Some households have meters, and associated energy deals that allow them to purchase electricity at two different rates – a higher rate during peak hours, typically during the day, and a discounted rate during off-peak hours, typically overnight, when energy demand is low.
These time of use (ToU) tariffs, including Economy 7 and Economy 10, can save you money on your energy bills, especially if you have electric storage heaters. But if you’re not vigilant about watching the clock, they can end up being more expensive than standard tariffs.
Compare energy suppliers and save money in five minutes!
Time of use meters, also called variable rate meters, have two separate numerical displays – one for electricity consumed on-peak and one for electricity used off-peak. When you take a meter reading, you’ll need to submit both numbers to your supplier to receive an accurate bill.
If you have a time of use meter, you’ll need a time of use tariff, one which charges you different rates for on- and off-peak electricity use.
Time of use meters are only for electricity. You won’t find time of use meters, or tariffs, for gas.
Currently, there are two types of time of use tariffs available: Economy 7 and Economy 10.
Economy 7 tariffs offer you cheaper electricity during seven off-peak hours overnight. These are typically between 11pm and 6am, midnight and 7am, or 1am and 8am. You’ll need to check with your supplier to find out the exact schedule and be aware that it may shift during British Summer Time.
Economy 10 tariffs give you cheaper energy during ten off-peak hours, often seven overnight and then an additional three but sometimes ten consecutive nighttime hours.
Not all energy suppliers will offer time-of-use tariffs. Economy 10 tariffs are particularly hard to find today. Some suppliers will only offer them customers who already have them and have been ‘grandfathered in.’
When you compare energy, in search of savings on your utility bills, you might be wondering if you could pinch pennies with a time of use tariff.
Time of use tariffs can save you money, but you have to watch the clock, and schedule your appliance and gadget use so you use a substantial portion of your electricity during off-peak. Typically, you need to use at least 40% of your electricity at night, either via electric storage heaters or by scheduling your appliances to run at night, to make these tariffs cost-effective.
But many households on time of use tariffs don’t schedule their energy use this way or can’t do so without inconvenience. And because the on-peak rate on these tariffs is generally higher than the rate given on standard tariffs, they end up paying more for their energy than they would on a standard tariff.
Consumer group Citizens Advice has cautioned that time of use tariffs provide a “false economy.” They released research in the autumn of 2018 showing that just under half (49%) of consumers on time of use tariffs actively try to schedule their electricity use to match their tariff. 65% admitted they used appliances “some of the time” or “most of the time” during the more expensive peak hours. Only a quarter (26%) managed to “hardly ever” or “never” use electricity during peak hours.
The busier a household is, with children and full-time jobs, the less likely it is it be able to stick to the rigid schedules offered by time of use tariffs.
Time of use tariffs can be a cost-saving measure if, rather than a boiler, you have electric storage heaters, which draw on electricity overnight and release it as thermal energy during the day. But Citizens Advice found only one in five households with time of use tariffs have these heating systems.
Time of use meters were once being phased out, as more homes moved away from electric heating to boilers and consumers found better deals on standard tariffs through energy comparison sites.
But they may see a revival – and with greater flexibility – following the proliferation of smart meters.
Next generation, digitally equipped smart meters, which are currently being rolled out to every home and small business in the UK, can enable consumers to better track their energy consumption. They can allow those on time of use tariffs to see exactly when they’re burning electricity and make modifications in their schedules to lower their bills.
In fact, energy market watchers have predicted that smart meters will facilitate the development of more flexible, and real-time, time of use tariffs. With these, customers may be able to watch energy prices rise and fall during the day and schedule their use accordingly. Of course, this may lead to a dystopia in which we’re waiting for the per-unit price of electricity to fall to run our washing machine or boil a kettle. But overall it could give vigilant consumers access to the cheapest gas and electricity and save them money on their energy bills.
And the benefits won’t just be felt in our wallets. Smart time of use meters and tariffs will enable network operators to better balance the grid, to reflect real-time demand. This means they won’t need to generate as much electricity and can better incorporate the power generated by intermittent renewable sources, like solar and wind. These tariffs and meters could be part of making our energy network smarter and more sustainable.
If you’re looking to switch energy to a time of use tariff, you’ll need to have a time of use meter installed. You should contact your supplier, either current or prospective, about the change. You may have to pay to have a new meter installed.
If you want to switch from a time of use tariff to a standard tariff, you should also contact your supplier. You may have to meet certain acceptance criteria in order to switch, including not being in debt to your supplier. In some cases, you’ll be able to continue using your old time of use meter and just take one reading off it. But in other cases, you’ll need to have a standard meter installed. You’ll likely end up paying for the installation yourself.