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18 Jun 2020
Steve Ramsey avatar Steve Ramsey

Business energy deemed tariffs

Man checking business energy bill

If you're on a deemed tariff, it's time to switch business energy supplier.

Why is my business on a deemed tariff?

There are two reasons why you might be put on a deemed tariff contract.

The first is if you’ve recently moved business premises and have started using gas and electricity without agreeing a contract with a supplier beforehand. The building’s current energy supplier will put your business on a deemed rates contract.

The second reason you might be put on a deemed contract is if you carry on using energy after your current deal has come to an end. This might be because the deal expired or because you or your supplier ended the contract.

If your contract doesn’t say what rate you’ll pay after it comes to an end, it’s very likely that you’ll move onto a deemed tariff. 

The good news is that moving to a deemed tariff means you won’t be left without energy. But the bad news is that the deeming rates will be among your supplier’s most expensive.

Ofgem estimates that prices on deemed rates contracts are on average 80% higher than rates charged in negotiated contracts.

So make sure you switch to a better deal as soon as possible.

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What are my rights if I'm placed on deemed supply rates?

If your supplier places you on a deemed price energy contract, they have to give you a full copy of the contract if you ask for it. Your supplier must do everything they reasonably can to outline the principal terms of the deal, and give you a full breakdown of the charges and fees.

They also have to do all they can to tell you about the alternative deals available, and make sure the terms of its deemed tariff are clear and properly explained.

The good news is you won’t be tied into a deemed rates contract in the same way you’d be tied into a formal one. This means you can terminate the deal at any time and switch to a new business energy supplier without incurring any penalty.

If you’re on deeming rates, your supplier can’t even stop you switching to a better deal for reasons of debt or contract.

What is a rollover tariff?

If you let an old deal lapse without renewing with your current supplier – or without agreeing a deal with a new supplier – they might move you onto a rollover tariff.

Again, this comes with expensive prices. But unlike deemed rates, you won’t be able to switch at any time as the supplier will have automatically signed you up for another year.

That’s why it’s important to make sure you know when your contract ends so you can take action.

If you’re on deeming rates, your supplier can’t even stop you switching to a better deal for reasons of debt or contract.

What other types of business energy contract could I switch to?

When switching to a new supplier, you may be offered two types of deal – a variable-rate contract or a fixed-rate contract.

A variable-rate contract links your unit rate (the price you pay for each unit of energy you use) to the current prices in the energy market. This means your price will fluctuate and your bills can go up and down, even if you use the same amount of gas and electricity each month.

With a fixed-rate deal, the unit rate you pay is locked in for the length of the contract. This means your rate stays the same, even if your supplier puts their prices up. Your monthly bills will still vary depending on the amount of gas and electricity you use.

Fixed-rate deals usually offer more competitive prices and allow you to budget your energy costs with more certainty while the contract lasts.

How can I switch from my deemed contract?

If you’ve recently moved your business into a new property, and haven’t agreed a new energy deal, you need to switch as soon as possible. Remember, deemed tariffs don’t have a switching window, so you’re free to switch at any time.

The switch should take around 4-6 weeks to complete. The energy company will supply your energy using the existing network, so there’ll be no need for any work at your premises.

To switch from your deemed supply rates, we’ve partnered with Bionic to find the best commercial gas and electric deals for your business. Call now on 0800 158 5296 or request a commercial energy quote and we’ll give you a call back.


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