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Guide to deemed contracts for businesses

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Nobody wants to overpay for their energy bills. Yet many businesses are missing out on potential savings due to deemed energy contracts.

In this guide, we explain what a deemed contract is and how you can avoid being switched to deemed rates.

What is a deemed contract?

A deemed contract will be in place when a customer moves into new premises and begins consuming gas or electricity before agreeing a contract with a supplier.

Businesses will also move to a deemed energy contract if their contract ends, and they continue to consume energy. This can happen when a contract is terminated (by either the customer or the supplier) or when a contract expires.

How much does a deemed energy contract cost?

Deemed energy contracts are much more costly than negotiated tariffs. For micro businesses, rates on deemed contracts are 80% higher than a negotiated deal.

Around 10% of micro businesses are currently on a deemed contract. This means that they will be paying far too much for the gas and electricity they use.

What are your rights on a deemed contract?

The good news is that businesses on a deemed contract have the right to switch supplier without a fee. If your business is on a deemed contract, your supplier cannot:

  • Prevent you from switching for any reason or at any time
  • Ask you to give notice before terminating the contract
  • Charge you a termination fee

Your supplier must also take all reasonable steps to provide you with the Principal Terms of your deemed contract. This includes all your charges and fees. They should also inform you of other available contracts and how you can get information on them.

If you’re on a deemed business energy contract, you should compare energy prices and switch as soon as possible.

As there is no exit fee involved, you can switch at any time free of charge. This can help your business make significant savings.

By switching with Business Energy, you can compare prices from a wide range of trusted business electricity and business gas suppliers. Our goal is to find the best possible tariff prices of your business quickly and easily.

You can start your switch today by entering the name of your current supplier, your postcode, and a few contact details.

How to avoid being switched to a deemed contract

Under rules introduced by the energy regulator Ofgem, energy suppliers must provide micro businesses with renewal letters. These should include your current prices, renewal prices, and current energy consumption.

There is no requirement for suppliers to provide this information to larger businesses. This makes it vital to know when your energy contract is approaching its renewal window. You should be able to find this information in your energy contract or on your latest energy bill.

Prices provided on your renewal letter will be much higher than the best rates available. By comparing the latest energy prices, you can ensure you switch to the best deal for your business.

If you choose to switch with Business Energy, you can benefit from our renewal reminders. We'll provide you with a range of tariff options to help you avoid costly deemed contracts.

What happens if you allow your contract to rollover?

If you allow your contract to rollover, you will likely be placed onto an expensive standard tariff. These terms can be 50% higher than negotiated contracts. Unlike a deemed contract, you may face an exit fee for switching early.

If your business is approaching the end of its energy contract, it's vital to compare the latest prices. Delaying taking action could leave you stuck on expensive rollover rates.

To find out how much you could save by switching, simply complete our quick online comparison calculator.

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Percentage energy savings quoted are against customers who let their last contract renew automatically.

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