Guides · Contracts

Deemed and out-of-contract rates: the most expensive energy in Britain

Utilities Made Simple · 6 minute read

There's a category of business energy pricing that nobody chooses and huge numbers of businesses pay: deemed and out-of-contract rates. They're legal, they're published, and they're routinely far above negotiated prices — sometimes half as much again, sometimes more.

How you end up on them

• Moving into premises. Use any gas or electricity before agreeing a contract and you're automatically on the incumbent supplier's deemed rates. Every business that's ever moved has paid them for at least a few weeks.
• Letting a contract lapse. Fixed term ends, nothing agreed: depending on the supplier's terms you move to out-of-contract or expensive variable renewal rates.
• A failed or missed switch. Objections, missed termination notices or registration errors can strand you between contracts.

Why they cost so much

Partly genuine risk — the supplier is serving you with no commitment, buying your energy at short notice — and partly, frankly, because they can. The rates are set unilaterally and the customers on them are by definition not shopping around.

The one mercy

Deemed contracts can be left at any time, without termination fees. There is no lock-in. The moment a proper contract is agreed and registered, the bleeding stops. That makes the fix simple: act fast. On a change of tenancy, ideally have the new contract agreed before you get the keys.

What to do today

1. Find your contract end dates for every meter (we'll diarise them permanently).
2. If you've recently moved premises and never signed — you're on deemed rates right now; get a contract agreed this week.
3. Check your latest bill for the words "deemed", "out of contract" or "variable" against the rates.