If you’ve just moved into new commercial premises, or your business energy contract ended and your bills suddenly jumped, you may have landed on a deemed contract business energy tariff.
This guide from Galaxy Region Utilities explains, in plain English, what deemed contract business energy means in the UK (Great Britain), how it starts, why it can cost more, what Ofgem says about fairness, and exactly what to do next to protect your business cashflow.
Deemed contract business energy
A deemed contract business energy arrangement is a default (automatic) energy supply contract that can apply when your business is using electricity and/or gas at a premises without having actively agreed a business energy contract with the supplier.
In Great Britain, Ofgem explains that a business can be placed on a deemed contract when it moves into new business premises and uses energy before agreeing a contract, and it can also happen when an old contract expires and doesn’t set out what happens next.
A helpful extra detail from Ofgem’s “Statement on Deemed Contracts” is that deemed contracts arise due to statutory provisions (they exist because the law creates them in certain circumstances), typically where supply is provided “otherwise than in pursuance of a contract”, and Ofgem’s general view is that consumption is needed for a deemed contract to arise.
Why does deemed contract business energy exist at all?
Because energy supply can’t “pause” every time a tenant changes. A deemed contract business energy setup ensures:
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Your lights stay on,
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Your equipment keeps running,
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Energy is billed to someone responsible for the premises.
The downside is that the deemed rate is rarely the best rate available, so the goal is usually to move from deemed to negotiated as quickly as practical.
When does a deemed contract business energy arrangement start?
In real business life, deemed contract business energy usually begins in one of these scenarios (and Ofgem’s guidance supports these “general principles”):
1) You move into new premises and start using energy
This is the classic scenario:
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You take keys to a shop, office, café, warehouse, or unit.
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The meter is already live with an existing supplier.
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You start trading (or fitting out) before setting up your own business energy contract.
Ofgem describes this as a typical trigger for deemed contracts.
2) Your fixed contract ends and there’s no “what happens next” clause
Ofgem notes that your supplier can move you to a deemed contract if your old business contract expires and it does not say what will happen after it ends.
Ofgem’s formal guidance adds important nuance: a deemed contract relationship may arise where an existing contract ends and the customer continues to consume energy, especially where the original contract doesn’t clearly provide for post-expiry or post-termination arrangements.
3) Your supplier goes bust and you’re transferred
This is less common day-to-day, but it matters.
Ofgem’s safety-net processes can transfer business customers to a new supplier after a supplier failure, and Ofgem’s business guidance explains you’ll continue to have supply and can later shop around without exit fees once contacted.
(For household customers, Ofgem also explains new suppliers may put customers on a “special deemed contract” during transfers, this is the same general “you didn’t choose it” idea.)
Deemed contract business energy vs out of contract rates vs rollover contracts
This is where many articles (and plenty of businesses) get confused, so let’s make it crystal clear.
Deemed contract business energy (default contract you didn’t agree)
A deemed contract business energy relationship is typically created because:
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You’re consuming energy without negotiating a contract, or
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Your old contract ended and there’s no continuing contract term covering what happens next.
Ofgem’s guidance sets out when deemed contracts are likely to exist and ties the deemed relationship to the underlying statutory provisions.
Out-of-contract rates (OoC) are different
Ofgem’s guidance explicitly states:
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OoC rates are the rates customers are put onto as defined by the terms of their contract when their current contract continues after the fixed term expires, and
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Deemed rates are different from OoC rates and the terms are not interchangeable.
Ofgem’s business advice page also distinguishes “out-of-contract” as different to a deemed contract.
Plain English:
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Out-of-contract = your contract itself explains what you pay after the fixed term.
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Deemed = you’re on a default arrangement because there wasn’t an agreed/continuing contract in place for that situation.
Rollover / evergreen contracts
A rollover (evergreen) contract is when a supplier automatically rolls you into continued terms if you do nothing at renewal. Ofgem describes rollover/evergreen contracts in its business contract guidance and notes a specific protection: microbusinesses cannot have a rollover contract for more than 12 months.
Why deemed contract business energy rates are often higher
Most businesses discover deemed contract business energy when they see a bill and think: “Why is this so expensive?”
Here’s why it happens (and why Google’s top guides keep warning about it):
1) You’re not “shopping” the market
Deemed contract business energy is what happens when a supplier is providing energy before a negotiated deal exists. Price comparison guides often note that deemed rates are usually higher than fixed/negotiated rates and recommend moving to a negotiated deal quickly.
2) Supplier-set rates (and they can change)
Unlike a fixed contract you agreed, deemed rates are typically “default” published rates.
Some suppliers publish deemed rates and deemed terms and conditions openly and update them on effective dates (which illustrates how supplier-set and changeable they can be). For example, SmartestEnergy describes deemed contracts as default arrangements and notes an obligation to publish deemed rates and terms, with “effective from” dates shown.
