Deemed rates — what happens when your business energy contract ends
Deemed, out-of-contract and rollover rates explained — how they're set, how much extra you pay, and how quickly you can get off them.
Deemed vs out-of-contract vs rollover
Three overlapping terms, subtly different. Deemed rates apply when there's no contract in place at all — for example when you take over a site and haven't signed a supply agreement. Out-of-contract (OOC) rates apply when your fixed term has ended and you haven't renewed. Rollover rates apply when a contract auto-extends for a further term at supplier-set rates (a practice now heavily restricted for micro-businesses).
How suppliers set them
Each supplier publishes its default rates in its Statement of Renewal Terms and updates them quarterly or when wholesale moves materially. They are priced to cover the supplier's worst-case cost-to-serve — including credit risk, hedging exposure and the possibility you leave next month — which is why they routinely sit 60-100%+ above the market fixed rate for the same meter and postcode.
How much extra you actually pay
The illustrative numbers vary by supplier, meter and region, but for a typical SME on electricity, moving from a signed fixed rate to deemed/OOC rates commonly adds 5-8 p/kWh — roughly £5,000-£8,000 per year for a 100,000 kWh consumer. Gas differentials are usually smaller in pence terms but similar in percentage. Every month you stay costs you a fraction of that annual figure that you cannot recover retrospectively.
How fast can you leave
Deemed and OOC rates carry no fixed term — you can switch away at any time with the standard 4-6 week switching window. In practice, from the moment you accept a new supplier's quote to the moment your new rate applies, expect 30-45 days. Every day of that window is at the higher rate, which is why the answer to 'when should I look' is always 'yesterday'.
The one exception — objections
A supplier can object to a switch if there is a debt on the account or if the incoming supplier's paperwork is incomplete. Clear any disputed balance before you initiate the switch, and use a broker who runs the paperwork end-to-end so an objection doesn't send you back to the start of the 4-6 week clock.
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