Business Energy Out-of-Contract Rates UK 2026: Costs & How to Switch Quick Answer
Business energy out-of-contract rates are the electricity or gas rates you may pay after a fixed-term business energy contract ends without you agreeing a new deal, where your existing contract specifies what happens after expiry.
Ofgem says out-of-contract rates are usually more expensive than negotiated fixed-term business energy contracts.
The important thing is that out-of-contract and deemed rates aren’t exactly the same thing .
Generally:
Out-of-contract rate: your previous contract specifies the rates or arrangements that apply after it ends.Deemed rate: you’re consuming energy without having agreed a contract and there isn’t an existing contractual arrangement determining what happens.Rollover contract: your previous agreement automatically renews into another fixed-term arrangement under its terms.
If you’re currently out of contract, you may be able to arrange a new contract or switch supplier rather than remaining on the out-of-contract rate.
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Key Takeaways
Out-of-contract rates can apply when your fixed business energy contract expires without a replacement contract being agreed.
Ofgem says out-of-contract rates are usually more expensive than fixed-term negotiated contracts. Out-of-contract rates and deemed rates aren’t the same thing.
The terms of your previous contract determine whether you move onto out-of-contract rates.
Out-of-contract pricing can change rather than remaining fixed.
If you’re on an out-of-contract or other variable arrangement, you may be able to switch supplier at any time.
Don’t automatically accept the first fixed contract offered simply to escape an out-of-contract rate.
Compare your current out-of-contract cost against new quotations using your actual annual consumption.
Your existing supplier may offer a competitive new contract, so optimisation doesn’t necessarily require switching supplier.
The easiest way to avoid unexpected out-of-contract rates is to know your contract end date and act during the switching window.
Contents
How Do We Work?
Our comparisons are researched and reviewed by the Compare Your Business Costs editorial team using provider information, official UK guidance and business buying criteria. See how Compare Your Business Costs works.
Business energy prices can change quickly and individual quotations depend on consumption, meter type, location, supplier, credit, contract structure and prevailing market conditions.
Authored by: Ally Cox – Business Technology & B2B Services Specialist, 10+ years’ experience.
Last updated: September 2026
What Are Business Energy Out-of-Contract Rates? An out-of-contract rate is a rate that can apply after your existing business electricity or gas contract ends – the important detail is that your previous contract specifies what happens after expiry.
For example:
Your business agrees a two-year fixed electricity contract.
The contract has an agreed end date.
You reach that date without agreeing a replacement contract.
Your existing contract states that an out-of-contract rate will then apply.
Your supplier continues supplying electricity under that arrangement.
You haven’t necessarily lost your energy supply simply because the fixed contract ended.
Instead, the commercial terms under which the energy is supplied can change.
Why Does This Matter? Ofgem states that out-of-contract rates are usually more expensive than fixed-term contracts, which means doing nothing at contract expiry can potentially increase what your business pays for electricity or gas.
When Do You Go Onto Out-of-Contract Energy Rates? You could move onto out-of-contract rates when:
your fixed-term business energy contract expires
you haven’t agreed a replacement contract
you haven’t completed a switch to another supplier
the existing contract specifies the arrangements that apply after expiry
Exactly what happens depends on your contract.
That’s why Ofgem recommends checking what happens at the end of your agreement before signing a business energy contract.
Possible outcomes can include:
a new negotiated contract
out-of-contract rates
deemed rates in applicable circumstances
automatic renewal or rollover under the contract terms
Our view: the contract end date isn’t an administrative detail. It is one of the most important dates in business energy procurement.
Out-of-Contract vs Deemed Business Energy Rates These terms are frequently used interchangeably.
They shouldn’t be.
Out-of-Contract Rate Deemed Rate
What is it?
A rate applying after a contract ends where the contract specifies what happens next
A rate applying where energy is being supplied without an agreed contract
Common scenario
Your fixed contract expires without a new agreement
You move into new premises and start consuming energy before agreeing a contract
Negotiated?
No new negotiated tariff has been agreed
No negotiated contract has been agreed
Price
Usually more expensive than negotiated fixed-term rates
Usually more expensive than negotiated contract rates
Can you change?
