Economy 7 electricity price hikes: what you need to know

Households with Economy 7 could see electricity bills go up this month as suppliers raise prices – how can this happen under the Energy Price Guarantee?

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More than two million Economy 7 electricity meter customers are expected to see bills go up by over £100 a year - even if they don’t change their energy habits. 

While Economy 7 households are still protected by the Energy Price Guarantee, prices can be slightly more complicated as suppliers don’t charge one single price per unit of energy.    

Due to the way Economy 7 works, suppliers can charge different rates – one higher ‘peak’ rate and a cheaper ‘off peak’ rate when appliances are used overnight.

While the current Energy Price Guarantee is in place until April, after which it will rise, when it comes to Economy 7 tariffs, suppliers can raise prices in January.

Ofgem, the energy regulator, has put up the price that suppliers can charge Economy 7 customers this month and if suppliers impose the price rises households using Economy 7 will face higher bills.

According to a BBC report (opens in new tab), number crunching by Future Energy Associates, shows these households face an average 7.6% rise in prices with a typical annual Economy 7 bill coming in at £2,964.   

This is higher than the £2,500 figure banded around under the Energy Price Guarantee for an average household energy bill, based on typical usage.  However important to remember the Energy Price Guarantee is an illustration of what the average household could pay, and not a cap on bills.

An Ofgem spokesperson said: “Our priority is to keep costs down for all customers. 

“Economy 7 users pay lower average unit rates than single rate customers and are protected by the government’s Energy Price Guarantee – saving the equivalent of £655 a year on average than if the full cost of electricity was passed on”.

Economy 7 electricity hikes

Can I switch from Economy 7 to a single-rate tariff?

If you think you are going to pay more each year with an Economy 7 deal than under a single rate tariff then you can switch.  

This could be if you regularly forget to run appliances during off-peak times or are unable to take advantage of the cheaper off-peak rates. But, it’s best to speak to your supplier first so they can help you work out whether that really will be the cheapest deal.

Sue Hayward
contributor

Sue Hayward is a personal finance and consumer journalist, broadcaster and author who regularly chats on TV and Radio on ways to get more power for your pound.  Sue’s written for a wide range of publications including the Guardian, i Paper, Good Housekeeping, Lovemoney and My Weekly. Cats, cheese and travel are Sue’s passions away from her desk!