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Is Economy 7 a big con?


Updated on 11 October 2012 | 28 Comments

Many Economy 7 customers are paying more than they need to for their energy and would be better off on other tariffs.

Economy 7 (E7) is an electricity tariff with two tariffs – one for the day time and a cheaper one for seven hours during the night. Hence ‘Economy 7.’

E7 tariffs use a different kind of electricity meter which can track how much electricity you use at different times during the day and night. There are also some other ‘time of use’ tariffs available including ‘Economy 10’.

If you’re not sure whether you have an E7 tariff, take a look at your bill. If you’re being charged different rates for day and night, you’re on E7 or another ‘time of use’ tariff.

E7 and similar tariffs serve a useful purpose, according to the industry, which claims that they help to spread out energy usage so that power stations don't get overloaded during the day.

Some make money

Now I’m in no doubt that some E7 customers do make money from the deal. This is most likely if they have night storage heaters. These heaters store thermal energy during the night when electricity is cheaper and then release the heat during the day as required.

However, this isn’t true of everybody. New research from Consumer Focus shows that 38% of E7 customers don’t have storage heaters and/or don’t regularly use appliances at off peak times.

As a result they’re not getting much benefit from E7, and they may well be better off on a conventional gas and electricity tariff.

If you’re not sure whether E7 is working for you, this table may help. It shows how much energy you should be consuming during the night to make sure that you’re making money from E7.

Night time consumption to make E7 cost effective

Supplier

Percentage of off-peak electricity usage required to make the Economy 7 tariff more cost effective than a standard tariff

British Gas

45%

Cooperative Energy

35%

Ebico

33%

Ecotricity

20-35% (depending on the region)

EDF Energy

20-30% (depending on region and consumption profile)

EON

34%

First Utility

Don’t offer an Economy 7 tariff

Good Energy

15 to 40% (depending on region and consumption profile)

LoCo2

13 to 20%

npower

35%

OVO

30%

Scottish Power

15%

Spark Energy

Don’t offer an Economy 7 tariff

SSE

35%

Utility Warehouse

40% (35% for low users)

Remember if you don’t have night storage heaters, there’s a strong chance that you won’t be making money from E7. You could also use our gas and electricity comparison tool to find out if you could make money by switching to a conventional deal.

What can you do?

If you think you’re not making money from E7, you have two options:

1. You could try and consume more energy during the night. You can get timer switches for appliances such as washing machines, and you could then run them at 2AM if you wish.

2. Consider switching to a conventional electricity tariff. Be careful though. You may need a new meter and your electricity provider may charge you for installing it. If that’s the case, make sure that any savings you’ll make from switching won’t be swallowed by the costs of putting in a new meter.

Ignorance

The Consumer Focus research also suggests that a big problem here is ignorance. Different providers offer cheaper rates for different periods during the night, so it’s not a surprise that 59% of E7 users would like more information on when tariffs begin and how they can the maximum savings from their tariff.

A con?

I don’t think that Economy 7 is really a con, as some customers do make money from it.

But it clearly doesn’t work for everyone, and I fear that providers may be exploiting customer ignorance and apathy to pocket extra cash from customers who should be on a regular tariff.

And let me emphasise, if you’re on E7 and you don’t have night storage heaters, you should definitely do some research and see if you’d be better off switching.

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Comments



  • 14 December 2012

    A simple tip for saving money on heating.......ACQUIRE A THERMOMETER!!! If you feeel chilly at 21 degrees, put another layer of clothes on, or move about a bit. Chairocise,or count your stairs, but keep your finger off the switch!! A thermometer used this way can save ££'s weekly! Thermometers can be acquired from a wide range of retail outlets, carboots, charity shops. This simple and cheap item will pay for itself in the first week!! No other tip claims this! Better yet find someone to cuddle!! (p.s I am available for this activity)

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  • 20 November 2012

    I think E7 is great! I only pay £10 per month for all my heating and hot water because my usage is approx. 75% night (E7) and 25% day (standard). I find that my flat is always toasty and warm and Ive always got enough hot water.Most of the grumbles about storage heaters are usually because people don't use them correctly!

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  • 17 November 2012

    i used to live in a flat with storage heaters i couldn't use my appliances at night as the neighbour below would complain about the noise. the storage heaters were terrible, even on the very lowest setting it would BELT out the heat as soon as they came on and by 6/7 pm they were empty, totally useless and a waste of money if you are out and about or at work in the day because you end up using some other electrical heating when it is really bad. its helpful if you are in during the day but at night forget it, its a con in this respect.

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