3) Risk + admin for the supplier
From a supplier perspective, deemed customers can be unpredictable:
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No agreed term length,
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Uncertain credit risk,
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Uncertain consumption pattern,
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Unknown business profile at move-in.
That uncertainty can lead to higher default pricing.
4) There is no general business energy price cap
A key point many business owners miss: the domestic “price cap” you hear about on the news is not a general cap for business tariffs.
Ofgem’s guidance discusses how domestic deemed rates fall under price cap requirements while the cap is in effect, this is specifically discussed in the domestic context.
For non-domestic customers, the more relevant protection is that suppliers must ensure deemed contract terms are not unduly onerous (more on that next).
Deemed contract business energy rules and Ofgem protections (what “fair” means)
If you’re on deemed contract business energy, you’re not powerless.
Ofgem’s guidance explains that suppliers are required (by licence) to take “all reasonable steps” to ensure deemed contract terms are not unduly onerous, and it also explains one way terms can be considered unduly onerous, if revenue derived significantly exceeds supply costs (and by more than the supplier’s general revenue-cost relationship).
What “unduly onerous” means in practice
You don’t need to become a regulatory lawyer, but you can take practical steps that align with the spirit of Ofgem’s guidance:
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Ask for the deemed contract terms in writing (or a link to them).
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Ask for the current deemed unit rate and standing charge, and the date they became effective.
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Ask what your options are for moving to a negotiated tariff.
Many suppliers publish deemed rate documents and prior versions may be available on request (SmartestEnergy explicitly mentions former publications being available on request).
Microbusiness and small business support (complaints & redress)
Ofgem’s business guidance notes that micro and small businesses should first raise issues with the supplier (and broker if used), and may be able to go to the Energy Ombudsman if not resolved, while medium/large businesses may need civil courts.
Separately, Ofgem has also communicated wider changes aimed at giving businesses greater protection and expanding access to redress (including definitions and thresholds).
(In short: if you’re a smaller business and you feel stuck or treated unfairly, you have more routes than “just accept the bill.”)
How to tell if you’re on a deemed contract business energy tariff
Businesses often don’t receive a big red warning saying “YOU ARE ON DEEMED.” Instead, look for these clues.
1) Your contract paperwork is missing (or never existed for this site)
If you can’t find:
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A signed contract,
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A renewal confirmation,
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A welcome pack for the current premises,
…and you recently moved in, deemed contract business energy is a strong possibility.
2) Your bill uses language like:
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“deemed”, “deemed rates”, “deemed tariff”
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“default rates”
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“out of contract” (sometimes used loosely in the market, though Ofgem treats OoC and deemed as different definitions)
3) You moved premises recently
Ofgem explicitly points to moving into premises and consuming energy before agreeing a contract as a key trigger.
4) Your supplier changed after a supplier failure
If your supplier went bust, Ofgem’s business guidance explains you’ll be contacted by the new supplier and can ask about tariffs or shop around once you’re contacted.
How to get off deemed contract business energy (step-by-step)
The fastest way off deemed contract business energy is usually to either:
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agree a new contract with the current supplier, or
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switch to a new supplier on a negotiated business tariff.
Here’s a practical checklist you can follow.
Step 1: Confirm who is responsible for the supply (tenant vs landlord)
Before you do anything else, confirm:
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Who is named on the lease for utilities?
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Is energy included in rent/service charge, or separately metered to you?
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Are you responsible for the whole site, or a sub-metered unit?
This matters because the “responsible party” is the one who should contract.
Step 2: Gather the information suppliers need (to avoid delays)
Have this ready:
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Business name and registered address
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Site address (supply address)
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Latest meter reading(s) and the date taken
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Banking details (if paying by Direct Debit)
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Estimated annual consumption (or last 12 months usage if available)
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Any special meter setup (half-hourly, multi-rate, etc.)
Step 3: Ask for the current deemed rates and deemed terms (so you can benchmark)
Many suppliers publish their deemed rates and terms. SmartestEnergy provides links to “latest deemed rates” and “deemed terms and conditions,” and even notes that older publications can be requested.
This isn’t just admin, it gives you negotiation leverage and helps you spot if you’re being billed correctly.
Step 4: Compare negotiated quotes (this is where Galaxy Region Utilities helps)
At Galaxy Region Utilities, this is the stage where we typically help clients by:
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Validating the site details,
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Checking tariff type suitability (fixed vs flexible, single vs multi-site),
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Comparing offers and contract terms (not just the p/kWh headline),
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Aligning the contract start date to get you off deemed quickly.
Step 5: Switch or sign, and manage the handover properly
Important operational steps:
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Take an “on the day” meter reading (start date and end date of deemed period).
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Keep photos/time-stamps where possible.
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Track the switch confirmation and agreed rates.
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Make sure the first bill on the new tariff matches the effective date.
