Out-of-contract and deemed rates explained: how you end up on them and how to move off

Nobody chooses a deemed rate. It happens to you: you move into new premises, a contract runs out, or a supplier fails, and your energy keeps flowing at a price you never negotiated. Because the energy never stops, it is easy to miss that the price has changed.

This guide explains the three situations people mix up (deemed, out-of-contract and rollover), how you land on each, what the regulator and Citizens Advice say about getting off them, and the practical steps. We are an introducer, so we set out options, not advice.

Deemed, out-of-contract and rollover: what is the difference?

These three terms get used as if they mean the same thing. Ofgem separates them, and the difference helps you work out what your options are.

In practice the label matters less than the question underneath it: did you choose this price? If not, it is worth finding out what you are paying and what else is available.

The four ways businesses end up on these rates

1. You moved into new premises

Ofgem says you are put on a deemed contract when you move into new business premises and use electricity or gas before agreeing a contract with a supplier. Citizens Advice says that if you do not arrange a contract before you move in, the previous tenant’s supplier will continue to provide the energy and you will probably be put on a deemed contract, which might cost a lot more than other tariffs. Ofgem adds that you are responsible for any energy you use before your new contract starts.

2. Your contract ended and said nothing about what happens next

Ofgem says your supplier will move you to a deemed contract if your old contract expires and it does not say what will happen after it ends.

3. Your fixed term ended and the contract does set out what happens

Then you move onto out-of-contract rates. Ofgem says these are usually more expensive than fixed-term contracts. Citizens Advice says that if you are in a rollover period or on an out-of-contract tariff, it is worth switching because they are usually very expensive.

4. Your supplier went out of business

Ofgem says you will be put on a deemed rate if your energy supplier goes out of business. Citizens Advice gives a specific warning here: do not switch tariff or supplier until your account is moved to the new supplier, because you might find it harder to get any money you are owed. Ofgem’s 2022 advice says you can then shop around and switch without exit fees once the transfer is complete.

How common is it?

More common than most owners think. In its March 2026 blog Ofgem said that a further 10 to 12% of businesses were currently on deemed contracts, on top of those coming to the end of fixed terms. That does not mean every one of those businesses was paying too much. It does mean a lot of businesses are on a price they did not actively pick.

Can I leave a deemed or out-of-contract rate?

Usually, yes, and easily. Ofgem says that with deemed, out-of-contract and rolling arrangements, which behave like variable contracts, you can switch to a new supplier at any time. Citizens Advice says that if you are on a deemed tariff you usually will not need to pay a fee or give notice to switch, and that if your fixed term has ended you can switch at any time without a supplier fee or notice.

There are a few exceptions and cautions:

• Evergreen contracts. Citizens Advice says if your contract has no end date you might have to give up to 30 days’ notice. Ofgem says microbusiness suppliers must acknowledge a request to end an evergreen contract within five working days.
• Money owed. Ofgem says your existing supplier may object to a switch, for example if you owe them money. If that happens, contact them straight away to find out what the issue is.
• Supplier failure. Wait until your account has moved before switching, as above.
• Your own contract. Always read the terms. Ofgem advises checking when you can switch, how much notice to give and whether there is an exit fee.

What to do when you take over new premises

Citizens Advice gives a clear sequence for a move. It is worth keeping handy:

1. Arrange a contract before you move in if you can. This avoids a deemed rate and lets you find out about any charges, such as a connection fee if the previous tenant was disconnected or it is a new property.
2. Find out who supplies the premises if you do not know.
3. Have proof of the change of tenancy. Citizens Advice lists confirmation from the landlord, confirmation from the solicitor or estate agent, a copy of your business rates statement, or a mortgage completion letter if you bought it.
4. Photograph the meter readings on day one and note the date, even with smart meters, and confirm the readings with the supplier.
5. Compare rather than settle. A deemed rate is a starting point, not a deal.

Moving out is the mirror image. Tell your supplier the date you are leaving and your forwarding address, photograph the final readings, and make sure everything is switched off. Citizens Advice warns that otherwise you might be charged for energy the next tenant uses.

Is it ever right to stay on a deemed or out-of-contract rate?

Sometimes, for a short time. Ofgem’s March 2026 blog says it may be better for a business to temporarily stay on deemed or out-of-contract rates if longer-term contract offers are high. It is a judgement call about timing, not a plan to drift. The key word is temporarily, and the key step is to look at what is on offer so you are making a choice rather than leaving it to default.

A worked example: what a missed date can cost

These figures are made up to show the mechanics, not a quote or a typical price. Suppose a business uses 40,000 kWh of electricity a year, which is inside the Ofgem microbusiness threshold of up to 100,000 kWh. Say its fixed unit rate was 25p per kWh and the rate it falls onto after the term is 30p per kWh. The difference is 5p per kWh.

The point is the shape: a small rise per unit is multiplied by a year of usage. Ofgem says a rollover can last up to 12 months for a microbusiness, so a default rate you never chose can run for a long time if nobody notices. Your own figures will differ. Your bill shows your rate and your annual usage, so you can run the same sum.

How to stop it happening again

• Diarise the end date and the switching window as soon as you sign. Ofgem says the window opens a few months before the end.
• Keep contact details current. Ofgem says to keep them up to date so you receive your bills and letters.
• Ask who is responsible. If you use a broker or introducer, ask who will tell you when your contract is due, and how.
• Put it in the handover. If a different person pays the energy bill than signed the contract, make sure they know the end date.
• Read the closing clauses of any new contract, especially the wording on what happens at the end. Ofgem says a contract that does not say what happens at the end can lead to a deemed contract.

Frequently asked questions

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