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A guide to deemed energy contracts

In 2025, the average deemed business energy contract rate for small business energy customers is 35p/kWh. This is significantly more expensive than fixed contract rates, which are typically less than 25p/kWh.

In this guide, we explain how deemed energy contracts work in business energy, how they arise, how much they cost, and how to exit them.

What is a deemed energy contract?

A deemed business energy contract applies when your business uses electricity or gas without a formal agreement with the energy supplier.

It specifies how much you will pay for electricity and gas until a formal contract is arranged.

This section explains how a deemed energy contract typically arises, as well as its key terms and conditions.

When a deemed energy contract applies

A deemed energy contract is automatically formed when a business or individual uses energy without a formal agreement in place with the supplier.

Here are the three most common scenarios that result in a deemed energy contract for businesses:

A business moves into a new commercial property and begins using gas or electricity without arranging a contract with the existing supplier.
A termination notice is issued by a business to their energy supplier, but no new arrangement for energy is made.
A landlord uses power (for viewings, heating, security, etc.) in an unlet commercial property.

Terms and conditions of a deemed energy contract

Each business energy supplier publishes its deemed energy terms and conditions on its website. Here are the key terms to be aware of:

Unit rates: You’ll pay business gas rates per kWh and business electricity prices per kWh as published on your supplier’s website.
Standing charges: You’ll pay business electricity standing charges and business gas standing charges as published on your supplier’s website.
Duration: Ongoing, with no fixed end date and no requirement to provide notice. It is terminated by switching business energy suppliers, agreeing a new contract with your current supplier, moving out of the property, or disconnecting the electricity/gas supply.
Billing frequency: Business electricity bills and business gas bills are issued monthly or quarterly by post to the supplied address.

When do deemed energy contracts apply?

A deemed energy contract is a type of statutory contract. Unlike other types of business energy contracts, it does not require your business to make an agreement with an energy supplier.

Deemed contracts are created when an occupier of a property uses a supply of electricity or gas without having formally agreed terms with the property’s energy supplier. They are legally enforceable even without a signed agreement.

Deemed contract terms apply even if your business has never had any communication with your supplier and is unaware of the terms of the deemed contract.

What’s the difference between deemed rates and out-of-contract rates?

Out-of-contract rates and deemed rates apply separately in two different scenarios:

Deemed rates apply when there is no existing contract between the consumer and the supplier.
Out-of-contract rates can apply when a previously agreed fixed contract has expired.

Fixed business energy contracts include a provision explaining what will happen at the end of the fixed term if no other arrangements are made. This typically involves either an automatic rollover contract or moving onto out-of-contract rates.

Most business energy suppliers publish both deemed and out-of-contract rates on their websites. For some suppliers, both rates are the same, whereas for others, deemed energy contract rates are more expensive.

Why are deemed energy rates more expensive?

All business energy suppliers are required to publish their deemed rates on their websites.

In 2025, the average deemed energy rate for a small business energy customer is 50% more expensive than current fixed contract rates offered by the Big Six business energy suppliers.

There are three key reasons why deemed energy rates are more expensive:

Unknown energy consumption – Without a formal contract, a supplier is unaware of the business energy consumption of the property, making it difficult to purchase energy in advance.
Increased credit risk – The customer in a deemed contract is often unknown, making it hard to determine who to contact for bill payments, which increases the risk of non-payment.
Short-term contracts – A business can leave a deemed contract at any time, making it difficult for suppliers to plan their supply costs. As a result, they raise their prices to compensate.

Deemed energy contracts regulations

The energy regulator, Ofgem, enforces rules to protect consumers paying for energy under a deemed contract.

Ofgem sets out the following rules and requirements for energy suppliers:

Transparency – Suppliers must publish their deemed rates and full terms and conditions on their websites.
Termination – Consumers in a deemed contract must be able to terminate the contract at any time without exit fees or penalties.
Communication – As soon as a supplier identifies energy usage without a formal contract, they must proactively contact the customer to inform them of the existence of the deemed contract.

💡Mandatory communications from a supplier are typically sent by post to “The Occupier”, as the supplier often does not have the name or contact details of the new occupier.

Deemed energy contract pricing restrictions

Business energy suppliers can set their own deemed energy prices, provided the terms are reasonable and reflect the actual cost of supply.

There is significant variation in deemed rates from one supplier to another.

Deemed energy contract rates for properties with half-hourly electricity meters are more complex and depend on:

The DUoS charges in your region.
The maximum import capacity of your connection.

What are the risks when staying on a deemed contract?

There are several significant risks associated with businesses remaining on a deemed contract:

Excessively high prices – Deemed energy contracts are the most expensive way to pay for an electricity and gas supply. Staying on a deemed contract longer than necessary results in wasted money.
No price certainty – Deemed rates are variable and can change at short notice when there are significant movements in the wholesale gas market. Using deemed rates means businesses lack predictability in their energy costs.
Backdating risk – If you don’t regularly take energy metering readings, your business may be exposed to large, unexpected bills under deemed contracts.

How do I find my deemed energy rates?

Deemed energy rates are published on the website of your commercial electricity or business gas supplier.

You should receive a letter from your supplier informing you of your deemed contract, which will include a link to the applicable rates.

If you haven’t received any communication from your supplier, here are the steps to find out your deemed energy rates.

How do I find my deemed electricity rates?

Use the Energy Networks’ Find My Network Operator tool to identify the distribution network operator in your area.

Visit the website of your network operator, which will provide a tool to inform you about the current business electricity supplier and the MPAN associated with your address.

Search for “[business electricity supplier name] deemed rates” to locate their published deemed rates.

How do I find my deemed gas rates?

Use the Energy Networks’ Find My Network Operator tool to determine who manages the local gas distribution network at your address.

Your gas network operator’s website will have a tool for searching your current business gas supplier and the MPRN associated with your address.

Search for “[business gas supplier name] deemed rates” to locate their published deemed rates on the supplier’s website.

How to get away from a deemed energy contract

Here we explain the two main ways to leave a deemed business energy contract.

Arranging a contract with the current supplier

Arranging a fixed contract with your current supplier is the quickest way to avoid expensive deemed energy rates.

Here are the steps:

Collect quotes from your supplier – Call the customer services team of your deemed energy contract supplier to request fixed energy quotes. We recommend requesting fixed quotes for 1, 2, and 3 years, including options for green business energy, to give you the broadest choice.
Choose a fixed quote – Select the quote that best fits your business’s budget and environmental goals. The customer services department will typically send an e-signature request to accept the quote.
Receive contract confirmation – Your supplier will send you a copy of your new contract and confirmation of the go-live date, when the deemed contract will end.

We recommend taking a meter reading on the go-live date of your new contract to ensure accurate billing from the start of your fixed agreement.

Arranging a contract with another supplier

Arranging a new contract with a different supplier typically takes around three weeks to complete, but it may help you access the cheapest rates.

The process is also hassle-free when you let our business energy comparison experts manage your switch. Here’s how it works:

Find the cheapest supplier – Use our business electricity comparison or business gas comparison service to identify which supplier is offering the most competitive tariffs. Choose the tariff that offers the lowest cost based on your expected annual consumption.
Let us handle your switch – If you choose to proceed with one of our quotes, review and sign your new contract along with our standard letter of authority. Our experts will manage the switch and notify you of the go-live date for your new contract.

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