Step 6: Clear any debt issues that might block switching
Some suppliers note that if there is debt on the account, it may need to be settled before switching supplier. (For example, Bryt Energy’s deemed/out-of-contract page explicitly flags debt expectations when switching.)
Deemed contract business energy moving premises checklist (avoid deemed rates before they start)
If you’re relocating (or opening a second site), this is the single most valuable section to save money.
Before you move
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Ask the landlord/agent: Who is the current supplier?
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Request the last bill (or at least the supplier name).
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Plan your contract start date for move-in day (or the earliest day you’re responsible).
On move-in day
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Take meter readings immediately (photo + date).
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Notify the supplier you’re the new occupier (this helps avoid billing disputes later).
Within the first week
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Don’t “wait until the first bill arrives.” That’s how deemed contract business energy costs rack up.
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Lock in a negotiated contract (or start the switch).
If the premises is a new-build
Developers sometimes set an initial supplier arrangement. If you start consuming before your contract is set, deemed contract business energy can still apply, so treat new builds as “high risk” for deemed rates and act fast.
Deemed contract business energy FAQs (long-tail SEO targets)
1) What is deemed contract business energy in the UK?
Deemed contract business energy is a default supply arrangement that can apply in Great Britain when a business uses energy at premises without agreeing a contract, commonly when moving into new premises or when a contract ends without clear post-term provisions.
2) Is deemed contract business energy legally binding?
A deemed contract exists because law/statutory provisions can create a deemed contract relationship in certain circumstances where supply occurs otherwise than under an agreed contract. Ofgem’s statement describes deemed contracts as arising from statutory provisions.
(If you need a legal opinion for a dispute, get qualified legal advice, this article is general information.)
3) How long does deemed contract business energy last?
In practice, deemed contract business energy often operates like a rolling default arrangement until you agree a contract or switch. Some consumer guides describe deemed contracts as rolling (often referenced as 28-day rolling).
Your exact position depends on supplier terms and the circumstances, so always check the deemed terms.
4) Is deemed contract business energy the same as out-of-contract rates?
Not according to Ofgem. Ofgem’s guidance explicitly says deemed rates are different from out-of-contract (OoC) rates and the terms are not interchangeable.
5) Can a microbusiness be put on deemed contract business energy?
Yes, if the microbusiness moves premises and uses energy before agreeing a contract, it can still be placed on deemed rates. Ofgem’s guidance and business advice describe moving premises as a typical trigger for deemed contracts for “any type of customer.”
6) What counts as a microbusiness for business energy?
Ofgem has defined microbusiness consumers using criteria such as low annual consumption thresholds and/or fewer than 10 employees and turnover/balance sheet thresholds (see Ofgem’s notes in its business protections communications).
7) How do I get out of deemed contract business energy quickly?
Usually by agreeing a negotiated tariff with the existing supplier or switching to a new supplier. The key is to act quickly, gather site details, and complete the switch/contract process so you stop paying deemed rates.
8) What happens if my business energy supplier goes bust, do I go onto deemed contract business energy?
Ofgem’s business guidance explains your supply won’t be disrupted, you should take a meter reading, and you’ll be contacted by the new supplier. When contacted, you can ask about tariffs or shop around and switch, without exit fees in that process.
9) Are deemed contract business energy rates capped?
There is a domestic price cap, but business energy doesn’t work the same way. Ofgem’s guidance discusses domestic deemed rates under the price cap (domestic context), while for deemed contracts more generally it focuses on suppliers ensuring deemed terms are not unduly onerous.
10) Who can help me compare and switch from deemed contract business energy?
That’s exactly what Galaxy Region Utilities supports: comparing negotiated business energy quotes and managing the steps to move you from deemed rates to a contract that fits your usage profile and risk preferences (fixed vs flexible, single vs multi-site).
Key takeaways: deemed contract business energy (what to do today)
If you remember nothing else, remember this:
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Deemed contract business energy is a default arrangement—common after moving premises or when a contract ends without clear post-term terms.
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Out-of-contract and deemed are not the same thing (Ofgem treats them differently).
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Deemed rates are often more expensive than negotiated deals, so time matters.
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Suppliers must ensure deemed terms are not unduly onerous (Ofgem guidance explains this principle and one test for it).
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The fastest savings usually come from agreeing a negotiated contract or switching supplier, with good meter-reading and documentation hygiene.
If you suspect you’re on deemed contract business energy (or you’re moving premises soon), Galaxy Region Utilities can help you:
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Confirm whether you’re on deemed rates,
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Benchmark against negotiated business energy quotes,
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Switch efficiently (with proper meter-read documentation).
If you want, paste the first page of your latest business energy bill (redact personal info) and I’ll tailor the “get off deemed contract business energy” steps into a precise checklist for your exact situation (electricity only, gas only, or dual site).
Contact Us Today!