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Your Guide to Deemed Energy Contracts

Shaun Starr |

May 2021

Reading Energy Bill

If your business energy contract is coming to an end, it’s vital to agree on a new deal with your current business energy 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 business gas and business 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 Energy Tariff?

Deemed tariffs are a standard energy deal that businesses are automatically placed on when a new business energy contract has not been agreed upon. Energy suppliers may also use a deemed tariff when you move into new business premises.

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 micro-businesses are on a deemed contract.

Why Your Business May Be Placed On A Deemed Tariff?

There are 3 common reasons your business gas or business electricity may be switched to a deemed contract. These are:

You Have Moved Into New Business Premises

As mentioned above, if you move into new premises you may be placed on a deemed contract. To avoid this situation, you should contact the energy supplier responsible for your new premises as soon as possible.

Business Energy Contract Cancellation

This is rare but you may be placed on a deemed rate energy tariff when your 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 Business Energy Contract Ends

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.

Am I On A Deemed Energy Tariff?

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 micro-businesses 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.

What Are My Rights If I’m Placed On A Deemed Energy Tariff?

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. Your energy supplier must have supplied you with a full copy of the contract with a full breakdown of charges and fees.

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.

What Happens When A Home Energy Contract Ends?

If your home energy fixed-term contract has ended, you will will revert to your energy supplier's standard variable contract - where the price you pay for your domestic gas and domestic electricity will fluctuate based on the price of wholesale energy.

Of course, in 2024, domestic energy prices are subject to the Energy Price Guarantee, so at time of writing prices are capped at a set price, while the business energy market is uncapped, but discounted.

Can I Switch From A Deemed Energy Contract?

You will not be legally tied into a deemed rates contract in the same way you would be for a formal one. You can terminate the agreement at any time provided you switch to a new energy supplier. You will not receive a penalty charge for switching suppliers.

With Love Energy Savings, you can compare the latest energy deals from a huge range of trusted suppliers in as little as 30 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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About the author

Shaun is an English Literature graduate with a passion for creating content to help save households and businesses money. He has a wealth of experience in professional services, so he knows the importance of business efficiency.

In his spare time, Shaun likes to get jamming with his band playing drums and guitar.