Generally yes, subject to the applicable arrangement
Generally yes
A Simple Way to Remember the Difference
Out-of-contract: the old contract tells you what happens next.Deemed: no negotiated contract exists to determine the supply arrangement.
There are other circumstances where deemed contracts can arise, including supplier failure.
For the full explanation, see our Business Energy Deemed Rates Guide .
Out-of-Contract Rates vs Rollover Contracts A rollover contract is another possible outcome when a business energy agreement ends.
It isn’t the same as simply moving onto an out-of-contract rate.
Out-of-Contract Rollover
Fixed new term?
Generally no
Usually yes
Can rates change?
Potentially
Depends on the new agreement
Ability to switch
Usually more flexible
Can be restricted during the new fixed term
How it happens
Existing contract ends and specified out-of-contract terms apply
Contract automatically renews according to its terms
A rollover can therefore potentially lock a business into another contract, whereas an out-of-contract arrangement may give greater ability to arrange an alternative.
See our Business Energy Rollover Contracts Guide .
Are Out-of-Contract Business Energy Rates More Expensive? Usually, yes.
Ofgem says out-of-contract rates are usually more expensive than fixed-term business energy contracts.
But we wouldn’t publish a generic claim such as “Out-of-contract energy is always 50% more expensive.”
The actual difference depends on:
supplier
fuel
meter
business consumption
location
current out-of-contract rate
available negotiated contracts
market conditions
The useful question isn’t “How expensive are out-of-contract rates nationally?”
It’s “How much more is our current out-of-contract arrangement costing compared with the contracts available to us?”
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How to Calculate Your Out-of-Contract Energy Cost Start with Annual usage cost = annual kWh × out-of-contract unit rate
Then add Annual standing charge = daily standing charge × 365
A simplified annual comparison is therefore Annual cost = (annual kWh × unit rate) + (standing charge × 365)
You can then account for applicable taxes, levies and other contract-specific charges.
Why Use Annual Consumption?
Because the unit rate alone doesn’t tell you how much the difference matters.
For example, a 5p/kWh difference represents:
Annual Consumption 5p/kWh Difference
10,000 kWh
£500/year
25,000 kWh
£1,250/year
50,000 kWh
£2,500/year
100,000 kWh
£5,000/year
500,000 kWh
£25,000/year
These figures are mathematical examples rather than estimates of the difference between current market and out-of-contract rates.
They demonstrate why resolving an expensive rate becomes increasingly important as consumption rises.
Business Energy Out-of-Contract Cost Example Consider a business consuming 30,000 kWh of electricity annually .
Its current illustrative out-of-contract charges are:
32p/kWh unit rate
£1.20/day standing charge
Its simplified annual cost is: 30,000 × £0.32 = £9,600
Plus 365 × £1.20 = £438
Total: £10,038 per year
Now suppose it receives a new illustrative contract quotation of:
25p/kWh
80p/day standing charge
Annual usage: 30,000 × £0.25 = £7,500
Standing charge 365 × £0.80 = £292
Total: £7,792 per year
Difference: £2,246 per year
This doesn’t mean every business can save £2,246.
The rates are deliberately illustrative.
It demonstrates how to calculate the actual financial impact of replacing your own out-of-contract rate.
How Do I Know If My Business Is Out of Contract? Check your latest business electricity or gas bill and your previous contract.
Look for:
contract end date
tariff name
unit rate
standing charge
contract status
renewal information
If you’re unsure, contact the supplier and ask “Are we currently on a negotiated contract, out-of-contract rate, deemed contract or rollover agreement?”
Then ask “What is our current unit rate and standing charge?”
And “Can we move to another contract or supplier now without a termination fee?”
Those three questions should establish your basic position quickly.
Can You Switch From Out-of-Contract Business Energy Rates? Generally, yes.
Ofgem advises that businesses on out-of-contract rates, deemed rates and other variable arrangements can switch to a new supplier.
That can make being out of contract very different from being midway through a fixed-term agreement.
A fixed contract can restrict your ability to leave until its switching window opens.
If you’re already out of contract, you may have more flexibility.
