If your business energy deal is coming to an end, many energy suppliers will use deemed contracts to manage your energy supply.
A deemed energy contract is often quite expensive with some of the highest energy rates on the market. Many companies are not aware they have been placed on a deemed contract and are unknowingly overpaying for their gas and electricity.
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.
When you understand the different types of business energy contracts, you can make informed decisions about your expenses and even reduce them. At Power Compare, we help business owners find packages that suit their needs. The first step towards choosing the right package is recognising some of the most expensive options, such as deemed contracts.
What Is a Deemed Contract?
A deemed energy contract is also sometimes referred to as an out of contract tariff. Energy suppliers will place companies on this tariff if they have failed to negotiate a new gas and electricity tariff. This type of contract allows business owners to access vital energy without loosing their energy supply. However, they are very expensive and companies should not spend too long paying deemed contract rates.
Unsurprisingly, deemed contracts are known for being expensive. Each supplier has different deemed rates. Business energy consumers can save a lot of money on their monthly bills by switching to a fixed rate tariff.
When Are Deemed Energy Contracts Used?
They are ultimately there as an emergency tariff. This ensures that the business does not lose their energy supply at the end on their energy contract.
This default contract acts as a bridge for business owners who do not have the time to review and choose a more suitable tariff. Large business events like mergers, premises changes, and restructuring can push energy tariffs to the bottom of the to-do list.
Deemed energy contracts should be avoided. These deemed rates are often inflated but can often be used for several reasons.
You Have Moved to New Premises
Business energy suppliers do not make it easy to understand a new contract. When companies are moving to new business premises, the stress and chaos of the move can leave them without an energy contract.
The energy supplier who manages the buildings energy supply will place you on a deemed contract if you fail to take reasonable steps to secure new energy deals.
Your Business Energy Contract Finishes
Failure to search for new business energy deals will result in being placed on a deemed contract. Your energy supplier will do this automatically at the end of your current contract’s end date. Your energy supplier is legally obligated to inform you that you will be placed on this default energy deal if you do not secure a new energy deal.
Some contracts do not have stipulations about rollover energy contracts. In this case, consumers will have to pay deemed rates. It is important to take reasonable steps to switch supplier before your contract expires. Switching supplier away from a deemed contract will often result in significant savings.
Your Business Energy Contract Has Been Cancelled
If either you or your supplier cancels your contract without agreeing to a new business energy tariff, you will be put on a deemed contract. This only applies to business owners who continue to use gas and electricity after the cancellation.
You can find a detailed breakdown of deemed contracts on Ofgem’s website.
Am I on a Deemed Contract?
There are a few different ways to tell if you’re on a deemed contract. If you move to new premises and your energy bills increase by a large amount, your supplier has probably placed you on a deemed contract.
If you have not moved premises but are suddenly being billed increased rates, the chances are that you might have forgotten to renew your contract. In any case, suppliers must contact business energy consumers about changes like this. We recommend contacting your energy supplier to double-check what type of contract you are on.
Can I Switch from a Deemed Contract?
The good news about deemed contracts is that they do not have a termination fee like other business energy contracts. If you are on a deemed contract, the good news is that when you switch supplier you will save a lot of money on a better deal.
Switching business energy suppliers is easy. Remember to have a recent energy bill handy so you can get accurate prices with your current energy consumption. Comparing the latest energy prices will mean you have extra cash available to reinvest in other parts of the business.
Business owners who are unhappy with their current supplier can look for a more suitable supplier on our comparison generator. Switching to a fixed term contract is the most popular option for many companies entering the switching window. This does depend on several factors including renewal letters and current prices on the market.
Our energy comparison site is perfect for business energy customers who want to find a better energy deal for their company. You will almost always save money on your current contract if you are currently using deemed contracts. At Power Compare, we will almost always beat the prices in your renewal letter.
We scan through dozens of trusted UK suppliers and whittle their deals down to bite-sized pieces of information. Busy business owners can scan through a comprehensive list of deals and suppliers without having to do time-consuming research.
With our energy price comparison generator, it has never been easier to save money. Business energy consumers can halve their bills and switch to a more consistent, fixed tariff with ease. Put your details into our generator and discover all the options available to your business within a minute.