Cheap rate electricity explained

Cheap rate electricity tariffs offer lower prices for power during specific off-peak hours, helping UK households reduce energy bills. These Time-of-Use (ToU) tariffs can transform how you pay for energy, especially when paired with smart meters to manage consumption.

Looking to make the most of cheap rate electricity? Fuse Energy offers modern dual-rate tariffs designed for smart meters, giving you greater control over your energy usage and costs. Click here to switch to Fuse Energy today.

Understanding cheap rate electricity in the UK

Cheap rate electricity refers to tariffs that charge different prices for electricity depending on the time of day it is used. This pricing structure encourages consumers to shift high-energy activities to periods when demand on the grid is lower, benefiting both their wallets and the wider energy system.

What defines 'cheap rate' electricity?

On a traditional single-rate tariff, you pay the same unit price for electricity regardless of when you use it. With cheap rate electricity, however, unit prices are significantly lower during designated "off-peak" hours and typically higher during "peak" hours. This difference can lead to substantial savings for those who can adjust their energy habits.

The evolution from Economy 7 to smart tariffs

The concept of varying electricity prices by time is not new. For decades, tariffs like Economy 7 offered cheaper rates for seven hours overnight, primarily for homes with electric storage heaters or immersion heaters. However, these older tariffs often relied on Radio Teleswitch Service (RTS) meters, which used a longwave radio signal to switch between peak and off-peak rates.

The RTS is now being phased out, with a managed shutdown beginning on 30 June 2025. This means that legacy meters relying on this service will no longer function as intended. The shift is towards more flexible and dynamic Time-of-Use tariffs, often enabled by smart meter technology.

How Time-of-Use tariffs work for you

Time-of-Use tariffs are designed to reflect the real-time cost of electricity, which fluctuates based on supply and demand. By understanding and adapting to these patterns, you can significantly reduce your energy expenditure.

Peak vs off-peak: when electricity is cheapest

With a dual-rate tariff, your electricity usage is divided into peak and off-peak periods. Off-peak hours typically occur late at night or early in the morning when overall demand on the National Grid is low, making electricity cheapest. Peak hours, conversely, are usually during weekday mornings and evenings when most people are using electricity, leading to higher unit rates. The exact timings for off-peak windows vary by tariff and supplier, so it is crucial to check the specific details of any tariff.

The role of smart meters in accessing dual rates

Smart meters are fundamental to modern Time-of-Use tariffs. They automatically send accurate meter readings to your supplier, often every 30 minutes, allowing for precise billing based on your consumption during different rate periods. While some dual-rate tariffs can operate with older multi-register meters, smart meters enable access to the most competitive and flexible modern options. If you have an older meter, your current energy supplier is responsible for replacing it with a smart meter installation, usually at no cost to you. This upgrade is a necessary step to take advantage of cheaper off-peak electricity.

Benefits beyond cost savings

While reducing your electricity bill is the primary driver for switching to a cheap rate tariff, there are broader benefits. By shifting your usage to off-peak times, you contribute to a more balanced and efficient energy grid, reducing strain during peak demand. This can also indirectly support the integration of renewable energy sources, as off-peak periods often coincide with times of high renewable generation. Ultimately, it gives you more control over your energy consumption and costs, moving away from a passive relationship with your energy supplier.

Finding the best cheap rate electricity tariff

Finding the right cheap rate electricity tariff requires a bit of research and an understanding of your household's energy habits.

Comparing dual-rate tariffs: what to look for

When comparing dual-rate tariffs, do not just focus on the off-peak unit rate. You need to consider:

• Off-peak unit rate: How low is it, and for how many hours?
• Peak unit rate: This will likely be higher than a Standard Variable Tariff, so assess if you can genuinely shift enough usage to offset this.
• Standing charge: This daily fixed charge can vary significantly between tariffs and suppliers, impacting your overall bill.
• Contract length and exit fees: Fixed dual-rate tariffs offer price certainty but may have exit fees if you leave early. Variable tariffs can change quarterly but usually have no exit fees.
• Supplier reputation and customer service: Look for providers with good reviews and reliable support. Fuse, for example, offers 24/7 human customer support.

