Types of Tariffs: Economy 7
Other Types of Energy Tariff:
What are Economy 7 tariffs?
The idea with Economy 7 tariffs is that customers pay a lower electricity unit rate for seven hours, usually over night. For those who use electricity mostly at night it can be a good way to save money on your bills. However, the rates for the other 17 hours a day tend to be higher, meaning it only makes sense for those that only use electricity at night. To sign up to an Economy 7 tariff you must have a special Economy 7 electricity meter.
Economy 7 Tariff Basics
With Economy 7 tariffs, customers pay two sets of unit rates (p/kWh)
Customers on an Economy 7 tariff pay different prices for electricity during the day and at night. Night electricity consumption is cheaper than daytime electricity usage on an Economy 7 tariff. This is why it is called Economy 7: for seven hours, usually between 11pm and 6am, 12am and 7am, or 1am and 8am, electricity is charged at a lower unit rate than the rest of the day (NB: times vary so ask your supplier what your Economy 7 period is). One way of finding out whether you are already on an Economy 7 tariff is to check your bill and see if you are being charged two rates, rather than one, for electricity.
Economy 7 electricity meters
Being on an Economy 7 tariff implies having an Economy 7 electricity meter. This type of meter distinguishes between the units (kWh) used during the day and the units used overnight, during the cheaper pricing period. Economy 7 Meter Point Access Numbers (MPAN) start with “02”. If you are still wondering whether you are on an Economy 7 tariff, look at your meter and see whether you have one set of numbers market “low” and another market “normal” (if so, you are on an Economy 7 tariff).
Economy 7 tariff customers allow for a variety of options
Customers on Economy 7 tariffs have the same options as those on standard tariffs.
It is possible to combine an Economy 7 tariff and a variable rate, where electricity prices may fluctuate, or a fixed rate, where electricity prices are blocked for a defined period (this rate usually involves early exit fees for customers who leave the tariff before the end date).
It is also possible for Economy 7 tariff customers to sign up to an electricity plan where they receive paper bills or an online plan, where meter readings are submitted on the supplier’s website and bills are sent via email.
Last, Economy 7 tariff customers may pay by monthly/quarterly direct debit, where electricity bills are debited automatically from their account at the end of each month, or on receipt of bill (usually every quarter) for those who prefer to control what they pay.
Are Economy 7 tariffs cheaper than standard tariffs?
The answer depends on when electricity is used:
- Customers who use over 40% of their electricity at night stand to gain from being on an Economy 7 tariff. Conversely, people who use most of their electricity during the day will lose a lot of money if they switch to an Economy 7 tariff.
- Customers who have a hot water tank, which heats itself at night and stores the hot water during the day, will find Economy 7 tariffs advantageous since the electricity used to heat water will be charged at a cheaper off-peak rate. The same applies to customers to have electric storage heaters that heat up at night and give off heat during the day.
- Customers with appliances with timers could also gain from Economy 7 tariffs if they set these appliances (washing machine, dishwasher, tumble dryer, especially) to run during off-peak electricity periods.
How to Switch to an Economy 7 Tariff
If you feel you might gain from switching from a standard tariff, you should start by comparing electricity suppliers to find out what the best plan is for you and whether you could save by switching to a new supplier. However, remember that your chosen supplier is likely to charge you a fee for meter installation, so it is advisable to find out what this might be before signing up.