All You Need To Know Guide About Time-Of-Use Tariffs

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    Contents

    Guide Author

    James Longley

    Managing Director

    min read
    Last Updated August 18, 2023

    What is a time-of-use tariff?

    An Economy 7 and Economy 10 tariff or time-of-use tariff tariff means you’ll pay two different rates for energy known as, “peak” and “off-peak”. With a time-of-use tariff, your business will benefit from lower business energy rates during the evening and night when there is less demand for energy. Energy prices will increase on the wholesale energy market at peak hours which is simply put down to supply and demand. The unit costs on these tariffs can vary over 24 hours and each day of the week.

    To benefit from a time-of-use tariff, you’ll need either a half-hourly meter or a smart meter. Changing your routines and processes to take advantage of off-peak energy prices could help your business save money. Within the guide, we will explain what time-of-use tariffs are as well as the advantages and disadvantages and whether this tariff is suitable for your business.

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    What are peak and off-peak tariffs?

    To help save money on your business energy bills during turbulent market conditions, switch to an energy supplier that offers peak and off-peak tariffs. Find out more about peak of off-peak tariffs below:

    What is a peak tariff (Standard variable tariff)?

    On most energy contracts, your energy supplier will charge you the same amount for your energy consumption whether it is day or night. This is due to most energy suppliers charging a fixed unit rate for energy consumption on standard tariffs.

    What is an off-peak tariff (Time of use tariff)?

    If you secure a time-of-use tariff, your energy supplier will charge you a cheaper unit rate for using energy at night whilst demand is less. Energy suppliers currently offer two types of time-of-use tariffs, these include Economy 7 and Economy 10. If you secure a time-of-use tariff you will be provided with a smart meter to help monitor your energy usage to avoid peak energy rates.

    Firstly, it is important to check what type of tariff you are on. If you have secured a flat rate tariff, your unit rate will remain consistent throughout the day and night. If you have secured a time-of-use tariff, your unit price will be considerably lower at off-peak times. Off-peak times are usually between 10 pm and 9 am and can sometimes be 50% lower than peak hours but this can vary depending on your energy supplier.

    What is an Economy 10 tariff?

    Similarly to Economy 7, Economy 10 also allows ten hours for off-peak electricity usage, with an extra three hours allocated during less energy-intensive points during the day. This extended time frame can result in cheaper electricity prices through the division of your off-peak electricity periods across both day and night.

    Usually, Economy 10 operates in three distinct intervals: a low-rate off-peak period in the afternoon, a four-hour span in the evening, and an additional three hours during the early morning depending on your energy supplier.

    Economy 7 tariff vs Economy 10 tariff

    Economy 7 and Economy 10 can help customers save on their energy bills. Although they feature lower rates during the night and higher rates during the day, the primary difference lies in the duration of off-peak electricity pricing provided each day.

    While Economy 10 provides longer off-peak hours for potential savings, there is a drawback as a significant portion of energy suppliers are hesitant to provide Economy 10 tariffs due to the elongated duration of its off-peak period.

    Can your business benefit from a time-of-use tariff?

    Time-of-use tariffs are ideal for businesses that have higher energy consumption during the night such as:

    Economy 7 sectors

    • Warehousing — Businesses that run their processes from warehouses and use machinery during the night.
    • Manufacturing — Manufacturers that work 24 hours a day, 7 days a week could benefit from this type of tariff.
    • Hospitality — Using appliances like dishwashers and ovens at night can help keep energy costs down.

    Economy 10 sectors

    • Pubs — If you run a business that’s mainly open at night, like nightclubs and bars, then you’ll benefit the most from an Economy 10 tariff. Running late at night and into the early hours of the morning means your energy rates should be lower as this is off-peak.
    • Restaurants — Some restaurants will have similar opening times to pubs. The off-peak rates in the afternoons, evenings and early mornings will benefit restaurants.

    How to find out if you're already on a time-of-use tariff?

    Are you unsure if you are on an Economy 7 or Economy 10 tariff? Firstly, finding your business electricity bill is one of the quickest ways to check what tariff you are on. If your electricity is charged at two different rates, you are on a time-of-use tariff.

    Can the time of year impact your rates?

    We recommend that you contact your energy supplier directly to find out more about the details of your Economy tariff.

    Energy Bills Relief Scheme

    Is there an Economy tariff for business gas?

    Unfortunately, business gas suppliers do not offer an Economy tariff for business gas. Business gas usage is much higher during the day due to activities such as heating and cooking which would result in higher costs for suppliers and customers.

    Energy Bills Discount Scheme

    Can a time-of-use tariff reduce your business energy bills?

    Business energy rates are known to be cheaper than domestic rates, reducing your business energy bills is based on your business usage and energy consumption. The cost of daytime electricity under an Economy tariff can nearly double when compared to the nighttime rate. Energy suppliers suggest that for an Economy tariff to be worthwhile, around 40% of your business’s energy consumption should occur during nighttime hours. Sectors like restaurants and pubs are more likely to reap advantages from an Economy tariff. Economy 7 and Economy 10 tariffs are for electricity only. For a business to benefit from this tariff, its main source of energy must be electricity and not gas.

    How to switch to a time-of-use tariff with Utility Bidder

    When employed effectively, an Economy tariff has the potential to contribute to your business’s cost savings. If your business’s energy consumption is higher during nighttime hours, considering an Economy 7 or Economy 10 tariff might be worthwhile.

    Our energy experts simplify the process of renewing your business energy contracts. Our consultants can assess our variety of suppliers to compare energy deals and determine whether a time-of-use tariff aligns with your business needs. Get in touch with our experts today to explore the potential savings you could benefit from with off-peak business energy.

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    Let’s save time, can we automatically gather meter information?

    ? What does this mean?
    To get your quotes at lightening speed we need several key pieces of information which can all be found on your electricity bill. But by simply ticking this box, we can search ‘industry held data’ to get your meter number, electricity consumption and current energy supplier. This means that we can get you quick quotes without asking you to dig out all of your paperwork. This is personal data therefore we need you to allow us to access this information.
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