Calculating potential savings based on your usage

The average UK home uses around 2,500 kWh of electricity per year.1 To estimate your savings, you need to understand your own usage patterns. Identify how much electricity you currently use during potential off-peak hours versus peak hours. Can you shift activities like charging an electric vehicle, running your dishwasher or washing machine, or heating hot water to the cheaper off-peak window?

Calculate your estimated annual consumption during both periods and apply the tariff's respective unit rates and standing charges. This will give you a clearer picture of potential savings.

Key questions to ask before switching

Before committing to a new tariff, ask:

• What are the exact peak and off-peak hours?
• What are the unit rates for both periods, and the daily standing charge?
• Is there a minimum usage requirement or any other eligibility criteria?
• What happens if my smart meter loses connection?
• How easy is it to manage my usage and track my consumption with the supplier's tools or app?

Switching to a cheaper electricity tariff

Switching energy suppliers in the UK is a straightforward process, regulated by Ofgem to ensure it is fair and efficient.

The step-by-step switching process

1. Check your meter type: Confirm you have a smart meter or are eligible for a free upgrade from your current supplier.
2. Understand your usage: Analyse your household's electricity consumption to identify when you use the most energy and what can be shifted.
3. Research and compare: Use comparison tools and supplier websites to find dual-rate tariffs that suit your needs.
4. Calculate savings: Based on your usage and the tariff details, estimate your potential savings.
5. Initiate the switch: Once you have chosen a new supplier, they will handle the switching process for you. This typically takes 5 working days, and you will not experience any interruption to your supply.

Ensuring smart meter compatibility

As highlighted, a smart meter is crucial for accessing modern Time-of-Use tariffs. If you do not have one, your current supplier is obliged to install one for free. Ensure your smart meter is functioning correctly and sending readings to your supplier. If you have an older RTS meter, arrange for its replacement with a smart meter before attempting to switch to a modern dual-rate tariff.

What happens after you switch?

Once your switch is complete, your new supplier will begin billing you according to your chosen tariff. You will receive regular statements, and with a smart meter, these should be based on actual consumption, not estimates. It is important to monitor your first few bills to ensure your usage patterns align with the tariff's benefits and that you are indeed saving money.

Maximising your savings with smart energy management

Switching to a cheap rate tariff is only half the battle; actively managing your energy usage is key to unlocking its full potential.

Shifting high-consumption activities to off-peak hours

The most effective way to save is to use your high-energy appliances during the cheaper off-peak windows. This includes:

• Electric vehicle (EV) charging: Charging your EV overnight can drastically reduce your fuel costs, especially with smart EV charging at home solutions.
• Washing machines and dishwashers: Schedule these appliances to run late at night or early morning.
• Storage heaters: If you have them, ensure they are set to charge during off-peak times.
• Immersion heaters: Heat your hot water during the cheaper hours.
• Home batteries: Charge your battery during off-peak times and discharge it during peak hours to avoid higher rates.

Leveraging smart home devices and apps

Modern technology makes energy management easier than ever. Smart plugs, smart appliances, and dedicated energy apps can help you automate and monitor your usage. Many smart EV chargers, for instance, can be programmed to automatically charge during the cheapest periods. Suppliers like Fuse offer intuitive apps that provide real-time data on your energy consumption, allowing you to track your usage and optimise your savings.

Long-term strategies for sustained savings

To maintain savings, regularly review your energy usage and tariff. Your needs might change, or new, more competitive tariffs might become available. Keep an eye on the market and do not hesitate to compare tariffs annually. By staying proactive and using the tools available, you can ensure you are always on the best plan for your household.

Ready to take control of your energy costs and make the most of cheap rate electricity? Fuse Energy offers modern dual-rate tariffs designed for smart meters, providing genuine control and potential savings. Our intuitive app and 24/7 human customer support are there to guide you. Click here to switch to Fuse Energy today. You can also find out more about our mission here.

References

1. Ofgem. Review of Typical Domestic Consumption Values