Deemed Energy Rates UK 2026: Business Deemed Contracts Explained Quick Answer
A deemed energy contract normally applies when a business uses gas or electricity without having expressly agreed a contract with the supplier.
A common example is moving into new business premises and starting to use energy before arranging a commercial energy contract.
You may also enter a deemed arrangement in certain other circumstances, including when:
your existing contract ends and doesn’t specify what happens afterwards
you continue consuming energy after an existing agreement ends in circumstances where a deemed relationship arises
your previous energy supplier fails and another supplier takes over your supply
Deemed rates are usually more expensive than negotiated business energy contracts, according to Ofgem.
But a deemed rate isn’t automatically the same as an out-of-contract rate.
If you’re on a deemed tariff, establish your current rates and annual consumption, then compare the cost of moving onto an expressly agreed contract.
Compare business energy contracts →
Key Takeaways
A deemed contract can arise automatically when energy is consumed without an expressly agreed contract.
Moving into new business premises without arranging energy is one of the most common causes. Deemed rates are usually more expensive than negotiated business energy contracts.
Deemed and out-of-contract rates are not interchangeable terms .
There isn’t one standard UK deemed electricity or gas rate; suppliers publish their own rates.
Ofgem requires suppliers to take reasonable steps to ensure deemed-contract terms aren’t unduly onerous .
You generally aren’t locked into a deemed contract in the way you would be with a fixed-term agreement.
If you move premises, take meter readings and contact the existing supplier promptly.
Compare your current deemed cost with negotiated quotations using the same annual consumption.
Contents
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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.
Authored by: Ally Cox – Business Technology & B2B Services Specialist, 10+ years’ experience.
Last updated: September 2026
What Is a Deemed Energy Contract? A deemed contract is an energy supply arrangement that can arise without the customer expressly agreeing a contract with the supplier.
For businesses, the classic example is You move into commercial premises → electricity or gas is already connected → you start using it → you haven’t yet agreed a new energy contract.
Energy continues to be supplied, so a contractual relationship can arise automatically.
Ofgem describes deemed contracts as arrangements that normally apply when you move into new business premises without agreeing a contract.
Why Do Deemed Contracts Exist?
They allow energy supply and charging to continue where gas or electricity is being consumed but an expressly agreed contract isn’t in place.
This is important because changing occupier doesn’t normally mean electricity and gas physically stop flowing to the property, but the convenience can come at a price.
When Does a Deemed Business Energy Contract Apply? A deemed relationship can arise in several situations.
1. You Move Into New Business Premises
This is the clearest example – if you occupy premises, energy is available and you start consuming electricity or gas without agreeing a contract, a deemed relationship can normally arise with the existing supplier.
2. An Existing Contract Ends
A deemed relationship can also arise in some circumstances when an existing contract ends and the supplier continues providing energy.
However, don’t automatically assume every expired business energy contract becomes a deemed contract.
The previous agreement may already specify what happens after expiry and if it does, the resulting arrangement could instead be an out-of-contract or rollover arrangement.
3. Your Supplier Stops Trading
If a business energy supplier fails, Ofgem can appoint another supplier to continue the energy supply.
The new supplier may initially place the business onto a deemed contract.
4. Other Circumstances
Whether a deemed contractual relationship exists can depend on the individual circumstances.
If you’re uncertain, ask the supplier “Am I currently supplied under a deemed contract, and if so, what are my deemed unit rates and standing charges?”
Deemed Rates vs Out-of-Contract Rates This distinction is one of the most important parts of this page.
A deemed rate and an out-of-contract rate are not necessarily the same thing.
Deemed Contract Out-of-Contract Arrangement
How it arises
Can arise where energy is consumed without an expressly agreed contract
Can arise after an agreed contract expires where the existing terms specify what happens afterwards
Common example
Moving into premises without arranging energy
Existing fixed contract expires and contractual OOC terms take effect
Pricing
Supplier’s applicable deemed rates
Supplier’s applicable out-of-contract rates
Fixed term?
Generally not a conventional fixed-term agreement
Depends on the applicable contractual terms
Ofgem deemed-rate rules
Yes, where a deemed contractual relationship exists
Ofgem’s specific deemed-contract guidance doesn’t simply apply to OOC rates
Why Does the Difference Matter?
Ofgem’s deemed-contract rules require suppliers to take reasonable steps to ensure deemed terms aren’t unduly onerous.
Its deemed-contract guidance specifically distinguishes these arrangements from out-of-contract rates.
So don’t identify your tariff purely because the price looks high.
Confirm your actual contractual status with the supplier.
For the separate scenario, see our Business Energy Out-of-Contract Rates guide.
How Much Are Deemed Business Energy Rates in 2026? There is no single UK deemed electricity rate or deemed gas rate.
Rates can vary by:
supplier
fuel
meter
region
customer type
market conditions
the supplier’s applicable deemed pricing structure
That’s why we don’t publish one generic “2026 deemed rate” and present it as the amount every business will pay.
