Deemed Energy Contracts: How to Exit Out-of-Contract Rates and Save 30–80%

If your business has never agreed an energy contract for its current premises — or your fixed deal quietly expired — you are almost certainly on a deemed contract, paying rates typically 30–80% above the market. Deemed rates are the most expensive way any UK business buys energy, and yet escaping them is easier than leaving any other energy contract: you can switch at any time with no exit fee. This guide explains what deemed contracts are, how to check if you’re on one, and how to get off one fast.

Ofgem estimates that a meaningful slice of UK small businesses sit on deemed or out-of-contract rates at any one time — often without realising. It happens silently: a contract end date passes unnoticed, a business moves into new premises and inherits the previous occupant’s supplier, or a renewal letter gets lost in the inbox. The supplier keeps the energy flowing and simply bills at its highest tariff.

What is a deemed contract?

A deemed contract exists when a supplier provides energy to a premises without a signed agreement in place. It’s “deemed” because the law deems a contract to exist from your conduct — you’re using the energy, so you owe for it — even though you never negotiated terms. The two classic routes in:

• Moving into new premises. From day one, the incumbent supplier (whoever supplied the previous tenant) bills you on its deemed tariff until you agree a contract — with them or anyone else.
• Letting a fixed contract lapse. Depending on the supplier’s terms, you roll onto “out-of-contract” rates or an extended/rollover tariff. Out-of-contract rates are priced like deemed rates; rollover contracts can lock you in for another year at an inflated price, which is arguably worse.

Why deemed rates are so expensive

Suppliers price deemed tariffs high for two reasons. First, genuine risk: they’re supplying a customer they know nothing about — no credit check, no consumption history, no commitment. Second, commercial reality: deemed customers are, by definition, not paying attention. There is no competitive pressure on a price the customer never compared.

In practice, deemed unit rates in 2026 commonly run at 40p–55p/kWh for electricity against contracted rates of 21p–30p, and 9p–14p/kWh for gas against contracted rates of 6p–9p. Standing charges are inflated in the same way. For a small business using 20,000 kWh of electricity a year, the gap between deemed and contracted rates can easily exceed £3,000–£4,000 a year — pure waste, fixable in an afternoon.

How to check if you’re on a deemed contract

Three quick checks, in order of speed:

• Look at your latest bill. Phrases like “deemed rates”, “out of contract rates”, “standard variable” or “default tariff” are the giveaway. Compare your unit rate against the typical contracted ranges in our business energy price guide — if your electricity is north of 35p/kWh, alarm bells.
• Check for a contract end date. If neither you nor your bookkeeping can produce a contract with an end date for the current premises, you’re on deemed rates.
• Ask the supplier. They are obliged to tell you your contract status, your current rates and (under Ofgem rules) cannot stop you switching away from a deemed contract.

Recently moved premises? Assume you’re on deemed rates until proven otherwise — that’s how it works for virtually every business move in the UK.

Your rights on a deemed contract

This is the part suppliers don’t advertise. Under Ofgem’s rules, deemed contracts come with protections that fixed contracts don’t:

• You can leave at any time. No exit fees, no waiting for a renewal window. A maximum of 28 days’ notice applies, and many switches complete faster.
• The supplier cannot object to your transfer on the grounds of the deemed contract itself (they can object over genuine unpaid debt — clear arrears first or agree a payment plan).
• Terms must be transparent. The supplier must make its deemed rates publicly available and tell you how to end the arrangement.

In other words: the most expensive contract in business energy is also the easiest one to escape. The only thing keeping businesses on deemed rates is not knowing they’re on them.

How to get off deemed rates — step by step

1. Gather the basics. Your business name and address, a recent bill if you have one, and ideally your MPAN (electricity) or MPRN (gas) supply numbers — they’re printed on the bill. No bill? A Letter of Authority lets a broker pull your supply details from industry databases instead.

2. Compare the whole market. Don’t just phone the incumbent supplier and accept their first contracted offer — it will be better than deemed rates, but that’s a low bar. Comparing across every major supplier is what gets you a genuinely competitive rate; see how business energy comparison works.

3. Sign the new deal and give notice. Once you’ve chosen, the new supplier (or your broker) handles the transfer. Notice on the deemed contract is 28 days maximum.

4. Take a meter reading on switch day. This ensures your final deemed-rate bill covers exactly the right usage and not a day more.

5. Settle the final bill. You pay deemed rates up to the transfer date. Painful, but it stops accruing from that day forward.

The whole process is days of elapsed time and minutes of your effort if a broker manages it. Start with a free quote here — out-of-contract businesses are exactly who saves the most, and we prioritise them.

Avoid the rollover trap

One warning for the future: when your new fixed contract approaches its end, diarise the notice window. Some suppliers’ terms still allow them to roll you onto a 12-month extension at uncompetitive rates if you neither renew nor serve notice. A good broker tracks this for you — it’s one of the main reasons businesses use one, as we cover in our guide to business energy tariff types. Renewal drift is how most businesses end up back on expensive rates; one diary entry (or one account manager) prevents it permanently.

Frequently asked questions

How quickly can I leave a deemed contract?

At any time, with no exit fee. The supplier can require up to 28 days’ notice, and the switch itself typically completes within that window. There is no minimum period you must stay on deemed rates.

How much more expensive are deemed rates?

Typically 30–80% above contracted market rates. In 2026 that often means 40p+/kWh for electricity versus 21–30p contracted, plus inflated standing charges. For most SMEs the gap is worth thousands of pounds a year.

Can a supplier block me from switching away?

Not because of the deemed contract itself — Ofgem rules prevent it. A supplier can only object over genuine outstanding debt on the account, which you can resolve by paying or agreeing a payment plan before the switch.

I’ve just moved into new premises — what should I do first?

Take a meter reading on day one, find out who the incumbent supplier is (the previous occupant, landlord or letting agent will know, or industry lookups can identify it), and arrange a contracted deal as soon as possible. Every week on deemed rates costs you money.

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