Economy 7 explained

Economy 7 tariffs have historically offered cheaper electricity rates during off-peak hours, typically overnight, as a way to manage energy bills. However, with changes in energy tariffs and meter technology, UK households need to consider if this option remains a suitable strategy, especially for heating. The energy landscape is evolving towards more flexible, smart meter-enabled solutions that provide greater control over energy consumption.

If you're looking to make the most of off-peak electricity rates, understanding modern dual-rate tariffs is key. Fuse Energy offers dual-rate variable tariffs, designed to help homeowners optimise their energy usage and manage bills more effectively. Click here to explore how switching to Fuse could benefit your home.

What is Economy 7?

Economy 7 is a type of electricity tariff designed to offer cheaper electricity rates for seven hours, usually overnight, in exchange for higher rates during the day. This dual-rate structure was historically popular with households that could shift a significant portion of their electricity use to these off-peak hours.

Understanding dual-rate tariffs

Dual-rate tariffs, also known as multi-rate or differential tariffs, divide the day into peak and off-peak periods, each with a different unit rate for electricity. The "7" in Economy 7 refers to the seven hours of cheaper electricity available during the off-peak window. These tariffs are distinct from single-rate tariffs, where the price per unit of electricity remains constant regardless of the time of day.

The history of Economy 7

Economy 7 was introduced to encourage electricity consumption during periods of low demand, primarily overnight, when power stations had excess capacity. It traditionally benefited homes with electric storage heaters or immersion heaters, which could be charged cheaply overnight and then release heat or hot water during the day. This allowed households to make the most of the lower rates for their heating needs.

How Economy 7 tariffs work

Peak and off-peak times

The seven hours of cheaper off-peak electricity typically fall between 10pm and 8:30am, though the exact times can vary by energy supplier and your specific region. Some suppliers might offer a single block of seven hours, while others might split the off-peak period into shorter chunks, potentially with a small top-up during the day. It is crucial to confirm the precise timings with your energy supplier, as these can also change when the clocks go forward or back for British Summer Time.

Calculating your savings

Savings on an Economy 7 tariff depend heavily on your ability to shift electricity consumption to the cheaper off-peak hours. Generally, it is considered beneficial if you use 40% or more of your total electricity overnight. If your daytime electricity usage remains high, the more expensive peak rates could outweigh any savings made during the off-peak period, potentially leading to higher overall bills compared to a standard single-rate tariff.

Benefits and drawbacks of Economy 7

Who benefits most?

Households that can maximise their off-peak electricity usage stand to benefit most from Economy 7. This includes:

• Homes with electric storage heaters or immersion heaters: These systems can be charged during the cheaper overnight hours, providing warmth or hot water throughout the day.
• Electric vehicle (EV) owners: Charging an EV overnight can significantly reduce running costs if done during off-peak times.
• Households with high-consumption appliances: Running washing machines, tumble dryers, or dishwashers overnight can lead to savings.
• Individuals who are often out during the day: If your home is empty during peak hours, you naturally consume less expensive electricity.

Potential disadvantages

While Economy 7 offers potential savings, it comes with certain drawbacks:

• Higher daytime rates: The peak rates on an Economy 7 tariff are typically more expensive than those on a standard single-rate tariff, penalising daytime electricity use.
• Requires lifestyle adjustment: To truly save money, you must consciously shift your energy-intensive activities to the off-peak window, which may not suit everyone's routine.
• Not universally cheaper: Without significant off-peak usage, an Economy 7 tariff can end up being more expensive than a standard tariff.
• Meter compatibility: Older Economy 7 meters are being phased out, requiring upgrades to smart meters.

Economy 7 meters and the smart meter transition

Traditional Economy 7 meters

Traditional Economy 7 meters are designed to record electricity consumption at two different rates: one for peak hours and one for off-peak hours. These older meters often relied on a system called the Radio Teleswitch Service (RTS) to switch between the peak and off-peak rates.

The RTS phase-out and smart meters

RTS, which supported many older Economy 7 meters, began its gradual phase-out on 30 June 2025. This service is reaching the end of its operational life, and the equipment can no longer be adequately maintained. If you have an RTS meter, it will need to be replaced with a smart meter to avoid potential disruption to your heating and hot water supply, or inaccurate billing.

Energy suppliers are responsible for replacing these meters, and the smart meter upgrade is typically offered at no upfront cost. Once your current supplier has replaced your RTS meter with a smart meter, you can then switch to a modern energy provider like Fuse, which offers dual-rate variable tariffs and a digital-first experience.

Is Economy 7 right for you?

Assessing your energy usage

Before considering an Economy 7 tariff, it's essential to understand your household's electricity consumption patterns. The average UK home uses around 2,500 kilowatt-hours (kWh) of electricity per year, according to Ofgem's medium typical domestic consumption value (TDCV) effective from 1 July 2026. However, your actual usage will vary based on factors like property size, the number of occupants, and the efficiency of your appliances. Reviewing past energy bills or using an in-home display from a smart meter can help you identify when you use the most electricity and whether you could realistically shift significant usage to off-peak hours.

Comparing tariffs

When evaluating if an Economy 7 or a modern dual-rate tariff is suitable, compare the total cost, not just the cheaper night rate. Consider both the off-peak and peak unit rates, as well as the daily standing charge, against standard single-rate options. Dual-rate variable tariffs require either a smart meter or a multi-register traditional meter to be eligible. It is crucial to ensure your meter supports the tariff you choose.

Modern alternatives to traditional Economy 7

Dual-rate variable tariffs

Modern dual-rate variable tariffs are the evolution of Economy 7, offering more flexible off-peak periods and are enabled by smart meters. These tariffs move beyond the rigid, fixed seven-hour window, often providing more dynamic pricing that can adapt to grid demand. This flexibility allows homeowners to optimise their energy usage more effectively, especially for high-consumption activities like charging EVs or running electric heating systems.

The role of smart technology

Smart meters are central to accessing modern dual-rate tariffs. They automatically send accurate meter readings to your supplier, eliminating estimated bills and providing real-time data on your energy consumption. This information, often accessible via an app, empowers you to make informed decisions about when to use electricity, helping you to manage and optimise your energy usage for cheaper periods.

Managing your energy bills should be clear and easy to understand. Fuse Energy focuses on straightforward pricing, so you can see exactly what you're paying without unnecessary complexity. If you have a smart meter, you can view detailed usage data through the app or website, helping you understand how you can lower your bills. If you don't have a smart meter, Fuse Energy can upgrade your non-smart meter, completely for free. This can make it easier to track spending and make informed decisions about your energy use. Our 24/7 human support team is always on hand with fast response times of under 5 minutes whenever you need help. Click here to switch to Fuse Energy today. Find out about our mission by clicking here.