Can an Economy 7 energy tariff save money?

These tariffs are ideal for households with electric storage heaters or water tanks who use a lot of electricity overnight rather than during the day.

Economy 7 meters will charge separate rates for overnight usage and daytime usage, so customers need to use as much electricity overnight as possible to benefit.

Some suppliers still offer Economy 7 tariffs to their customers, although other Time of Use (ToU) tariffs are emerging to take their place.

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How do Economy 7 tariffs work?

Economy 7 is an energy plan that works alongside a special type of electricity meter called an Economy 7 meter.

An Economy 7 tariff and meter offers a separate rate for seven hours of overnight usage. This means that using electricity overnight is cheaper.

There are a couple of things to note about Economy 7:

• It's an electricity plan. While customers can take a gas tariff alongside, there is no equivalent of Economy 7 for gas supply.
• It requires a separate meter to be installed to monitor the night-time usage as well as the day-time usage.
• Some energy providers offering Economy 7 tariffs will provide a smart meter, although this isn't something offered by all suppliers.

Economy 7 is a form of Time of Use (ToU) tariff. While work is going on to incentivise these tariffs using smart meters and other technologies, Economy 7 is a legacy ToU tariff that has been around for a long time.

Research from Citizens Advice published in 2018 found that Economy 7 and similar tariffs weren't working well for customers. Issues when trying to switch included:

• Suppliers being unable or unwilling to take customers with those meters on
• Customers being unable to find a good ToU deal
• Customers facing additional charges due to swapping meters

However, Economy 7 meters may represent better value for some households as we explore below.

One important fact to note about some Economy 7 meters: they don't always have the ability to change time zones. This means that the switch from BST to GMT doesn't happen and therefore the hours where the cheaper rate applies may be different for six months of the year.

Can I get an Economy 7 meter?

Customers can check if they already have an Economy 7 meter by looking at their energy bill. If there are separate rates for day and night electricity usage, the house is on an Economy 7 plan.

Alternatively, look at the meter itself and see If it has two sets of figures on it or if there is a button to show different rates.

While many customers have moved away from Economy 7 meters, there may be some who still want to install them in their property.

Economy 7 meters must be installed by energy companies. However, some energy companies do not install these meters anymore or might encourage customers to take a different tariff instead.

If you want to switch to an Economy 7 meter, it's worth asking your current energy supplier whether it's an option first. However, it's always worth comparing tariffs from other suppliers too.

For those customers who are told they can't get an Economy 7 meter installed or find it difficult to get a supplier to take them on, looking at dynamic Time of Use tariffs from companies like Octopus Energy may be a useful alternative.

Economy 10

There is another Time of Use tariff that's less widely available: Economy 10.

As the name suggests, this tariff has 10 hours of lower-rate electricity usage, although these hours are not usually all overnight.

Economy 10 tariffs are more complicated than Economy 7 plans and require more planning to make the most of the cheap rate.

Can an Economy 7 tariff help save money?

Economy 7 meters can help save customers money - in certain circumstances.

Because Economy 7 is predicated on lower rates at night-time and higher rates during the day, the tariff is most useful for those households that use most energy at night.

They might:

• Have electric storage heaters that collect heat overnight to emit heat the following day
• Have a hot water tank that is heated overnight
• Have appliances with timers such as washing machines, tumble dryers and dishwashers that can be set to go on at cheaper times
• Use more electricity at night due to lifestyle or work patterns

Homes that are electric-only might get more benefit from Economy 7, but the plan could still be economical for some dual-fuel households.

Economy 7 and electric vehicles

Economy 7 could be a good fit for customers looking to charge their electric vehicle (EV) overnight.

The lower rates on an Economy 7 tariff during the night could be economical for EV owners, however it's worth noting that many energy suppliers have dedicated tariffs for EVs that may be better value.

As we noted in 2017 when E.ON launched their EV plan, these specialist tariffs are essentially Economy 7 tariffs in another guise - they allow for cheaper charging at night when most people will be charging their EV at home.

Example of an Economy 7 tariff

To demonstrate how Economy 7 works in practice and what it means for the amount we pay for electricity, we've looked at a tariff from a major supplier for the Eastern region (energy costs vary depending on where we live).

This is what we found:

In this example tariff, we can see that:

• The standing charge is slightly more expensive for the Economy 7 tariff but not by much. Over 365 days, the difference would be less than £1.
• The day rate for Economy 7 is around 4.7p higher.
• The night rate for Economy 7 is around 10.8p lower.

If we look at this in terms of usage over a year (using the Ofgem average of 2,900 kWh per year), this is how the pricing would vary across different consumption levels:

Note: These figures include the relevant standing charges mentioned above.

So, although the standard tariff makes sense if we use most of our electricity during the day, it starts to become uneconomical if we use more than 40% of our electricity at night-time.

It's important to remember this is just an illustration, and customers need to assess their own energy usage and compare energy plans to understand whether Economy 7 would be a good fit for their household.

Switching away from Economy 7

Customers who have an Economy 7 meter and tariff who no longer want it should be able to switch to a traditional meter.

However, they are advised to contact their energy supplier directly to understand the process they need to go through, and it might result in a new meter being installed.

This is likely to be a smart meter that may be equipped to work with other Time of Use tariffs in the future.

Households may want to switch away from Economy 7 if:

• They don't have storage heating or a water tank
• They use the majority of their electricity during the day
• They don't like having two meters for their electricity

For some homes, Economy 7 meters simply aren't economical, although it's worth taking time to understand where electricity is being used to work out whether charging items overnight or using appliances at different times could make Economy 7 a worthwhile tariff.

Summary: Is Economy 7 worth it?

Economy 7 tariffs enable households to access cheaper energy overnight than during the day. This is useful for homes that rely solely on electricity or who are happy to use more electricity overnight to take advantage of the better rates.

Here are a few things to remember about Economy 7:

• Economy 7 tariffs are Time of Use (ToU) tariffs that give customers different rates at different times of day
• Customers can check whether they have an Economy 7 meter by looking at their bill and seeing if there are different rates for day and night electricity usage
• Some suppliers have stopped offering Economy 7 tariffs but it might be possible to get a meter installed
• Economy 7 tariffs are most appropriate for homes that use more electricity overnight such as electric vehicle owners or those who set appliances to run in the early hours

Time of Use tariffs are set to become a bigger feature in the UK, with green tariff proponents saying they can encourage customers to use electricity at times when demand is low and therefore energy is cheaper.

Economy 7 has almost become unfashionable, yet the principle of these fixed energy deals remains the same as the more fashionable ToU tariffs - saving customers money by charging a lower rate at different times of day.