Differential tariff is an example of demand side management where the price per unit of energy varies with the consumption.
A differential tariff creates a balance in production and consumption of power by utilizing customer demand.
Typically such tariffs are used in conjunction with storage heaters, which charge up cheaply overnight and release heat slowly during the following day.
For example, the supplier EDF advertises its Economy 7 service in the London area as offering 7 hours of off-peak electricity between midnight and 8.00am;[1] the precise start and finish times can be varied to smooth out peak demand.
In response, it created a bespoke tariff and used radio teleswitches to stagger off-peak heating times and better distribute loads across the day.