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Your Guide to Deemed Energy Contracts

Reading Energy Bill

If your energy contract is coming to an end, it’s vital to agree a new deal with your current supplier or switch to a new tariff elsewhere.

If you fail to renegotiate your energy tariff, your supplier may place you on a deemed contract. Deemed energy rates are some of the most expensive tariffs on the market and will leave you overpaying for the gas and electricity you use.

In this guide, we look at what you should do if you’re currently on a deemed contract and how you can avoid deemed rates.

What is a deemed contract?

Simply put, a deemed contract is a default energy deal that is put in place for customers who haven’t agreed a contract with an energy supplier.

Deemed contracts are mostly found when you move into new premises and start using gas and electricity without agreeing a deal with the incumbent supplier.

These contracts are notorious for including expensive rates. Prices can be up to 80% more expensive than the cheapest available tariffs. The Evening Standard recently reported that 10% of microbusinesses are on a deemed contract.

When might I be placed on a deemed contract?

There are 3 common reasons you may be switched to a deemed contract. These are:

You have moved into new premises

As mentioned above, if you move into new premises you may be placed on a deemed contract. Therefore, it’s vital to contact the current supplier for your premises as soon as possible. If you begin to use gas and electricity without agreeing a deal with a supplier, you will likely be charged at expensive deemed rates.

Your energy contract has been cancelled

Another common cause of deemed energy rates is when an energy contract is cancelled by yourself or your supplier. If your contract doesn’t state what will happen after termination and you continue to use gas and electricity, you will be moved to a deemed energy contract.

Your energy contract expires

This is less common as you’re more likely to move to a rollover energy contract once your deal expires. However, in some cases, your original contract will not set out what happens after expiry. Under these circumstances, any gas or electricity you use will be charged at deemed energy rates.

How can I tell if my business is on a deemed contract?

If you have noticed a sharp increase in the prices you pay for energy you may be on a deemed contract. If you have recently moved to a new location, it is even more likely.

With one in ten microbusinesses currently on a deemed contract, it is likely many businesses are unaware that they are being charged expensive deemed rates. Deemed energy contracts pose a large problem for many businesses as it is easy to overlook dealing with gas and electricity when you move into new premises.

If you are placed on a deemed contract, your supplier is required to contact you and provide information on the type of contract you are on. They should also inform you of other available contracts and how you can find more information on these.

If you haven’t received this information, you should contact your supplier as soon as possible.

Are deemed energy contracts enforceable?

Just like any other type of energy contract, deemed contracts are legal and enforceable. As long as your energy supplier has taken reasonable steps to inform you about the contract, you will be required to pay deemed rates.

You may be able to seek to have the contract terminated if your energy supplier has failed to do one of the following:

  • Provide you with a copy of your full contract (if you ask for it)
  • Contact you before the end of your contract with other contract options and how you can find more information on those options.

Can I switch from a deemed energy contract?

Fortunately, there is some good news if you find yourself on a deemed contract. As your deemed contract has no set period, you can switch to a new deal at any time, with no termination fees.

You will have the option agreeing a deal with your current supplier or switching to a better deal elsewhere.

With Love Energy Savings, you can compare the latest energy deals from a huge range of trusted suppliers in as little as 60 seconds. By switching from a deemed contract to the latest negotiated deals, you can make significant savings on your gas and electricity bills.

When you switch with us, we’ll be in touch with you when your current deal is coming to an end with information on the best new energy deals. This means you can avoid deemed and rollover contracts and say on the right energy deal for you.

To find out how much you could save today, simply enter your postcode and compare energy tariffs.

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