Do You Have to Change Supplier? No.
Your choices could include:
agreeing a new contract with your existing supplier
switching to another supplier
using a broker to negotiate alternatives
using a comparison service
The best replacement contract could still be offered by your current supplier.
See our Business Energy Switching Services Guide .
What Should You Do If Your Business Is Out of Contract? Step 1: Confirm Your Current Rate
Find your current:
electricity unit rate
gas unit rate
standing charge
other applicable charges
Step 2: Find Your Annual Consumption
Use recent bills or supplier records to find annual kWh consumption.
Step 3: Calculate Your Current Annualised Cost
This gives you a benchmark for comparing replacement contracts.
Step 4: Ask Your Existing Supplier for a New Contract
Don’t assume you need to leave.
Ask what fixed, variable and other suitable options are available.
Step 5: Compare Alternative Suppliers
Use exactly the same annual consumption when assessing competing quotations.
Step 6: Compare Total Cost
Don’t compare unit rates in isolation.
Check:
unit rate
standing charge
estimated annual cost
contract length
fixed/variable structure
termination conditions
broker fees or commission where applicable
Step 7: Arrange the New Contract
Once you’re satisfied with the quotation and terms, arrange the replacement contract.
How to Compare Out-of-Contract Rates With a New Energy Deal Use this structure:
Compare Current Out-of-Contract Rate New Contract
Unit rate
_____ p/kWh
_____ p/kWh
Standing charge
_____ p/day
_____ p/day
Annual consumption
_____ kWh
Same _____ kWh
Estimated annual cost
£_____
£_____
Contract length
Out of contract
_____ months/years
Fixed or variable
_____
_____
Broker cost
£_____
£_____
Termination terms
_____
_____
Don’t Compare Different Consumption Assumptions
If your current annualised bill is calculated using 50,000 kWh but the new quote assumes 40,000 kWh, the comparison is misleading.
Use the same annual kWh consumption wherever possible.
How to Avoid Business Energy Out-of-Contract Rates The simplest strategy is contract management.
1. Record the Contract End Date
Don’t leave it buried in an old PDF.
Add it to your calendar or procurement system.
2. Record the Switching Window
Fixed-rate contracts normally have a switching window before expiry.
This is the period when you can start arranging your next contract.
3. Start Comparing Before the Deadline
Give yourself time to:
understand your consumption
request quotations
negotiate
check contract terms
arrange the switch
4. Don’t Assume Your Supplier Will Automatically Put You on Its Best Deal
Find out exactly what happens if you do nothing.
5. Set a Renewal Reminder
This sounds basic, but it’s one of the simplest energy procurement controls a business can put in place.
Our view: the best time to deal with out-of-contract rates is before you’re actually paying them.
What Happens to Business Energy When You Move Premises? Moving into new premises is more commonly associated with a deemed contract than an out-of-contract rate.
If you move into commercial premises and start consuming electricity or gas before arranging a contract, the existing supplier can put the business onto a deemed-rate contract.
Before moving:
check your existing energy contract
tell your current supplier you’re moving
check the energy arrangements at the new property
take meter readings
arrange the new supply contract as soon as practical
Don’t assume your old energy tariff automatically moves with your business.
See our Deemed Business Energy Rates guide if you’ve recently moved premises.
7 Mistakes to Avoid With Out-of-Contract Energy Rates
Assuming out-of-contract and deemed rates are identical. Ignoring your contract end date. Comparing replacement tariffs using only the unit rate. Accepting a long fixed contract purely because your current rate is expensive. Assuming you have to switch supplier. Using generic “average business usage” when you have your own consumption data. Leaving the business out of contract indefinitely because switching feels complicated.
Don’t Panic-Fix Because Your Current Rate Is Expensive This is important.
An expensive out-of-contract rate can create pressure to accept the first lower quotation offered.
But Ofgem noted in March 2026 that, depending on market conditions, it can sometimes be better for a business to remain temporarily on deemed or out-of-contract rates rather than immediately accepting an expensive longer-term contract.
That doesn’t mean you should deliberately remain out of contract indefinitely.
