What are Economy 7 and Economy 10 tariffs?
Have you ever been a guest in a home where the residents were checking the clock, and waiting, to turn on their washing machine or dishwasher or even to take a shower, if they had an electric one? You thought electricity being cheaper at night and dearer in the day was an urban legend, or a myth propagated by your grandmother, when you and your cousins were desperate to watch TV during the day. And for most people, it doesn’t matter when you fire up that electricity-intensive tumble drier; you’ll pay the same flat rate per kilowatt hour of electricity at 6pm and at 2am—although fellow residents of your block of flats may beg you not to run it late at night. And especially not with your trainers.
But if you have a differential electricity tariff, also called a time of use (ToU) tariff—either Economy 7 or Economy 10—you’ll pay a different, cheaper rate for your electricity during off-peak hours, which are usually overnight. These tariffs operate a lot like off-peak train tickets. Want to travel when fewer other people do? You’ll save money, as train companies try to incentive customers to avoid rush hour. Want to light your home late at night? If you have a time of use tariff, energy companies can give you a discount on electricity consumed when there’s less demand on the grid.
Time of use tariffs can be particularly cost-effective if, rather than a boiler, you have electric storage heaters, which draw electricity during the night and convert it into thermal energy they release during the day.
But what’s the difference between Economy 7 and Economy 10 tariffs, what hours do they apply, and can they save you money on your gas and electricity bills? Read on for the rundown.
Economy 7 vs Economy 10
There are two types of time of use tariff on the market in the UK.
Economy 7 tariffs give you discounted electricity during seven off-peak, nighttime hours. These are often 11pm to 6am, midnight to 7am, or 1am to 8am. So you might have to be a night owl to take much advantage of them—or just very diligent about setting your washing machine to run before you go to bed.
However, the exact hours your discount applies will depend on where you live and what supplier you use. It’s important to check the schedule before you commit to a tariff or fire up your tumble drier at 11:15pm. Ignorance of the exact schedule of their time of use tariff is one reason people sometimes end up spending more with time of use tariffs, or at least miss out on the savings they can deliver.
Economy 10 tariffs are available from a dwindling number of suppliers. They provide—guess what—10 hours of discounted electricity, often seven at night and than three additional during the afternoon, but sometimes 10 consecutive nighttime hours.
Can I save money with a time of use tariff?
When you compare energy deals, desperate for any savings to be had, especially as energy bills rise, you might wonder if you could benefit from an Economy 7 tariff.
The answer is yes, but you’ll have to be diligent about watching the clock. And many households aren’t or can’t be easily.
Citizens Advice has warned that time of use tariffs provide “false economy” for many households. A report by the consumer watchdog published in the autumn of 2018 found that just under half (49%) of consumers on these differential tariffs were making active efforts to save money by using electricity overnight. In fact, 65% reported that they use their appliances “some of the time” or “most of the time” during peak hours, and only 26% managed to “hardly ever” or “never” use appliances during peak hours.
The busier you are, with a job, with kids, the less likely you are to be able to stick to the inflexible schedules of time of use tariffs. You can’t exactly hold off until after midnight to wash that muddy football kit if your kid has practice at 4pm, or to launder the shirt you need for that afternoon meeting after you spilled your morning coffee on it. And with kids just tucked into bed and work in the morning, you might just be too exhausted to stay up past the 1am watershed to turn on your dishwasher.
Citizens Advice found that among people with time of use tariffs, households with children and with people in work were more likely to run appliances during peak hours than households without children and with pensioners.
Time of use tariffs are a great option if you have storage heaters, but Citizens Advice found that 80% of people with these tariffs don’t.
Electricity will be more expensive per unit during the day with a time of use tariff, to partly offset the discount you get a night. So if you have a time of use tariff and don’t abide by it, expect to pay more overall for your energy.
Other things to consider with a time of use tariff
- Time of use tariffs only apply to electricity. Even with an Economy 7 or Economy 10 tariff for your electricity, you’ll have a different gas tariff and you’ll be charged a flat use for any gas you use, no matter what the clock says.
- The hours your time of use tariff applies usually change with daylight saving time. An Economy 7 tariff with discounted hours between midnight and 7am Greenwich Mean Time (GMT) will shift to 1am to 8am during British Summer Time (BST).