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18 Jun 2020
Adam Bate Confused.com

Business energy deemed tariffs

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

What are deemed rates for business energy?

If you’ve recently moved business premises, and have started using gas and electricity without first agreeing a contract with a supplier, you’ll be placed on a deemed rates contract by the building’s current energy supplier.

You might also be placed on deemed rates if you continue to use energy after your current deal has expired or is terminated by yourself or your supplier, particularly if your contract doesn’t stipulate what rate you’ll pay after termination.

Although this ensures you’re not without energy in the new place, the bad news is that the deeming rates will be among your supplier’s most expensive. Ofgem estimates that prices on these 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, it must provide a full copy of the contract upon demand, and take all reasonable steps to outline the Principal Terms of the deal, as well as a full breakdown of its charges and fees.

The supplier is also obliged to do all it can to tell you about the alternative deals available, and make sure the terms of it 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 would be a formal one, meaning you can terminate the deal at any time and switch to a new one, without incurring any penalty. If you’re on deeming rates, your supplier can’t even stop you transferring to a better deal for reasons of debt or contract.

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

If you let an old deal lapse without renewing with your current supplier or agreeing one with a new supplier, you might be placed onto a rollover tariff. Again, this will come with expensive rates, but unlike deemed rates, you won’t be able to switch at any time as you’ll have been automatically signed up for another year.

When switching to new deal, you may be offered two types of deal – a variable-rate contract or a fixed-rate contract. A variable-rate contract links your unit rates (the price you pay for each unit of energy you use) to the current prices in the energy market, meaning prices can 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 will stay the same even if your supplier puts its prices up, but your monthly bills with still fluctuate depending up on the amount of gas and electricity you use. These deals usually offer more competitive rates, and give business owners peace of mind that they’re on a reasonable rate for the foreseeable future.

How can I switch from my deemed contracts?

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 and the energy will be supplied 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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