Out of contract rate

What it is

When a fixed-term contract ends and you do not agree a new one, you may be moved to the supplier's out-of-contract rate. This is a standard variable price that the supplier can change, and it is usually higher than a fresh fixed deal. It is similar to a deemed contract, except that you had an earlier agreement with that supplier.

Where you will see it

• On a letter or email before your contract ends (a renewal notice).
• On bills after the end date, where the unit rate changes.

Why it matters

You are not locked in. There is no termination fee for leaving an out-of-contract arrangement, and a microbusiness cannot be forced to give notice except under an evergreen contract (up to 30 days). So switching is usually quick. The expensive part is waiting.

A comparison site reported on 21 October 2026 average out-of-contract prices of 40.0p/kWh and 254.0 pence a day standing charge for electricity, against 28.4p and 58.0p for a microbusiness fixed rate. Treat these as indicative.

Example

A shop uses 20,000 kWh a year. Out-of-contract versus fixed, units: (40.0 - 28.4) = 11.6p, so 20,000 x £0.116 = £2,320. Standing charge: (254.0 - 58.0) = 196p a day x 365 = £715.40. Combined, about £3,035 a year more, before CCL and VAT. Check your own figures with the out-of-contract calculator.

Diarise your contract end date and start comparing well ahead. See how early you can agree a new contract.

Related terms

How much more deemed rates cost and rollover contract.