stored, and output dial to set how much heat is being released. These heaters take a lot longer to cool down than newer models, which can lead to unintended heat loss.
More advanced and recent models may just have a thermostat to set a temperature goal so that you don’t need to worry about anything else. Newer High Heat Retention Storage Heater designs can provide increased performance, though installation costs can potentially cancel out any savings gained from Economy 7 tariffs.
Economy 10Just like Economy 7, Economy 10 is a kind of differential tariff that can save you money if you run heating and appliances during a 10-hour time slot. Sometimes, these 10 hours are split up between the afternoon, evening, and nighttime. Scottish energy providers install white meters for this type of energy tariff, which is why they call it a 'White meters' tariff.
What time of day is it cheapest to use electricity?
Economy 7 off-peak times can vary nationwide. You should always check the schedule with your own energy provider, but the table below will give you a general idea.
|Region||Economy 7 off-peak times|
|North East||12.00am-7.00am OR 12.30am-7.30am|
|Merseyside and North Wales||12.30am-7.30am|
|London||No standard off-peak time, but typically seven hours between 11pm and 7am|
|South East||10.30pm-12.30am and 2.30am-7.30am|
|Southern||11.30pm-6.30am OR 12.30am-7.30pm|
It is worth keeping in mind that the off-peak times can shift when clocks go back or forward during the year. Timing your electricity use accurately during off-peak hours is crucial if you want to lower your electricity bill.
If you can schedule the bulk of your electricity consumption to the off-peak hours set by your energy provider, then an Economy 7 tariff may be for you. However, your heating and hot water systems also play a major role in how much you could end up saving on your electricity bill.
We only recommend Economy 7 tariffs if you have recent electric storage heaters and a hot water tank, as well as appliances like slow cookers, washing machines and dishwashers that you can run during the off-peak night hours.
Is it worth it?
At Selectra, we speak with hundreds of customers about their gas and electricity. Time and time again, we see people on Economy 7 meters overpaying for their electric due to a whole host of issues.
Many Economy 7 meters are older models and their reliability suffers for it. In some cases, the meters do not switch correctly to Daylight Savings Time or their internal clocks change over time.
Technical issues aside, Economy 7 tariffs require know-how, routine and discipline for customers to benefit from them.
We lead much busier and flexible lives now than in the seventies, when Economy 7 was first introduced to respond to increasing energy demand, prices and economic hardship. Nowadays, differential tariffs like Economy 7 seem very much a relic of the past just like the storage heaters that are designed to work with them.
For this reason, we do not recommend Economy 7 unless you have recent and efficient storage heaters. For most modern households Economy 7 just doesn’t make sense, so switching to a cheaper fixed rate tariff is our strong recommendation.
For more information on fixed-rate tariffs and the best deal for your home, give us a free call on 020 3936 0059 to speak to an energy expert about your options today.