What is a time-of-use tariff?

A time-of-use tariff is an electricity tariff that charges different prices depending on when you use electricity. Electricity is usually cheaper during off-peak periods when demand is lower, and more expensive during peak periods, when more people are using energy.

Unlike a standard electricity tariff where you pay the same unit rate all day, a time-of-use tariff can have multiple rates throughout the day.

At a glance

Time-of-use tariffs can make electricity cheaper at certain times, but they work best if your household can use more electricity during those lower-cost periods. This guide explains how they work, the main types available and what to check before switching.

How do time-of-use tariffs work?

Time-of-use tariffs are designed to reflect changes in electricity demand throughout the day.

Your electricity meter records not only how much electricity you use, but when you use it. This helps your supplier apply the correct rate for each period.

Why are electricity prices different throughout the day?

Electricity demand changes throughout the day.

Demand is often highest:

• On weekday mornings when people are getting ready for work or school.
• During the early evening when households are cooking, heating their homes and using appliances.

Demand is typically lower overnight. Encouraging customers to use electricity more evenly throughout the day can help reduce pressure on the electricity network.

What types of time-of-use tariffs are available?

Economy 7

Economy 7 tariffs offer seven hours of cheaper electricity, usually overnight, and a higher rate during the rest of the day. They can work well for households that use significant amounts of electricity at night, such as charging an electric vehicle.

Economy 10

Economy 10 tariffs provide ten hours of lower-cost electricity, typically spread across a number of periods during the day and night. They are often used in homes with electric heating or hot water systems.

Smart time-of-use tariffs

Smart time-of-use tariffs can offer several different electricity rates throughout the day. Some tariffs may even change every half hour. These tariffs are designed for households that can be flexible about when they use electricity.

When is electricity cheapest?

Off-peak periods often fall overnight or in the early hours of the morning, but the exact times vary between suppliers and tariffs.

Before choosing a tariff, check:

• When off-peak periods apply.
• How long the cheaper rates last.
• Whether there are any additional pricing periods throughout the day.

What do I need before getting a time-of-use tariff?

Before switching, consider:

• Whether you have a working smart meter.
• Whether you understand when peak and off-peak rates apply.
• Whether your household can move some electricity use away from peak periods.
• How the tariff compares with your current deal.

Looking to save money?

If you’re wondering whether a time-of-use tariff could reduce your electricity bills, read our guide: How can time-of-use tariffs help me save money on electricity?

Need advice?

Energywise’s friendly advisors can provide impartial information about time-of-use tariffs and help you understand your options. Call free on 0808 196 8268 or complete our contact form.