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The Complete Guide to Business Energy Deemed Contracts

CHRIS RICHARDS | 19 MAY 2021

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When moving your business into a brand new building, the last thing you want to worry about is being surprised by a large bill from an unknown energy supplier. This is what could happen, however, if you end up on a deemed business energy contract.

There is confusion surrounding deemed business contracts and what your rights are surrounding them. Are they expensive to cancel? Are they legitimate and legal? Why is my business on deemed rates?

A lot of business could save money by switching from a deemed rate to a negotiated one, but are unaware of how to do so. That's where we come in. In this guide, we explain exactly how deemed business energy contracts work, what to do if you find yourself in one, and how you can switch suppliers today with Business Energy UK.

What is a business energy deemed contract?

A business energy deemed contract occurs when a business uses energy, such as gas or electricity, in new premises without having agreed on a deal. They are typically enforced when a business moves into a new building and use energy before having signed with a supplier.

Deemed business energy contracts also occur when a deal has been terminated either by a customer or supplier but the business continues to use gas and electricity.

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How do deemed business energy contracts work?

Deemed business electricity contracts are put into place when energy is used without a contract being worked out beforehand. A supplier will set the rates for the contract, which are regulated by Ofgem but are still much more expensive than a pre-arranged contract is. It is called a deemed business contract because the energy company are able to charge whatever they 'deem' reasonable for the property that the business has moved into.

Deemed business tariffs work similarly to out-of-contact contracts, but differ as customers do not choose to not have a contract. Rather, it is because they have just moved into new business premises and have not yet gone about choosing the right supplier.

You will only be charged a deemed rate until you settle on a contract with either your current supplier or a new supplier. The sooner you do this, the less you will have to pay, so we recommend finding a tariff either before you move so you never get charged a deemed rate, or as soon as you have time after moving.

Your rights with a deemed business energy contract

Before resigning to the fact that you will be charged extortionate energy costs because of a deemed non-domestic energy contract, read up about your rights and what you can do if in this situation.

Firstly, the supplier who is charging a deemed tariff is not able to stop you from switching business energy suppliers at any point. You are allowed to switch immediately, without giving notice, and should not be charged a termination fee for doing so.

If you find yourself on a deemed fixed-rate contract, you should be provided by your business energy supplier information about your new contract and fees, as well as details of other types of contracts. This allows you to compare electricity prices and find yourself a better deal.

Unfortunately, a deemed energy tariff is enforceable by the law, and you are required to pay it, regardless of whether or not you intended to use energy before finding a new supplier. However, it could not be easier to switch suppliers and find cheap business energy prices.

Switch business energy suppliers with Business Energy UK

Switching business energy supplier with Business Energy UK could not be easier. From start to finish we will support you with guidance and steps on how to move from your existing contract to a new one that suits the needs of you and your business.

With us, you can compare prices and business energy quotes across a wide range of trusted suppliers. We aim to find you the best prices so that you can get on with running a company and leave the electricity supply to us!

Visit our website here for more information on switching business electricity supplier today.

Frequently Asked Questions

A deemed business energy bill usually costs a lot more than an agreed business energy tariff, and can even be up to 80% more expensive. Approximately 10% of microbusinesses in the UK are currently being charged for their energy usage via deemed bills, which means they are being hugely overcharged for their gas and electricity.

The reason for a deemed energy contract being more costly is because there has been no negotiation regarding energy demands or rate. The energy supplier is, therefore, able to charge the business their fixed deemed rate, and the business has no chance to broker it.

If you are unsure whether or not your business is on a deemed tariff, we advise checking immediately. These tariffs are some of the most expensive and uncompetitive on the market and should be avoided if possible.

To get out of a deemed business tariff, all you need to do is find a tariff that suits your business better and switch to it. Visit Business Energy UK to compare suppliers on the energy market and for support on switching.

Getting out of a deemed deal is fast and free to do. As long as you have taken a final meter reading so that your old supplier can issue any outstanding bills, you are able to switch without any notice or imposed fees.

There are two main reasons why your business has been put on anon-domestic energy deemed rate contract.

The most common reason is that your business has recently moved to a new address and has not yet contacted any electricity suppliers to negotiate a contract. Therefore, the same supplier that the old occupant used has begun charging you a deemed rate for any energy consumption.

Another cause is that your current contract has ended and, instead of termination or finding a new deal, your supplier has automatically rolled over to a deemed tariff.

The most obvious method is to become a more energy-efficient business. By doing this, you will lower your own electricity usage and be charged less at the end of each month. Making the move to renewable energy sources such as energy-saving light bulbs can save you money, as well as save the planet.

Bear in mind that business customers will be charged a climate change levy, whether on deemed or fixed-term contracts, and so will be spending more on their electricity bill than the average homeowner would. The climate change tax incentivises customers to lower their carbon emissions and invest in renewable electricity.