What is Economy 7?

Economy 7 is an electricity tariff in which the cost of the electricity you use is different, depending on the time of day.

The hours of cheaper electricity are normally from 12am (midnight) until 7am in winter, and from 1am to 8am in summer, though this can vary between suppliers. Sometimes people talk about ‘day-rate’ and ‘night-rate’, but we prefer to call this ‘on-peak’ and ‘off-peak’.

The cheaper, off-peak rate is about a third of the price of the on-peak electricity. This is because demand for electricity overnight is lower and the energy companies are happy to sell their electricity for less. Some companies offer similar tariffs to Economy 7 that may have different start and finish times or may also include an hour or two during the day at a cheaper rate.

Economy 7 tariffs need a different kind of electricity meter so that it can measure the electricity you use during the day and at night separately. It might have two sets of dials or displays, as on the image above.

Is Economy 7 right for me?

While Economy 7 gives you seven hours of cheaper electricity at night, the downside is that for the other 17 hours the electricity costs more than normal.

This suits certain customers, but not others. If you are paying more for your day-time electricity, you should think about running appliances like your washing machine and dishwasher during off-peak hours, but only when you are up and about. If you run these appliances when you’re asleep, there’s a greater risk of a fire breaking out unnoticed. The fire service recommend that you check your smoke alarms regularly.

Economy 7 will be cost effective if you use electricity for your heating and hot water, and if you use more than 40% of your electricity at night.

Most people that use 40% of their electricity at night will have electric night storage heaters and a hot water tank heated by electricity. This is because they can both be timed to use cheap, off-peak electricity and store this as heat until needed during the following day.

If you heat your home with electricity with an air source heat pump and you don’t have night storage heaters or a hot water tank timed to come on overnight, Economy 7 probably won’t be cost effective for you, but your electricity supplier can confirm this.

How do I know if I have Economy 7?

If you are on an Economy 7 tariff, both your electricity meter and electricity bill will show an ‘on-peak’ and ‘off-peak’ rate. If you’re in any doubt whether or not you are on Economy 7, call your electricity supplier.

Wiring circuits

A home using Economy 7 will normally have two wiring circuits. The main wiring circuit is the same as in any home, connecting to the plug sockets, lights etc. Anything using this circuit can be turned on at any time and it will use either the on-peak or the off-peak rate depending on what time of day it is used.

There will also be a second wiring circuit that is connected to the night storage heaters and (usually) the hot water tank – this circuit will only activate when the electricity meter switches to off-peak mode.

Some homes will only have one circuit, this is because the heaters and hot water have been specially programmed by the installers to only use electricity during the night and you will be charged the off-peak rate.

If you ever move off Economy 7 and onto a single-rate tariff you need to make sure an electrician checks the wiring in the home, as there is a risk the old Economy 7 wiring circuit will remain active.

On and off switches

Next to your heaters and hot water tank there will often be two switches that connect to the on-peak or off-peak circuit. It’s important to know which switch is connected to which circuit.

Any off-peak switches can be left ‘on’ as they will not actually be heating during the day. Any on-peak switches should only be turned on for a short period of time, if you need to boost the heating or hot water during the day. After you have finished with the boost, remember to turn the switch off again. This is because some types of tank and heater will continually use the boost facility if this switch is left on all the time, which can become very expensive.

If you have programmable night storage heaters that have a digital screen, you may only have one circuit in the home and therefore one switch by the heater. It’s important to leave it switched on all the time, so that the display screen is always on. Leaving it on will not cost you much extra but it will enable the computer to ‘learn’ how much heat you need.  

Hot water tank

An Economy 7 hot water tank will have a slightly different set up than a standard immersion tank, in order to take advantage of cheaper off-peak rates. See our advice on hot water cylinders.

On the front of the tank you should see two circular disks, with wires connecting into the wall. These are the two heating elements (illustration below).

The lower heating element is the main one. It should be turning on automatically during off-peak hours, and will heat the whole tank. In some homes you may have additional controls, such as being able to turn it off at the wall or set a timer so the tank does not heat for the full seven hours.

The top heating element is a boost. It is intended to heat the top section of the tank and provide extra hot water if you run out during the day. It should have a control or switch that allows you to turn it on and off. Knowing how to turn the boost off is important as leaving the boost on for long periods of time can be very expensive

Here are two common controls:

If you have this kind of control (above), make sure the 24 hour clock is correct against the winter-summer line (based on the time of year), otherwise it may heat up during on-peak hours. For extra hot water during the day turn the boost dial, and the immersion will switch off after the selected period of time.

If you have this kind of control (below), set the correct time against the arrow. Push the tappets out for any time you want the water tank to heat (several hours during off-peak times). The switch should be left in the middle (timed), rather than 1 (heating constantly) or 0 (off constantly).

Economy 7 can be a good option for people who have electric night storage heaters and a hot water tank heated by electricity – or people who can shift much of their electricity use to the off-peak hours. If this sounds like you and you’re not currently on the Economy 7 tariff, talk to your energy supplier about switching tariffs.