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How to Avoid Deemed Energy Rates as a Micro Business

Deemed contracts carry a supplier's highest rates by default - here's exactly what triggers one, and the Ofgem rules that let you avoid or escape it.

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What Actually Triggers a Deemed Contract

Ofgem's guidance on Supply Licence Conditions 7.3 and 7.4 sets out two main situations where a deemed contract arises: a business begins consuming energy at a premises without having agreed a contract (most commonly when moving into new premises), or an existing contract comes to an end with no provision for what follows and the business keeps consuming energy regardless. In both cases, the supplier is entitled to supply you - but on its own deemed terms, not a negotiated one.

No agreed contract, new premises

Starting to consume energy at a site before any supply contract is arranged is the most common route into a deemed contract.

Contract ends, nothing arranged

If a fixed-term contract ends and you keep consuming energy with no renewal or follow-on arrangement in place, this can also result in deemed terms.

Highest standard rates apply

Deemed rates are generally the supplier's highest published unit rates and standing charges - there is no negotiated discount built in.

Not the same as "out of contract"

Out-of-contract tariffs (what you move to when a fixed term simply expires without a deemed scenario) are a related but separate issue - see our tariff penalties guide.

Know Your Way Out

You Can Switch Off a Deemed Contract With No Penalty

Under Ofgem's rules, a deemed contract cannot carry a fixed term, a termination fee, or a notice period before you switch. If you discover you are on deemed rates, you are free to arrange a new contract and move away immediately - the sooner you compare your options, the sooner you are off the supplier's highest rates.

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To give you the most useful review, it helps if you can provide:

  • Your business name and postcode
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  • Whether you need electricity, gas, or both
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  • An approximate idea of your energy spend or usage

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Deemed Energy Rates - Frequently Asked Questions

A deemed contract can arise when a business starts consuming electricity or gas at a premises without having agreed a supply contract - for example moving into new premises, or an existing contract ending without any arrangement for what happens next while the business keeps consuming energy.

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