What is a deemed energy contract?

Two hands pointing at an energy contract

If you’ve just moved premises and noticed your energy bills are drastically higher than they used to be, you might be on a deemed contract. The rates you’ll pay on these contracts are some of the highest in the market. But what are deemed contracts and how can you get back to paying the right rates for your usage?

What are deemed contracts?

Deemed contracts are energy contracts that businesses will be automatically placed on if they have not agreed on a new contract or have moved to a new business premises. Ofgem found that around one in ten microbusinesses are on these types of contracts. Deemed contracts are rolling contracts that last for 28 days. Therefore, each month without switching, your payments could be increasing.

Why would my business be placed on a deemed contract?

There are three main reasons for why your business may have switched to a deemed contract. The first being that you have moved into new business premises and have started using energy and gas from your supplier. If your contract is cancelled either by you or your supplier, you may also be placed on deemed energy rates. If there are no terms in the contract regarding what will happen after the contracts is terminated and you continue to use your supply, you’ll also see deemed rates on your bills.

Are deemed contracts more expensive?

Deemed contracts are usually around 80% more expensive than the cheapest tariff available from your supplier. This is usually down to the fact that your supplier isn’t aware of how much energy and gas you’ll need to power your business premises.

An electricity pylon
A person holding up and looking at an energy contract

Should I stay on a deemed contract?

If you’re on deemed rates, you should try to switch as soon as possible. The longer you stay on these rates, the longer your business will be overpaying for the gas and energy you’re using. You can switch at any point in a deemed contract so it’s best to search the market and find the best contract for your business’ usage and budget.

What are my rights if I’m on a deemed contract?

The energy regulator, Ofgem, has put different measures in place to ensure that customers aren’t unfairly charged by their supplier. Your supplier must make sure that the terms of your contract are not “unduly onerous”.

If you’re on a deemed energy contract, your supplier can’t stop you from switching to another supplier. This is in place for any possible reason why you may be wanting to switch, even debt. They also cannot say that you must give notice before ending the contract or charge you a termination fee.

If you’re on a deemed contracts and using the supply, there are things your supplier must be doing. They need to take all reasonable steps to provide the principal terms of the contract. This includes any charges or fees you will need to pay. They will need to make you aware of any other available contracts and how you can find more information about them. If you request a copy of the full contract, your supplier must make this available to you as well.

How can I switch?

If you’re on a deemed contract, there are a variety of ways that you can break free from the contract. Deemed contracts don’t have an exit fee, making it easier for you to switch at any time without worrying about hefty fees. Your supplier should provide you with renewal letters which will cover your current prices, renewal prices and your current energy consumption. All you need is a recent energy bill and our team can use this to search the market to find the best rates for your business.

Contact us

Looking to switch your business’ energy contract? Our team of experts have extensive market knowledge, helping you to secure the best deal for your business’ energy, gas, and water bills. Our team will search the market to find you the best possible deal so that you can get back to running your business. Get in touch with one of our energy experts today to find out more.

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