Economy 7: definition and meaning

Economy 7 is an electricity tariff with two unit rates. For seven hours a day, usually overnight, electricity costs less per kilowatt-hour; for the other 17 hours it costs more than on a typical single-rate tariff. It was introduced so that homes with electric storage heaters and hot water cylinders could heat up on cheaper night-time power.

How it works

You need a meter that records peak and off-peak use separately. That can be an older two-rate meter, often showing two readings, or a smart meter set up to apply different rates at different times. Your bill then charges each reading at its own rate, plus the daily standing charge.

The cheap hours are not the same for everyone. Ofgem says they are usually between midnight and 7am, but they depend on where you live and on your supplier, and some older meters do not change with the clocks, so the period shifts by an hour in summer. Your supplier should tell you the exact times. If you switch supplier or tariff, check whether the times change, and reset any timers on storage heaters, immersion heaters or appliances.

Some homes have older meters controlled by a radio signal that is being retired; Ofgem advises those households to ask their supplier about a replacement.

Who it suits

Likely to suit	Less likely to suit
Homes with storage heaters or an electric hot water cylinder	Homes that use most electricity in the day and evening
Electric vehicle owners who charge overnight	Households that cannot move use to the cheap hours
Households able to run appliances on timers at night	Homes heated by gas with low electricity use

Economy 7 pays off only if enough of your electricity is used in the off-peak hours to outweigh the dearer daytime rate. Ofgem’s typical consumption figure for a home with a multi-rate meter is 3,400 kWh a year, against 2,500 kWh for a single-rate home. Comparing your own day and night readings with the rates on offer is the most reliable test. This is general information, not advice.