Households on Economy 7 energy tariffs hit by 1 January price rises – what you need to know
Households on Economy 7 tariffs have just been hit with substantial price hikes due to the changes to the energy price cap and the subsequent rate changes under the Government's energy price guarantee that took effect from 1 January. Below we explain why and what you can do about it.
How much are rates rising by and why?
For most, the changes are trivial, ranging between 0.8% and 1.4% on average, depending on how you pay. But for those on an Economy 7 tariff, where you pay two different rates for your electricity depending on when you use it (you pay more during the day, less overnight), it's much more substantial.
It's much harder to get full average and regional pricing for Economy 7, but from the rates we've seen Economy 7 users have been hit with an average 7% price rise from 1 January, based on typical usage. What's more, rates vary by regions, with the largest increase at about 8% on typical use in North Wales and Merseyside, while the lowest was around 6% (North East England).
It also depends on how much you use when the rates are cheap, and how your provider changes its day or night rates – we've heard from some MoneySavers on Economy 7 that have been told prices are increasing by as much as 11% on average.
These increases are due to the fact that Economy 7 customers get exactly the same level of discount as all other energy customers, despite Ofgem increasing the underlying rates for Economy 7 much more than standard meters. According to the regulator, this is because its "assessment of the costs of supplying those customers has increased more than direct debit dual-fuel customers".
Octopus Energy told customers the increase was "bonkers" and explained Ofgem's calculation for the price cap is different as it "takes into account that Economy 7 homes are more likely to heat their homes and hot water with electricity" – and it's electricity prices that are massively high right now.
On Economy 10? It's likely you will have been hit by similar price rises on 1 January, but it's even harder to get info on average and regional pricing here, so we can't say by how much it rose.
While you can't switch and save right now, you can cut back to try and save on your bills – see our 70+ energy saving tips for more info. Or, if you're really struggling this winter, see our full help with energy bills guide.
Martin: 'It's a poor set up and doesn't look just'
Commenting on the Economy 7 hikes, MSE founder Martin Lewis said...
'Seems like E7 customers are being ripped off!'
We've also seen plenty of MoneySavers taking to social media to vent their anger at the upcoming price increases.
If you're not happy with the price rise, see if you can switch to a single-rate tariff
What you should be doing now to help yourself
There are no meaningfully cheaper tariffs available, so you can't switch and save right now. Yet there are three areas to focus on...
- Try to cut your energy usage. There are lots of ways to easily reduce what you use. Check our 60+ energy savers checklist for pain-free changes, such as turning down your thermostat or tweaking your boiler's flow temperature. Also, see our Heat the human and Energy mythbusters guides for more tips.
- Have you got all the help you qualify for? First check you've got the £400 help all households are eligible for – important as some on prepay meters haven't claimed theirs. Plus if you can't pay, check out Struggling to pay – energy help to see if there are any grants.