Saving money on energy bills has always been a priority – but all the more so since the energy crisis. At present, bills are set to rise for most people from 1 January 2024, when the Ofgem energy price cap will rise 5%.
Some fixed deals come in below the new rate of the cap – see our energy comparison guide for more info. However, the current best way to cut your costs is by slashing your energy usage, which we explore in our energy saving top tips piece.
While you can’t really save much through energy deals right now, there are a wide variety of tariffs available on the market. Time-of-use (TOU) tariffs can help you to lower your energy costs if you shift the bulk of your energy use to unpopular times of the day. Smart meters allow you to access these kinds of tariff. But in the past, these deals were the preserve of those who had an economy 7 meter fitted in their property.
So, if you have one, how does it work – and how can you use it to cut your energy bills? Here’s a quick guide to this type of meter.
What is an economy 7 meter?
With standard electric meters, you pay the same price for each unit of energy (kWh) you use regardless of what time it is. But those with an economy 7 pay two different rates for electricity – one during the day and a cheaper one for 7 hours overnight (hence the number 7). The hours for cheaper power tend to fall between 11pm and 7am. Your specific times are likely to depend on whether we’re on British Summer Time or Daylight Saving.
This kind of meter is typically installed in homes that are reliant on electricity rather than gas for both their heating and hot water. These households usually need to heat up a hot water cylinder or a storage heater overnight for use in the daytime. Economy 7s make this process cheaper and allow you to use household appliances for less.
One thing to be wary of is that it’s not safe to run appliances while you’re asleep. Apart from your fridge, freezer and heating/hot water system, household appliances present a significant fire risk. So, if you’re switching them on at a cheaper time, make sure it’s when you’re going to be waking up.
What is Economy 10 meter?
Similar to an Economy 7, an Economy 10 gives you 10 hours of off-peak electricity a day. However, these meters are much less common than Eco 7s.
The off-peak times Eco 10s offer tend to be split up into two or three blocks of cheaper energy, with the bulk kicking in overnight. For example, you may get a seven-hour block of cheaper energy overnight, with another three hours during the afternoon.
Unless you’ve already got this type of meter installed in your home, you’re unlikely to be able to switch to an Economy 10. This is because a decreasing number of suppliers now offer them in light of the push for smart meter sign-ups. If you do want one, you may have to pay a hefty installation fee.
Is economy 7 going to be phased out?
Only one form of economy 7 meter is currently being phased out. Radio teleswitch (RTS) versions of this meter will stop working on 31 March 2024 as the BBC radio service that supports them is being switched off.
You’ll have one if your meter automatically turns on your heating and hot water during your cheaper hours. If they haven’t been in contact with you already, your supplier should soon be getting in touch to discuss a replacement. Ofgem has more information about the RTS switch off.
While there is no official ruling that economy 7s should be phased out, they are generally in decline. Most suppliers don’t offer them anymore.
Homes built in the last two decades are likely to have been fitted with combi boilers that heat water on demand. Coupled with the government encouraging people to move over to other forms of heating system – such as heat pumps (see our guide to the Boiler Upgrade Scheme) – it has meant the number of economy 7 meters is gradually falling. Also, if you want a traditional one installed, you will have to pay for it.
If you don’t already have one fitted, it could be worth getting a smart meter as their installation is free, and you can still take advantage of similar tariffs to those available to people with an economy 7.
How do I take a meter reading for an economy 7 meter?
Economy 7 meters are quite different to other forms of meter. Unlike a smart meter, which will send readings straight to your supplier, you will have to record two different readings. They also differ from traditional meters, which typically only have one measure. See our guide on how to take meter readings.
To read your economy 7, you will need to record the two separate readings. One will be for your usage during peak time and the other will be for off-peak hours. Usually, there will be 5 numbers (see below) that you’ll need to record in each section. Any numbers in the red zone of the meter’s interface will not need to be recorded.
You can get a smart meter that will do all of this for you. But not all suppliers offer this option, and will instead seek to move you across to a standard credit smart meter.
Can I save money with an economy 7 meter?
Whether or not you will be able to save money with an Economy 7 very much depends on how much of your energy use you’re able to shift to off-peak times. If you aren’t able to do all that much, this kind of meter could be more expensive than a standard one or a smart meter.
