Time of Use Tariffs Explained: Could Off-Peak Rates Cut Your Energy Bill by £500?

Why Thousands Are Still Paying Too Much for Electricity

While many UK households continue paying standard rates for their gas and electricity, time-of-use (TOU) tariffs offer a different approach that could reduce energy bills by hundreds of pounds annually. These variable-rate tariffs charge different amounts depending on when you use electricity, rewarding those who can shift their consumption to cheaper off-peak periods.

Understanding whether a time-of-use tariff suits your lifestyle requires examining your daily routines and calculating potential savings based on your actual usage patterns. With the right approach, these tariffs can deliver substantial cost reductions, particularly for households with flexible energy needs.

How Time-of-Use Tariffs Actually Work

A time-of-use tariff divides the day into different pricing periods, typically including peak and off-peak rates. Peak periods usually occur during high-demand times, such as weekday afternoons and early evenings, when electricity costs more. Off-peak periods, often overnight or during weekends, offer significantly reduced rates.

Some suppliers also include super off-peak periods with even lower rates during times of minimal national demand. The specific time bands and rates vary between suppliers and regions. Currently, average electricity unit rates are set at 24.67p per kilowatt hour (kWh) during peak times, with standing charges of 57.21p per day between April and June 2026^[1].

Most time-of-use tariffs require a smart meter to accurately track your half-hourly consumption, enabling precise billing based on when you actually use electricity. If you already have a smart meter, changing supplier with smart meter technology is typically straightforward, as the new supplier can usually access your usage data remotely.

Which Daily Routines Benefit Most from Off-Peak Rates

Households that can shift significant energy usage to off-peak periods are ideal candidates for time-of-use tariffs. Electric vehicle owners represent one of the strongest use cases, as overnight EV charging can take advantage of substantially lower off-peak rates^[2].

Flexible appliance users also benefit considerably. Running dishwashers, washing machines, and tumble dryers during off-peak hours can generate meaningful savings when these energy-intensive appliances operate at cheaper rates. Home workers who can schedule their most power-hungry activities during off-peak periods may also see reduced bills.

Simple changes like installing timers on appliances, using smart plugs to delay device charging, or running your weekly laundry overnight can facilitate this shift. The key is identifying which energy-consuming activities you can realistically move to off-peak times without significantly disrupting your routine.

Calculating Your Potential Savings Step by Step

Determining whether a time-of-use tariff would save you money requires examining your current consumption patterns and comparing costs under different tariff structures. Start by reviewing recent energy bills to understand your typical usage levels and identify peak versus off-peak consumption periods.

Next, obtain quotes from various suppliers offering TOU tariffs, paying close attention to their specific peak and off-peak rates, time bands, and standing charges. Many suppliers now offer online calculators that can estimate your costs based on your usage patterns.

To calculate potential annual savings, multiply your estimated peak usage by the peak rate, then add your off-peak usage multiplied by the off-peak rate. Include daily standing charges multiplied by 365 days. Compare this total with your current standard tariff costs to identify potential savings^[2].

When comparing different options, remember that gas is generally less expensive than electricity in the UK. As of March 2026, electricity costs approximately 27.69p per kWh while gas costs around 5.93p per kWh^[3]. This price difference makes time-of-use electricity tariffs particularly valuable for households with high electrical consumption.

Major UK Suppliers' Time-of-Use Tariff Comparison

Several major energy suppliers now offer competitive time-of-use tariffs with varying rate structures and off-peak hours. Here's how the main options compare for potential savings:

These figures represent potential maximum savings for households that can shift substantial energy usage to off-peak periods. Your actual savings will depend on your specific consumption patterns and ability to adjust your energy usage timing.

Important Considerations Before Switching

While time-of-use tariffs offer significant savings potential, they're not suitable for every household. The main requirement is flexibility in when you use electricity. If your routine is inflexible or you cannot shift energy-intensive activities to off-peak hours, a standard tariff might prove more cost-effective.

Smart meters are essential for most TOU tariffs, as they enable accurate tracking of usage during different time bands. If you don't currently have a smart meter, you can request installation from your current supplier before switching, though this may involve a waiting period.

Some households benefit from considering gas only suppliers or dual-fuel packages that combine gas and electricity. However, most major suppliers offer comprehensive dual-fuel tariffs that can provide additional savings compared to separate gas and electricity contracts.

The switching process itself has become much simpler in recent years. Many suppliers handle the transition automatically once you sign up, managing the transfer of your account details and ensuring continuity of supply. Services like Lodo can also help streamline the switching process by comparing tariffs and handling the administrative aspects on your behalf.

Making the Switch Work for Your Household

Successfully benefiting from a time-of-use tariff requires some planning and potentially modest lifestyle adjustments. Start by identifying your most energy-intensive appliances and activities, then consider which ones you could realistically shift to off-peak periods.

Many households find that simple changes like charging phones and tablets overnight, running the dishwasher after the evening peak period ends, or doing laundry early in the morning can generate meaningful savings without major inconvenience.

For those considering an OVO energy switch or moving to any other supplier offering time-of-use tariffs, the process typically takes a few weeks to complete. Your new supplier will contact your previous provider and arrange the transfer, ensuring your supply continues uninterrupted throughout the switching process.

Frequently Asked Questions