If you’re looking to reduce your energy bills, you’ve probably encountered the term “Economy 7” whilst browsing tariffs. But what exactly is it, and more importantly, is it right for your home? In this guide, we’ll break down Economy 7 versus standard tariffs so you can make an informed decision about your energy costs.

Understanding Economy 7 Tariffs

Economy 7 is an electricity tariff that charges different rates depending on the time of day. The name “Economy 7” refers to seven hours of cheaper electricity, typically offered during off-peak hours, usually between 11pm and 8am (though times vary by region and supplier).

The concept is straightforward: you get cheaper units of electricity during those seven hours, but you’ll pay a premium rate during peak hours. The idea is to encourage households to shift energy consumption to cheaper periods, reducing their overall bills.

It’s worth noting that Economy 7 typically applies only to electricity. Your gas tariff would remain on a standard rate with most suppliers.

How Standard Tariffs Work

A standard tariff (sometimes called a single-rate tariff) charges the same price per kilowatt-hour (kWh) for electricity regardless of when you use it. You pay a fixed standing charge and a consistent unit rate throughout the entire day.

This simplicity is one of the main advantages. There’s no need to think about timing your energy use differently throughout the day. Whether you’re using electricity at 3pm or 3am, you’ll pay the same rate per unit.

Economy 7 Rates: What You’ll Actually Pay

To understand whether Economy 7 makes financial sense, you need to know the numbers. As of early 2024, Economy 7 rates vary by region and supplier, but here’s what you might expect:

• Off-peak rate (Economy 7): typically 20-30p per kWh
• Peak rate (Economy 7): typically 35-45p per kWh
• Standard tariff: typically 27-35p per kWh (flat rate)

These figures are illustrative and change regularly. Always check current rates on comparison websites or directly with suppliers. Ofgem publishes energy price cap information quarterly, though this primarily affects standard tariffs.

Who Benefits Most from Economy 7?

Economy 7 works brilliantly for certain households but may cost you more if you’re not careful. Consider whether you match these criteria:

• Night shift workers: If you’re awake and at home during off-peak hours, you can genuinely use cheaper electricity
• Heating systems: If you have storage heaters that charge during cheap hours and release heat during the day, Economy 7 is designed for you
• Large families: With multiple people, you might naturally use electricity across all hours, allowing you to capitalise on cheap periods
• EV owners: If you charge your electric vehicle during off-peak hours, the savings could be substantial
• High night-time usage: Those who regularly run dishwashers, washing machines, or tumble dryers after 11pm

When Standard Tariffs Make More Sense

Standard tariffs are genuinely better for many households. You’ll likely save money on standard rates if:

• You work regular 9-5 hours and aren’t home much during off-peak times
• You have young children with unpredictable sleep patterns
• You use most electricity during evenings and weekends (peak times)
• You have an electric shower (typically too expensive to run during peak hours)
• You don’t have storage heaters or an EV to charge
• You prefer the simplicity of a single rate without planning your energy use

Calculating Your Potential Savings

The only way to truly know which tariff suits you is to calculate your personal consumption. Here’s what to do:

First, gather your energy bills for the past year and note your total usage. Next, identify how much electricity you genuinely use during off-peak hours (11pm to 8am). This requires honesty – don’t count usage you could shift but probably won’t.

If you use 30% of your electricity during off-peak hours and 70% during peak hours, Economy 7 might save you money. But if it’s the reverse, standard tariffs are almost certainly cheaper.

Most comparison websites allow you to input your usage patterns, so use this to get accurate quotes for both tariff types with different suppliers.

Important Practical Considerations

Standing charges: Economy 7 tariffs typically have higher standing charges than standard rates. Make sure you factor this into your calculations, as it applies regardless of consumption.

Smart meters: If you don’t have a smart meter, Economy 7 requires manual meter reading, which can be inconvenient. Modern smart meters make tracking off-peak usage much easier.

Switching costs: Changing between tariff types may require different metering equipment. Ask your supplier whether there are any installation costs involved.

Fixed vs variable rates: Both Economy 7 and standard tariffs come in fixed and variable versions. Fixed rates lock in your unit rates for a set period, offering protection against price rises.

Making Your Decision

Rather than assuming one is universally better, make a decision based on your specific circumstances. Calculate your realistic off-peak usage, compare quotes from multiple suppliers for both tariff types, and check the total annual cost (including standing charges).

Remember that your circumstances change over time. If you’ve been on Economy 7 for years, it’s worth reviewing annually when your fixed term ends. Conversely, if you recently started working from home or got an electric vehicle, Economy 7 might suddenly become more attractive.

Take Action Today

Don’t let energy bills eat unnecessarily into your budget. Spend 20 minutes comparing Economy 7 and standard tariffs using comparison websites like MoneySuperMarket, USwitch, or Energyhelpline. Input your actual usage, compare total annual costs, and switch to whichever genuinely suits your household better.

Even small changes in your tariff type can save £100-300 annually. When combined with other energy-saving measures, you could cut your bills significantly. The energy market moves fast, so reviewing your tariff annually ensures you’re always on the best deal for your lifestyle.