How Do I Find My Deemed Rate?
Check:
your latest bill
your supplier’s deemed-rate schedule
your welcome communication
your online account
Or ask the supplier directly for:
electricity unit rate
gas unit rate
standing charge
other applicable charges
confirmation that you are on a deemed contract
Use your actual supplier rate rather than an internet average when calculating what the arrangement is costing you.
For wider UK price benchmarks, see Business Energy Prices UK .
Why Can Deemed Energy Rates Be More Expensive? Ofgem says deemed rates are usually higher than negotiated contract rates, and one reason is procurement risk.
With an agreed contract, the supplier has more information about the commercial arrangement and expected duration of the customer relationship.
A deemed customer hasn’t chosen a fixed contractual commitment and in supplier-failure situations, Ofgem also explains that the incoming supplier can face additional risk because it may need to purchase wholesale energy at short notice.
Does That Mean Every Deemed Rate Is Excessive?
No.
A deemed rate being higher than a negotiated contract doesn’t automatically mean the supplier has broken Ofgem’s rules.
The regulatory test is more specific.
Suppliers must take reasonable steps to ensure deemed-contract terms aren’t unduly onerous .
That is different from imposing one universal maximum deemed rate.
How Do I Know If My Business Is on a Deemed Contract? Start with the circumstances, and you might need to investigate if:
you recently moved into the property
you haven’t agreed an energy contract
your previous supplier stopped trading
a previous agreement ended without a clearly agreed replacement
Check Your Bill
Look for references to:
deemed
default
out-of-contract
contract end date
tariff name
But terminology alone isn’t always enough.
Ask Your Supplier
Ask “Please confirm the contractual basis on which you are currently supplying this premises.”
Then ask for the applicable unit rates, standing charges and other charges as this is more reliable than assuming that every non-fixed tariff is deemed.
Moving Into New Business Premises: What Should You Do? Moving premises is one of the easiest ways to end up on a deemed contract – we would deal with the energy account as part of the move itself.
When You Take Responsibility for the Property
Record:
electricity meter reading
gas meter reading
meter serial numbers
date you became responsible for the premises
photos of the meter readings where practical
Then identify and contact the existing supplier.
Tell the Supplier You’ve Moved In
Provide the relevant change-of-tenancy information.
This helps establish:
when your liability begins
opening meter readings
the account holder
the rate currently being charged
Then Compare Contract Options
You don’t necessarily need to stay with the existing supplier.
Compare available options based on:
expected annual consumption
unit rate
standing charge
contract length
contract structure
additional charges
terms
Don’t sign a long-term agreement purely because you want to escape a deemed rate quickly.
The replacement contract still needs to be suitable.
How to Switch Off a Deemed Business Energy Rate Step 1: Confirm Your Current Status
Ask the supplier to confirm whether you’re on a deemed contract.
Step 2: Find Your Current Rates
Record:
unit rate
standing charge
other charges
Step 3: Establish Annual Consumption
Use recent bills or meter data where available, so if you’re new to the premises, historical consumption may help with initial estimates, but your own expected usage may differ.
Step 4: Compare Available Contracts
Compare the existing supplier and alternative suppliers where appropriate – the existing supplier could still offer the most suitable negotiated contract.
Step 5: Compare Total Annual Cost
Don’t select the lowest unit rate automatically, rather, calculate the expected annual cost.
Step 6: Check the Contract
Before agreeing, check:
contract term
pricing structure
standing charge
additional charges
termination provisions
end-of-contract arrangements
broker commission where applicable
See our Business Energy Contracts guide.
Compare business energy quotes →
How Much Could Moving Off a Deemed Rate Save? There isn’t a defensible universal saving such as “20%”, “30%” or “50%”.
It depends on:
your existing deemed rate
the negotiated rates available
your consumption
standing charges
other contract costs
Calculate it using your own figures.
Illustrative Example
Assume a business uses 40,000 kWh of electricity per year.
Its current deemed arrangement costs 31p/kWh + £1.50/day
A new quotation costs 25p/kWh + £1/day
Current Deemed Cost
40,000 × £0.31 = £12,400
£1.50 × 365 = £547.50
Illustrative annual cost = £12,947.50
New Contract
40,000 × £0.25 = £10,000
£1 × 365 = £365
Illustrative annual cost = £10,365
Illustrative Difference
£12,947.50 − £10,365 = £2,582.50 per year
These aren’t market rates or a savings guarantee, they simply demonstrate how to compare your existing arrangement against a quotation.
Use your own rates and consumption before making a decision.
What Happens If My Business Energy Supplier Goes Bust? If an energy supplier fails, Ofgem can appoint a new supplier to maintain continuity of supply.
For business customers, the replacement supplier can initially place the business on a special deemed contract.