An Economy 7’s daytime, or peak, rate will be up to 33% more expensive than what someone with flat unit rates will pay under the Ofgem energy price cap. But off-peak rates can be as much as 50% cheaper.
The Ofgem cap assumes the average household with an Economy 7 that pays via direct debit uses 3,900 kWh of electricity per year, 42% of which is in off-peak hours (anything over 40% is generally considered to be money saving compared to a conventional meter).
The current price cap for October says this typical home will pay £1,219 for a year’s worth of energy. Under Ofgem’s old usage calculations, which had typical energy consumption at 4,200 kWh for economy 7 users, the price cap is £1,298.
Whichever figure you take, they are well below the price cap rate for a typical home on a standard meter that pays by direct debit – £1,834 under the new usage calculation, £1,923 under the old one. Of course, these homes are paying for two fuels (gas and electricity) while Economy 7 households are likely to be on a single fuel.
Under the next price cap, which kicks in on 1 January 2024, Economy 7 users are set to see their bills rise 4% to an average of £1,272 a year. Most other households will be subjected to a 5% rise, with their average bill coming in at £1,928 a year.
So, at present, Economy 7 tariffs are likely to be cheaper than most others on the market. Should more competition return to the market in the coming months, this situation may change given people on smart meters and standard credit meters will have more tariff options.
Is an economy 7 meter the right option for you?
Economy 7 meters tend to be at their most cost effective for people with specific set-ups in their household and particular lifestyles. If you currently have one installed in your home, it may be worth keeping hold of it until the energy market offers more deals (unless you’re spending too much money on your energy).
They will be at their money-saving best if you:
- Live in an all-electric home.
- Have an electric hot water cylinder or a storage heater system
- Tend to use a lot of electricity.
It will also be particularly useful if your lifestyle fits in with antisocial hours or, at least, is flexible enough to accommodate them. So, if you have a young or large family in your home, they are unlikely to be the best option for you. But they could be a good option for those who work night shifts, as you’re more likely to do your energy intensive chores, like laundry, late at night.
Tips for how to save money with an economy 7
If you have an economy 7 meter, Look After My Bills has put together some tips for how to make it as cost effective as possible:
- Don’t be caught out by the clocks changing
Most economy 7 meters will not adjust automatically when the clocks go forwards or backwards. If you do nothing, you could end up paying more than you need to for your energy use as it may stray out of your cheap hours.
The best thing to do is to contact your supplier to see what you will need to do. The next clock change is coming on the morning of Sunday 29 October 2023, so make sure you find out before or soon after we move to Daylight Saving time.
- Check your economy 7 hours with your supplier
Contact your energy supplier to find out what times your cheap rates are available from and to. Using electricity within the 7-hour off-peak window could save you a lot of money. But if you stray into day-rate times, you may end up paying significantly more. You will be able to see how much energy you managed to use off-peak in your energy bill.
- Be strict with the timings of your energy intensive chores
If you need to use your washing machine or tumble dryer, you should really try to use them in the cheaper hours set out by your supplier. It would also be a good idea to charge up any battery packs or devices to ensure you’re using as little energy as possible during the day.
But, be careful. Apart from your fridge and freezer, appliances should not be active when you’re likely to be fast asleep. The safest thing to do is to set them so that they switch on when you’re likely to be waking up. If that’s not possible, you may have to set your alarm for the middle of the night.
- Make sure your meter’s working properly
As well as the clock’s changing, you may also need to make sure your meter is working as it should do. If it’s faulty, you may not be benefiting from off-peak rates.
There are two ways you can go about checking your meter. One is to watch it at the start or end of your off-peak hours so you can double-check that the off-peak dial is the one that’s recording energy usage (you’ll see the numbers ticking up on the off-peak dial if it’s working properly).
The other is to keep an eye on your bills. If your day rate usage suddenly spikes, it may be because your meter’s broken.
If you’re concerned that your meter’s not doing its job, call your supplier immediately. That way, the problem shouldn’t cost you too much money.
- Invest in energy-efficient appliances
This tip will require a lot of upfront cash, so it may not be possible for everyone. But getting in energy efficient appliances may help you to avoid being penalised by steep economy 7 day rates. This is particularly the case with appliances that need to be left on all day, like fridges and freezers.