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Out-of-Contract Rates and Deemed Contracts


Keen to keep your business gas and electricity costs as low as possible? If so, avoiding out-of-contract rates and deemed rates is essential. Here we explain what they are and how you can keep them from driving up your gas and electricity bills.

Out-of-Contract Rates

Out-of-contract rates are the default rates you pay for your business energy when you do not have a formal contract with your supplier. You’ll find yourself paying these rates if:

• Your current contract ends and you haven’t arranged a new one with your existing energy provider or any other provider.
• You’re in the process of switching your energy provider but delays have resulted in a gap between the end of one contract and the beginning of another.

Out-of-contract rates are considerably more expensive than typical market rates. In fact, they can cost you more than twice as much as contracted rates.

If you want to avoid this type of expense, you need to be aware of when your current energy agreement ends so you can make the necessary arrangements well in advance of this date. Happy with your current supplier? Have a chat with them about the best deals they can offer you if you renew with them. If you’d like to switch to a new supplier, it’s advisable to do your shopping around a few months before the end of your contract. The switching process takes time, so you need to have your switch arranged at least 30 days before that end date.

Deemed Contracts

A deemed contract usually comes into place when you move into new business premises and begin to consume energy without having entered into a formal contract. In this case, you’re ‘deemed’ to have entered into an agreement with the previous occupant’s energy supplier and will be charged default deemed rates. While these are higher than formal contract tariff rates, they’re not quite as high as out-of-contract rates.

In most cases, you can avoid paying deemed rates altogether by arranging a new energy contract before your change of premises. If you’re moving from one business address to another, discussing your options with your existing energy supplier can be helpful – you may be able to carry over your current deal to the new premises.

If for any reason you’re unable to arrange a contract before the move, make sure you arrange one as soon as you’ve moved in. The longer you wait, the more money you’ll waste on deemed rates! Fortunately, you are not tied to a deemed contract the way you would be to a formal one – you can terminate it at any time (without a fee) and you’re free to switch to another supplier if you wish to do so.

If your current energy agreement is coming to an end or your business is changing location, you can always discuss your options with SwitchMyBusiness.com. We can help you find the best deals and ensure a smooth transition from your current tariff to the next one. You can call us on 0800 411 8830, or begin comparing tariffs using our free online energy comparison tool.

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