What are out of contract and deemed tariff rates?

If you’re in the process of moving your business to new premises, you may have come across out of contract or deemed tariff rates on your most recent energy bill.

These rates apply to gas and electricity contracts, and usually come into play when an energy contract expires, or when a business moves to new premises and no suitable arrangements are in place for using energy at the new premises.

To help you fully understand what out of contract and deemed tariff rates mean for you and your business, we’ve put together this handy resource and FAQ page. For more info and insights, read on...

What are out of contract rates?

Out of contract rates apply when an energy contract between the customer and supplier comes to an end, and no new or alternative rate is put in place. When a gas or electricity contract expires, the rates for supply revert to a default charge — otherwise known as the out of contract rate.

Business energy customers will be charged the out of contract rate until a new contract is put in place, they move out of the premises or they switch to a new supplier. The default rate for out of contract energy use tends to be more expensive than rates available under contract, so we’d always recommend moving off this rate as quickly as possible.

Due to the current unprecedented wholesale market conditions, we will be regularly reviewing our deemed and out of contract unit rates for gas and electricity.  

We will always try to provide as much notice as possible before publishing new rates. However, we strongly advise that all customers on deemed and out of contract rates monitor this page regularly to ensure they are aware of the latest rates. Based on current market conditions, we expect to continue increasing these rates. As a result, they’re likely to be substantially higher than they are currently.

How much are out of contract rates?

Click the links below to view the Out of Contract (OOC) Rates for the last few months:

What are deemed tariff rates? 

Similar to out of contract rates, deemed tariff rates are charged for gas and electricity use when there was never a contract in place to begin with, e.g., a new tenant moves into an existing site. In such circumstances, the customer is charged the deemed rate by the property’s existing gas or electricity supplier.

Deemed tariff rates apply until a new contract is put in place, or until the business moves out of the premises or switches to a new supplier. Because deemed rates may be more expensive than rates available under contract, you should try to move off this rate as quickly as possible.

How much are deemed tariff rates?

Click the links below to view the Deemed Rates for the last few months:

Find out more about the Gas Supply Deemed Contract Scheme here.

Are deemed contracts legal?

Deemed contracts are entirely legal and enforceable by energy suppliers. That said, if you can prove your energy provider has failed to properly inform you that you’re on a deemed contract, you might be able to negotiate with them.

If your energy company has not done one of the following, you might be able to have your contract terminated:

  • Provided you with a copy of the full contract, upon your request
  • Contacted you about other contract options before the end of your current contract

What if you never pay deemed contract bills?

Failing to pay your energy bills when you’re on a deemed contract results is the same as failing to pay on any other contract. Not paying a previous bill or not paying a regular amount towards future invoices will mean you’re in arrears with your supplier, and this should be dealt with urgently.

If you don’t resolve your debts, your energy supplier is entirely within their rights to cut off your supply. However, this measure is only a last resort, and your utilities company should give you notice before this happens.

Do I have to cancel a deemed contract?

A deemed contract lasts as long as you want it to. That means you can continue paying the deemed rate if you’re happy to do so. But since they’re pricier than other rates, we’d advise you to cancel your deemed contract and seek out a rate that your business can more realistically afford.

Is a deemed rate the same as a variable tariff?

In a word: no.

Deemed rates occur when no contract has been set up. You’re placed on them automatically.

Variable tariffs, on the other hand, are suited to businesses who can afford to weather the changing prices of energy market activity. It’s entirely up to you whether you decide to be placed on them.

If your business isn’t opposed to risk, then there are certainly benefits to going with a variable tariff.

For more information on variable tariffs, click here.   

Switching and consumer rights 

If you’re currently being charged out of contract or deemed tariff rates for your gas or electricity supply, your current supplier cannot prevent you from switching to a new supplier, or charge a termination fee for moving. Additionally, you are not required to give any form of notice in order to cancel an out of contract or deemed tariff contract.

For more information on out of contract and deemed tariff rates give the SEFE Energy team a call today on 0161 837 3395.