Ofgem warns that this arrangement may be more expensive because the new supplier can face additional costs and risks, including buying energy at short notice.
Can You Switch?
Yes. However, when a supplier has just failed, follow Ofgem’s instructions around the transfer first so account information can be established correctly and once the replacement supplier contacts you, ask about its available business contracts and compare alternatives.
Are Deemed Business Energy Rates Regulated? Yes, but they aren’t subject to one universal maximum business rate.
Business energy customers aren’t protected by Ofgem’s domestic energy price cap.
Instead, specific licence conditions apply to deemed contracts.
Suppliers are required to take reasonable steps to ensure their deemed-contract terms aren’t unduly onerous .
Ofgem’s guidance explains how it assesses supplier compliance with these rules.
2026 Deemed Contract Review
Ofgem consulted in 2026 on changes to its deemed-contract guidance and the consultation considered areas including:
when a customer has the ability to consume energy
bad-debt recovery
customer-transfer blocking and delayed switching
security deposits
The consultation closed in July 2026 and, at the time this page was updated, Ofgem’s final decision was still awaited.
This means businesses should use the latest Ofgem guidance where a disputed or unusual deemed-contract situation arises.
How to Avoid Deemed Rates You can’t prevent every deemed-contract scenario – supplier failure is an obvious example.
But many can be avoided with better contract administration.
When Moving Premises
check energy arrangements before moving where possible
take opening meter readings
contact the incumbent supplier promptly
compare replacement contracts
Before an Existing Contract Ends
record the contract end date
understand what happens at expiry
check the switching window
start reviewing quotations before the deadline
See our Business Energy Switching Services guide.
Our View: Treat a Deemed Rate as a Trigger to Review Your Options A deemed contract isn’t automatically evidence that something has gone wrong – if you’ve just moved into a building, it may simply be the mechanism allowing the existing energy supply to continue while you establish the account.
But it shouldn’t be ignored.
Our preferred order is Confirm status → establish rate → check consumption → compare contracts → calculate total cost → check terms → switch or negotiate.
Don’t Confuse Urgency With Panic
Ofgem says deemed rates are usually more expensive than negotiated contracts, so there is a commercial reason to review the arrangement.
But that doesn’t mean accepting the first fixed contract offered.
A poor three-year contract can be a much bigger decision than spending a short period on a deemed arrangement while properly comparing your options.
Move promptly, but compare properly.
Deemed Business Energy FAQs What is a deemed business energy contract?
A deemed contract can arise automatically where a business consumes gas or electricity without having expressly agreed a supply contract. Moving into commercial premises without arranging energy is a common example.
Are deemed energy rates expensive?
Ofgem says deemed rates are usually higher than negotiated contract rates. The actual difference depends on the supplier, deemed tariff and alternative contracts available to your business.
How long does a deemed contract last?
Don’t assume a deemed business energy contract is a universal 28-day agreement. It can continue until the contractual relationship ends, for example because you agree another contract or switch supplier, subject to the applicable rules and circumstances.
Can I switch from a deemed energy contract?
Generally, yes. Deemed arrangements aren’t intended to lock businesses into a conventional fixed term. Check your circumstances with the supplier and compare available contracts.
Do I have to stay with the supplier already at my new premises?
Not necessarily. The incumbent supplier may initially supply the property, but you can investigate another contract or supplier. Compare the incumbent’s offer as well as alternatives.
Is a deemed contract the same as an out-of-contract tariff?
No. A deemed contract can arise without an expressly agreed contract. Out-of-contract rates can apply after an agreed contract ends where the contract specifies what happens afterwards.
Are deemed rates covered by the energy price cap?
Non-domestic energy contracts aren’t protected by Ofgem’s domestic energy price cap. Specific deemed-contract licence rules instead require suppliers to take reasonable steps to ensure deemed terms aren’t unduly onerous.
What should I do when moving into commercial premises?
Take meter readings, record when you became responsible for the premises, contact the existing supplier and establish the current tariff. Then compare negotiated business energy contracts.
How much can I save by leaving a deemed rate?
There isn’t a universal saving. Compare your current deemed unit rate and standing charge against available quotations using your actual annual consumption.
Can my deemed rate change?
Deemed arrangements aren’t necessarily fixed-price contracts. Check the supplier’s current deemed terms and pricing and how changes are communicated.
What if I think my deemed rates are unfair?
Ask the supplier for an explanation of the rates and confirmation of your contractual status. Ofgem requires suppliers to take reasonable steps to ensure deemed terms aren’t unduly onerous. Eligible small businesses may also have access to relevant complaints and dispute-resolution routes.
Compare Business Energy Contracts If you’re currently paying deemed rates, gather:
your latest bill
current unit rate
standing charge
annual consumption where available
MPAN and/or MPRN business postcode
Then compare replacement contracts on the same consumption basis.
Compare tailored business energy quotes →
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Contracts & Switching Prices & Comparison Administration & Procurement 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.
