Economy 7 and Time-of-Use Tariffs Explained

Most households pay one price per unit of electricity, whatever time of day they use it. Time-of-use tariffs charge different rates at different times, usually with cheaper electricity when demand on the grid is low. They can save money, but only if your habits fit.

How Economy 7 works

Economy 7 is an older style of two-rate tariff. You get seven hours of cheaper electricity overnight, with the exact hours depending on your region and meter, and a higher rate for the rest of the day. It was designed for homes with storage heaters, which charge overnight and release heat during the day. It requires a meter that records two rates.

Modern time-of-use tariffs

Newer smart tariffs can have several rate bands, with cheaper electricity overnight or at other off-peak times and more expensive rates in the early evening, when demand is highest. Some even change the price every half hour. They generally require a smart meter. Some are aimed at households with electric vehicles or home batteries.

Who can benefit

• Households with an electric vehicle that can charge overnight.
• Homes with a battery, which can charge when electricity is cheap and discharge when it is expensive.
• People with storage heaters or electric heating that can be timed.
• Households that can run dishwashers, washing machines and tumble dryers at off-peak times.

Who may lose out

If most of your electricity is used in the evening, which is the typical pattern for working households, you could pay more on a tariff with a high peak rate. The daytime rate on an Economy 7 tariff is often higher than a standard tariff, so a household with little overnight use can be worse off.

How to check whether it suits you

1. Look at your usage pattern. A smart meter or energy monitor can show when you use most electricity.
2. Estimate how much usage you could realistically shift to the cheap period.
3. Compare the total annual cost on the time-of-use tariff against a standard tariff using these estimates.
4. Check standing charges, exit fees and the length of the cheap period.

Practical tips

Use delay-start timers on appliances to run them overnight, but never leave tumble dryers or washing machines running while you sleep or are out, because of fire risk. Dishwashers and washing machines are usually safer choices than dryers. Always follow the manufacturer's guidance.

Time-of-use tariffs reward flexibility. If your routine allows you to move some of your use to cheaper times, they can lower your bill. If not, a standard tariff may be simpler and cheaper. Our appliance cost calculator can help you see which of your devices use the most.