Is Economy 7 A Big Con?
One writer looks into whether Economy 7 is economical, and finds out how customers can switch to regular tariffs.
I decided to look into Economy 7 recently, because my instincts told me that it is a big con. It's confusing and there are fewer tariffs, which probably means less competition. The problems of confusing products and lack of competition are huge warning signs when I'm reviewing a financial product where, inevitably, after further investigation, I find that the product isn't up to scratch.Economy 7 serves a useful purpose, according to the industry, which claims that E7 helps to spread out energy usage so that power stations don't get overloaded during the day. (Most E7 tariffs are overnight.) I find this weird though, because I would think that it's everyone using their heating at night that is the biggest usage.Still, suppliers claim that E7 is made cheaper for us so that they can spread out our usage. We can't just take their word for it though, so I talked with Florian Ritzmann, one of my trusty contacts from Xelector, which powers our unparalleled gas and electricity comparison tool. He told me that Economy 7 usually does save people money, so long as you use around 25% or more of your energy during your seven economy hours. However, he pointed out that it varies by supplier, which might explain why a spokesman for npower claimed the figure was just 20%.I then did some analysis, using our comparison tool:Best E7 tariffs based on using 10,000kWh per yearE7 usageTariff nameCost15%npower Sign Online£77520%npower Sign Online£75025%npower Sign Online£72530%npower Sign Online£70035%npower Sign Online£67540%npower Sign Online£655I found that, at present, for 10,000kWh per year in the Kilburn area, all the most competitive tariffs are one and the same: npower's Sign Online. But it's not unusual for one supplier to dominate a table for a while, before another one offers better rates to new customers.What's more interesting about this table is that it shows how much cheaper it is if you use 40% of your energy during the E7 hours versus just 15%: you'll save about £120. Typically, you might save around £25 for every 5% of energy used at the cheaper rate. However, what's even more interesting is when you compare those E7 rates with the best non-E7 electricity rates:Best non-E7 tariffs based on using 10,000kWh per year Tariff nameCost 1npower Sign Online£640 2Powergen Electricity Online Extra Saver£750 3British Gas Click Energy£770 4British Gas Priority Response Click Energy £790 5Powergen ElectricityGuarantee £820 6Atlantic Electric and Gas Domestic Standard Online£850If you compare both tables, the cheapest tariff overall, costing £640, is npower's regular -- non-E7 -- tariff! You'd need to use more than 40% of your energy at night to do better, which I suspect is a tall order for most people.Although this is certainly a revelation, I think it could be an anomaly. You'll see from the second table that the next cheapest non-E7 tariff is Powergen's Electricity Online Extra Saver, which is £110 more expensive at £750. You'd only save money with that tariff if you use less than 20% of your energy during the E7 period. This is more in line with what Ritzmann and npower have told me. Still, that doesn't mean you can't take advantage of it!Switching from E7 to standard tariffsThis is all just a snapshot of course, and prices may vary for you. Anyone on E7 should shop around for the cheapest E7 tariff, but if you've just had enough or if you think you can get a better deal with non-E7 then you can try to switch out of E7.To get more information on how to do this, I contacted the press office of each of the six biggest suppliers, and in some instances called their customer services for a second opinion. Ritzmann also spoke with his contacts at some of the suppliers. We found that, with the possible exception of Scottish Power, all the suppliers should, grudgingly, allow you to switch from Economy 7 to a standard tariff. They might do this by combining your two E7-meter readings into one standard reading, or by replacing the meter. Generally, they'll only allow you to switch from E7 after you've had your first bill.However, I encountered a lot of confusion and conflicting information from each of the departments. More worryingly, I came up against a lot of resistance, as if suppliers really don't want customers to switch from E7. Perhaps they really think E7 is fantastic for consumers, but I still can't help but be suspicious as to their motives.I would say that if you insist on being taken off E7, you'll be able to do so. The trick is to be firm.> Compare gas and electricity tariffs based on where you live, and your usage or monthly bills, or even based on the exact tariff you pay now!> Read more: Cut Your Economy 7 Bill By 40%!