It means compare the cost of staying temporarily against the cost and commitment of the contracts available.
Our View: Treat Out-of-Contract Rates as a Warning, Not an Emergency Out-of-contract rates deserve attention because they’re usually more expensive than negotiated fixed-term rates.
But optimisation still matters.
We’d use this order:
Confirm status → find current rates → calculate annual cost → compare alternatives → check contract length → check terms → choose.
Priority 1: Establish What You’re Actually Paying
Don’t assume you’re out of contract simply because the bill looks expensive, confirm it.
Priority 2: Quantify the Cost
Calculate how much the current rate costs at your annual consumption.
Priority 3: Compare Your Existing Supplier
Ask what new contracts it can offer.
Priority 4: Compare the Market
Get alternative quotations using the same consumption.
Priority 5: Don’t Overcorrect
Don’t replace an expensive flexible rate with an unsuitable multi-year agreement simply because its initial price is lower.
The Question We’d Ask “Based on our actual annual consumption, what will each option cost over the full contract period, and how long are we committing to that price?”
That’s more useful than simply asking which supplier has the lowest advertised unit rate.
Business Energy Out-of-Contract Rates FAQs What are business energy out-of-contract rates?
Out-of-contract rates can apply after a business energy contract expires where the existing contract specifies what happens when the fixed term ends and you haven’t agreed a replacement contract.
Are business out-of-contract rates expensive?
Ofgem says out-of-contract rates are usually more expensive than negotiated fixed-term contracts. The actual difference varies by supplier, consumption and market conditions.
Are out-of-contract and deemed rates the same?
No. An out-of-contract rate applies according to the terms governing what happens after your previous contract expires. A deemed contract generally applies when you’re consuming energy without having agreed a contract, such as after moving into new premises.
Can I switch supplier if I’m out of contract?
Generally, yes. Ofgem says businesses on out-of-contract, deemed or other variable arrangements can switch supplier.
Do I have to change energy supplier?
No. Your existing supplier may be able to offer a new negotiated contract. Compare its offer with alternative suppliers before deciding.
How long can I remain on out-of-contract rates?
This depends on the supplier’s terms. Rather than treating an out-of-contract rate as a long-term tariff, check your options for moving onto a suitable negotiated contract.
Does the domestic energy price cap protect business out-of-contract rates?
No. Non-domestic energy contracts aren’t protected by the domestic Ofgem energy price cap.
Can out-of-contract rates change?
They can. Check your supplier’s current out-of-contract pricing and terms rather than assuming the rate remains fixed.
Why has my business energy bill suddenly increased?
One possibility is that a fixed contract has ended and you’ve moved onto a different rate. Check your contract status, unit rate and standing charge with the supplier.
What happens if I don’t renew my business energy contract?
It depends on the contract. You could move onto out-of-contract rates, a deemed arrangement in applicable circumstances, or a rollover/renewal contract.
Can a business energy broker get me off out-of-contract rates?
A broker can help compare and arrange replacement contracts. Check which suppliers the broker works with and understand how it is paid before agreeing a new contract.
How quickly should I leave an out-of-contract rate?
Compare alternatives promptly, but don’t agree an unsuitable long-term contract purely to leave the existing rate. Compare both immediate cost and longer-term commitment.
How can I avoid going out of contract again?
Record your contract end date and switching window and start reviewing replacement contracts before expiry.
Compare Business Energy Quotes If your business is currently out of contract, gather:
a recent electricity or gas bill
current unit rate
current standing charge
annual consumption
MPAN/MPRN
business postcode
current supplier
Then compare replacement contracts using the same consumption figures.
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Contracts & Switching Compare & Optimise Energy Understand Business Energy Prices Hi, I’m Ally Cox , a senior copywriter and blogger at CompareYourBusinessCosts.co.uk, the UK’s trusted platform for comparing business services.over a decade of experience in the B2B sector, I specialise in simplifying complex topics like leased lines, VoIP, business energy, HR and payroll solutions, accounting software, and EPOS systems .HR, copywriting, and business operations- from clocking-in systems to card machines and office technology .informed, confident decisions when choosing products and services that improve efficiency and save money.
