Deemed rates for business energy

What a deemed contract is

A deemed contract is the arrangement that exists when your business is using gas or electricity at a premises but has not agreed a contract with the supplier. You have not signed anything, but because energy is being supplied and used, a contract is treated as being in place on the supplier's deemed terms and at its deemed rates.

Ofgem's guidance on business energy contracts puts it plainly: you will be put on a deemed contract automatically when you move into new premises without arranging a formal contract, and deemed rates are usually higher than negotiated contract rates. Ofgem adds that you will also be put on a deemed rate if your energy supplier goes out of business.

Deemed rates are a default, not a product anyone chooses. They exist so that a supply can continue while you sort out a contract, which is why the aim is to spend as little time on them as possible.

When deemed rates apply

The most common situations are:

• Moving into premises. If you start using energy at a new site before you have agreed a contract, the supplier already registered at the meter supplies you on deemed terms. Ofgem's switching guidance says you are responsible for any energy used in the period before your new contract starts. See business energy change of tenancy for the notification steps.
• Taking over a lease or premises. When the occupier changes, Ofgem's change of tenancy process applies: tell the supplier you are now responsible for the supply, then arrange your own contract.
• Your supplier goes out of business. Ofgem chooses a new supplier (the supplier of last resort) and, unless you agree a different contract, you are put on its deemed contract. Ofgem says you can ask that supplier for another contract or switch to a different supplier, without an exit fee.

Deemed rates are not the same as out-of-contract rates, which some suppliers apply when your own fixed-term contract ends. The table below sets out the difference.

Deemed, out-of-contract and rollover compared

The first two are variable arrangements that Ofgem says you can leave at any time. A rollover is a new fixed term, so the rules on leaving are different; see how to get out of a business energy contract.

How to find your deemed rates

We do not publish supplier rates on this site, and deemed rates differ by supplier, by region and over time. To see what you are paying:

• check your latest bill, which should show the unit rates and standing charges being applied
• check your supplier's website for its published deemed rates for business customers, or ask the supplier for them
• note the date your deemed supply started and the meter readings from that date, so charges can be checked later

If you searched for a particular supplier's deemed rates, its own website and your bill are the reliable sources. What matters more than the exact figure is the length of time you spend on them.

How to get off deemed rates

1. Tell the current supplier you are the occupier as soon as you can, with the date you took over and a meter reading. Ofgem's change of tenancy guidance says to do this even if you are talking to other suppliers, and to provide evidence such as a tenancy or lease agreement, property sale documents or title deeds when the supplier asks.
2. Find your supply details. The MPAN is on the electricity bill and the MPRN on the gas bill. If you have no bill yet, the supplier or the previous occupier's paperwork may show them.
3. Estimate your annual consumption. Past bills for the premises help; otherwise an estimate based on your equipment and opening hours.
4. Compare quotes. You can accept a contract from the current supplier or switch, since Ofgem says deemed contracts can switch at any time. The best option may be your current supplier.
5. Agree the contract and give a meter reading at the start date, so the deemed period is billed accurately.

The supplier still runs its own credit checks, and accepting a quote is binding: there is no business energy cooling off period. Read the term, the fees, the broker costs in the principal terms and what happens at the end before you agree.

Avoiding deemed rates when you move

Most time on deemed rates comes from the first weeks in a new premises, when there are more urgent things to deal with than the energy supply. A little preparation helps:

• Start before you move. Ofgem's switching guidance says you may want to switch to a new supplier or contract for your new premises, and suggests checking whether you can do this before you move.
• Ask the landlord or seller for the supply details (the MPAN and MPRN and the current supplier) as part of the move, so quotes can be prepared in advance.
• Take dated photos of the meters on the day you take over, and do the same at the premises you leave.
• Watch for multi-site gaps. A group opening or acquiring sites can have one location quietly on deemed terms for months. Check every new site has an agreed contract and that the first bills show it.
• Use past consumption if you can. The previous occupier's usage will not match yours exactly, but it gives suppliers a starting point.

The business energy quotes page lists what to have ready, and our business energy by sector guides cover sector-specific points such as taking on new hospitality premises.

How we help you move off deemed rates

Forever Communications works as an agent of Fidelity Energy, an independent business energy broker that compares a panel of 24+ suppliers (its own figure; not every supplier in the market). If you have moved in, taken over a business or been moved after a supplier failure, we help you gather the details, Fidelity Energy prices them across its panel, and we help you compare the quotes and the terms before you decide.

Fidelity Energy is normally paid commission by the supplier you choose, included in your rates, and Forever Communications receives a share of that payment. The details are on our energy broker fees page.

Contact us with your address, the date you took over and any bill you have, and we can start the comparison.