An Economy 7 energy tariff is designed to help homeowners save money by encouraging them to use more electricity during the ‘off-peak’ hours of the night.
How does it work?
This type of tariff charges one price for electricity used during the day and a cheaper price for electricity usage during the night – normally the 7 hours from 1am until 8am, hence the name ‘Economy 7’.
Using energy over this period helps ease pressure on the national grid during the day when most people are using their electrical appliances.
The amount of electricity used during the day and at night is measured using a two-tier meter system and displayed on two separate dials.
What are the pros and cons?
The biggest benefit of an Economy 7 tariff is the savings that can be made by using household appliances at night instead of during the day.
The most cost effective way of using this tariff is to heat your water and storage heaters overnight – when energy rates are lower – and then use these supplies to keep your home warm throughout the day.
Another benefit is the use of a two-tier meter, which can help you manage your fuel bills and improve your home’s energy efficiency by reducing energy consumption.
However, if not used properly an economy tariff can result in considerably high electricity bills. Another potential drawback is that the amount of heat and hot water stored at night may not always be enough to last you through the day, so bear this in mind when making your decision.
How much does it cost?
Economy 7 tariff costs vary from supplier to supplier, but it is important to remember that ‘peak’ daytime rates are usually a lot higher than ‘off-peak’ night-time rates. Some suppliers can even charge almost double the rate of a standard tariff for any energy used during peak hours.
If you move from a standard tariff to an Economy 7 plan, your current energy supplier will need to install a two-tier meter and may charge you a small fee for this.
Is it suitable for me?
An Economy 7 tariff can help reduce your home’s heating bills, but only if you manage your energy usage effectively (i.e. use at least 50% of your energy at night). If not managed properly, your electricity could end up costing you significantly more than with other standard energy tariffs.
If you do opt for an Economy 7 tariff, it is recommended that you set your key electrical appliances to run on timers so that they automatically run during the ‘off peak’ hours.
If your dishwasher, washing machine or tumble dryer doesn’t have a built-in timer, don’t worry – you can pick up and install external ones and set them to run after 1am.