With energy prices creeping up, switching to Economy 7 could save you up to £200 a year on electricity bills, but it's not the right option for everyone. Here's how to tell if it can help you save.
If you’re fed up with high electricity bills the Economy 7 tariff could be the answer.
Here’s everything you need to know about the off-peak energy tariff that promises big savings.
What is Economy 7?
Available from most providers, Economy 7 is a type of energy tariff that charges you less for using energy at off-peak times. It’s designed to encourage people to use electricity when it’s at its cheapest.
The off-peak period lasts 7 hours, (hence the name Economy 7) and usually starts at around 1:00am although this will depend on where you live.
During this 7 hour period the cost of electricity can be up to 4 times cheaper than the standard tariff price.
Who can switch?
Although targeted towards homes with a storage heater, you don't need this type of heating system to switch to Economy 7.
Anyone can opt to move to Economy 7, just make sure it suits your needs better than your existing energy tariff before making a change.
Will it save me money?
Most suppliers estimate that you need to use somewhere between 20-40% of your electricity late at night to save money using an Economy 7 tariff.
If you heat your home using an electric storage heater or have a hot water tank then it’s likely you use a significant amount of your electricity at night and could potentially save money by switching to an Economy 7 tariff.
The same applies if you work shift patterns and are up during the night, or if you just tend to use very little electricity during the day.
However, if there are people at home during the day or evening using electricity then Economy 7 is unlikely to suit your circumstances and could actually end up costing you more.
What are the drawbacks?
Like any energy tariff Economy 7 has its disadvantages, the main drawback being the price of energy at peak times.
To offset the discounts companies give you during the night time, the standard price of electricity during the day can be anything up to twice the price you would pay on a standard tariff.
This means if you don’t take advantage of the 7 hours of cheap energy you get at night, and use energy during the day you could end up with an unnecessarily large electricity bill.
You should be able to see on your Economy 7 bill the amount of energy you are using at peak times and either try to make the most of cheap off-peak energy perhaps by running appliances overnight or if that is not an option consider moving off of the Economy 7 tariff.
If you don’t have Economy 7 details of the electricity you use can be found in you Annual Energy Statement . While it may not break down how much you use at different times of the day, you should be able to see how much you are currently paying and estimate how much would be during off-peak hours.
There are also downsides to heating all your water overnight using a storage heater as many people find that the 7 hour period is not long enough to ensure they have enough hot water and heating to last the day.
Although there will be plenty of hot water in the mornings, in the evening you might start feeling the cold and ultimately have to put the heating on again when it costs more.
How do I switch to an Economy 7 tariff?
If you are thinking of switching to Economy 7 you will need to contact your electricity supplier, however use the opportunity to compare all the different tariffs (not just Economy 7) on the market – you might find bigger savings on other tariffs elsewhere.
Changing your electricity tariff to Economy 7 may mean having to have a different meter installed. This is more likely to be the case if you live in an older property where there were no plans to incorporate Economy 7 when the house was originally built.
Although you might have to pay for installation and set up costs, if you use your energy as outlined above you may still be able to make significant savings in the long term.
Weigh up the expense of installation and set up against the savings you'll make on your electricity bills; you can then calculate how long it will take to recoup your initial outlay.
Before you switch you should also consider how your lifestyle might have to change and if you have any plans to move home in the near future. Will you be in the property long enough to make the savings worthwhile?
Can I change back if Economy 7 is more expensive?
If after a few months using an Economy 7 tariff you find that you are paying more than you used to for your electricity, (or you are convinced that your lifestyle and home are not suited to Economy 7) then you should seriously consider switching back to a regular energy tariff.
If you are considering this option remember to compare all the different tariffs on offer, there are usually significant discounts available if you manage your account online or pay by direct debit as well.
Before you make any decision should make sure you’ve researched all your options, if you’re still unsure then opt for the cheapest regular energy tariff to make sure you make a saving.
Remember there are lots of quick and easy ways to save money on your energy bills, read our article 6 Ways to Reduce Your Energy Bills Instantly for more ideas.
How to make the most of Economy 7
If you’re already on an Economy 7 tariff or have decided to switch and want to make the most of cheap off peak electricity there are a number of things you can do to maximise your savings.
Firstly many household appliances such as dishwashers and washing machines have a timing feature that allows you to set them to switch on during the night, make use of these so you use electricity at the cheaper discounted rate and save money.
Secondly, if you have a storage heater system set it to start at the time your cheaper energy starts. This will this make sure that a large amount of energy is being taken while it costs less.
Finally making sure you are on the best tariff is essential, even if you make sure you use appliances at over night and have a storage heating system it still make sense to check what you would pay on the other tariffs on offer.
