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Economy 7 tariffs, also known as ‘differential’ or ‘two rate’ tariffs, are electricity tariffs that contain two different prices for the energy that’s consumed. Compared to a regular tariff, electricity with Economy 7 will be cheaper for seven hours overnight, but more expensive for the rest of the time. There are a number of ways to take advantage of the cheap electricity, which can cut down your overall energy bill.
Economy 7’s cheaper rate normally kicks in between 11pm and 1am, lasting until between 6 and 8 the following morning. The exact timings can vary geographically and with different energy companies, and will often change with the switch between Greenwich Mean Time and British Summer Time. You should always check with your electricity provider if you’re not sure of the specifics for your current tariff or a tariff you’re considering for the future.
To balance the cheaper nighttime electricity, Economy 7 tariffs also include a more expensive rate (relative to other tariffs) for the remaining hours in a cycle. Later on, we’ll look at a few different techniques to save money, but a general rule of thumb, if you want Economy 7 to work out cheaper, is that you need to use more than 40% of your electricity in the 7 hour period.
If you’ve recently moved into a new house, it’s possible that you’ve inherited an Economy 7 meter without realising it, which could be costing you a lot of money. If you’re unsure, the easiest way to see which tariff you’re on is to look at your meter.
Economy 7 tariffs require different meters to regular, because they need to keep track of the two rates. Two-rate meters will either have two separate screens for the different rates, or a button that toggles between the two different price bands.
It’s definitely possible to save money with Economy 7, but you do have to use your electricity in a certain way. The tariff is designed to be more economical for consumers who use a lot of electricity overnight, but it will often work out more expensive if it’s treated like a regular tariff. As we’ve already mentioned, the general recommendation is to use at least 40% of your electricity in the cheaper hours. The more you can use in that time, the more you’ll save.
Economy 7 and electric storage heaters are often mentioned together because storage heaters use energy overnight to build up heat that they release during the day. If you use storage heaters already, Economy 7 is almost always a good tariff to consider. Conversely, if you’re on Economy 7 and you don’t have storage heaters, they may be worth a look, especially if you’re already using electric heaters.
However, you don’t have to have storage heaters for Economy 7 to be worthwhile. If you use gas-powered central heating it won’t have any bearing on your electricity consumption, so won’t make a difference either way. Instead, you’ll have to look at how you use other electrical appliances to see if a new tariff is worthwhile.
Economy 7 can be beneficial if you’re able to time appliances like dishwashers, washing machines and tumble dryers so that they come on in the cheaper hours. These appliances all consume a lot of electricity, and timing them all to come on at night could be enough to push your consumption above the baseline 40%.
If your lifestyle means that you’re already active over the cheaper hours, Economy 7 could mean that you can save money without needing to change anything else. It’s worth considering if you work nights or shifts that mean you’re regularly awake in the early hours of the morning.
If you want to switch to Economy 7, the process is almost identical to any other tariff. When you’re doing your research or filling out price comparisons, it’s helpful to fill out the forms as if you have an Economy 7 meter already and have an estimate in mind for how much electricity you think you’ll use at night.
You should bear in mind that it’s quite likely that there’ll be a charge for having an Economy 7 meter installed if you don’t have one already, however Robin Hood Energy will always look to switch you to a smart meter if possible. Smart meters are free and work with Economy 7, as well as other tariffs. If a dedicated Economy 7 meter is installed instead, we charge £75 for the installation. However, you can recoup that cost with savings on the new tariff if you use it wisely.
It’s also easy to switch back to a regular tariff from Economy 7. If you’re not meeting the 40% nightly threshold, or doing so is making you uncomfortable, you should consider switching to a regular tariff. There are plenty of different options that can help you to save more money than Economy 7.
If you know you want to switch, don’t waste time. Doing so as soon as possible will stop you losing more money. With Robin Hood Energy, it’s completely free to switch from Economy 7, so there’s no reason to put it off if you’re not satisfied.