Deemed and Out of Contract Rates

Deemed contracts commonly arise when moving into a new premise without pre-arranging an active energy supply contract – at the point of moving in you are ‘deemed’ to be supplied by the previous inhabitant’s energy supplier. Although a little complex, the wording of the previous sentence is important to understanding deemed rates.

As you are now deemed to be supplied by whoever it was that supplied the previous owner/tenant/inhabitant – you are now responsible for paying for that supply too.

Prices on deemed contracts are far higher than any other negotiated contract which means you will likely be paying a hugely inflated unit price per kWh of energy, and in some cases an expensive standing charge too.

Deemed contracts are rolling contracts which last for 28 days, meaning that after the 28-day period is over – you could see another increase in prices. Suppliers are regulated by law to inform you, the customer, of other available deals whilst ensuring the terms of the deemed contract are clearly presented and understood.

Why does anyone choose deemed rates?

Due to the nature of deemed rates, not many customers choose to remain on them. Most commonly it is a case of short-term convenience or forgetfulness that customers remain.

But they are much more common than you would think! It is estimated that around 10% of UK microbusinesses are still currently on deemed-rate contracts.

Are they not the same as out-of-contract prices?

The two are incredibly similar but entirely different.

Deemed contracts offer slightly cheaper rates than out-of-contract prices due to the related positioning of the ‘fault’ and who it lies with. In deemed contracts, the customer is not at fault – all they have done is moved into a new premise and taken over the supply from the previous tenant.

Out-of-contract customers have made a conscious decision to not have a contract with an energy supplier – and as such, are at fault.

Deemed contracts are only rates that you have to pay if you are taking over a new premise before organising your own energy supply contract. Out-of-contract rates are prices that you have to pay as your original contract and terms have ended, without organising a replacement.

A small difference in wording, huge difference in monthly prices!

How to avoid deemed rates?

Be organised.

Keep energy in the forefront of your thinking when moving property, and you should be fine.

Now you are aware of what deemed rates are and how they operate, you are now far less likely to ever be placed on a deemed contract. If you are moving into a new house, or business location – try to arrange an energy contract before moving in. It is entirely possible to find all of the information you need to do this, before even moving in!