Economy 7 is the long-standing arrangement that gives you cheaper electricity for seven hours overnight in exchange for a higher price during the day. It can be a real money-saver or a quiet penalty, and which one it is depends almost entirely on when you use your electricity. Getting this wrong costs people money for years without their realising.
How the split rate works
On a standard single-rate tariff every unit costs the same whatever the hour. Economy 7 splits the day in two: a cheap rate for a seven-hour block at night, often somewhere between midnight and seven in the morning though the exact window varies by region and meter, and a more expensive rate the rest of the time. Your meter records day and night usage separately, either as two registers on one meter or as readings you submit as two figures. The night rate can be markedly cheaper than the single rate, but the crucial catch is that the day rate is markedly dearer than it.
Who genuinely saves
The tariff rewards a home that does a lot of its electrical work at night. Classic winners are houses heated by electric storage heaters, which deliberately soak up cheap night electricity into their bricks and release the warmth through the day, and homes that heat water with an immersion heater on a timer overnight. Add in running the dishwasher and washing machine on a delay timer so they finish in the small hours, and charging an electric car overnight, and a household can push the majority of its usage into the cheap window. For these homes Economy 7 can cut the electricity bill considerably.
Who quietly loses
The flip side catches a lot of people. If you have gas central heating and gas hot water, most of your electricity goes on lighting, cooking, the kettle, the telly and appliances used in the evening, all of it at the expensive day rate. For that household the dear daytime price more than wipes out the cheap nights, and they would be better off on a flat single rate. Plenty of homes sit on Economy 7 by inheritance, because a previous occupant had storage heaters long since removed, and lose money on it year after year without knowing.
Doing the rough sum
You do not need to be precise to see which camp you are in. Find your day and night usage split from a recent bill or your meter's two registers. As a rough guide, Economy 7 tends to pay off only if you can get something approaching forty per cent or more of your electricity onto the night rate; below that the expensive daytime units usually cost you more than the cheap nights save. Feed your appliance wattages and likely night-time hours into the running cost calculator to see how much you could realistically shift, then weigh that cheap-rate saving against paying the higher day rate on everything else.
Making the most of it if you stay
If Economy 7 does suit you, the saving comes from discipline about timing. Use delay-start timers on the washing machine and dishwasher so they run in the cheap window, set the immersion and any storage heaters to charge overnight, and charge an EV then too. Be careful with high-power daytime use, since an electric shower or a load of tumble drying at the day rate is now noticeably dearer than it would be on a single tariff. The whole game is to move the heavy, schedulable loads into the night and keep expensive habits out of the day.
The modern picture
Economy 7 is the old, blunt version of charging by time of day. A smart meter opens up more flexible modern time-of-use tariffs with cheaper or even occasionally free off-peak periods, which can suit EV owners and flexible households better than the fixed seven-hour block. If you are weighing up Economy 7, it is worth checking whether a smart time-of-use tariff would serve you better, since the principle is the same but the windows and rates are often more generous. As with any tariff change, compare the total annual cost for your own pattern of use rather than the headline rates alone, as the switching guide sets out.