Deemed and out of contract rates are the default terms that apply when a supply has no proper contract in place. Businesses land on them by inattention rather than by choice, usually because a contract lapsed and nobody noticed.
Verification
- Verified as at:
- Source:
- Ofgem retail market rules; supplier published deemed rate terms
- Last reviewed by:
- Omnium
Figures in this sheet were current at the verification date above. Regulated charges reset each April. If you are relying on a figure, check the source or ask us.
Designed A4 fact sheet, ready to print or circulate.
The three ways it happens
| Rate type | When it applies |
|---|---|
| Deemed rates | You occupy a premises and start using energy with no contract agreed, for example after moving into a new site. You are deemed to have a contract on the supplier’s default terms. |
| Out of contract rates | A fixed contract ends and no new one has been signed. The supply continues, but on default rates rather than the contracted price. |
| Rollover rates | A contract lapses and the supplier moves you onto a new fixed term without you actively choosing it. |
Why they cost more
A supplier pricing a deemed or out of contract supply has no certainty about how long the customer will stay or how much they will use, and prices that risk in.
There is no corresponding benefit to the customer. It is the cost of not having a contract in place, and it is entirely avoidable.
How a business ends up there
Almost always a lapsed contract nobody was tracking. A fixed term ends, no renewal was arranged, and the supply moves onto default rates.
Months can pass before anyone notices, because the supply keeps working exactly as before and only the price has changed. By the time it surfaces, every unit in between has been billed at the higher rate. The cost is invisible until someone looks.
The discipline that prevents it
- Know every contract end date. Keep one record of when each supply expires. You cannot manage renewals you are not tracking.
- Start early. Review the market well before a contract ends, so the timing is yours rather than forced.
- Mind the notice window. Some contracts require notice to prevent an automatic rollover, and missing it can commit you to another term.
- Treat a change of premises as a live supply. A new site has a supply from the day you take it, whether or not anyone has arranged a contract.
Related sheets
- Contract types, and how a fixed rate is built
The four business contract types, how a supplier assembles a fixed price, and why the wholesale market is no longer the larger part of an electricity rate.
- Securing ahead of renewal
Energy can be agreed well before a contract ends. What forward securing buys, what it costs, and how to decide without guessing where prices go.
- Reading your energy bill
What every line on a commercial gas and electricity bill means, so you can check it is right and see which parts you can influence.
Take this sheet into a meeting
Deemed and out of contract rates is available as a designed A4 fact sheet, dated and set for printing or circulation.
If this sheet raises a question about your own sites, speak to us.