How much more do deemed rates cost than fixed rates?
Typically a lot more. One comparison site's October 2026 averages put out-of-contract electricity at 40.0p/kWh plus 254p a day, against 28.4p plus 58p a day for a microbusiness fixed deal. On 20,000 kWh a year that is roughly £3,000 more before VAT, using those indicative figures.
If you move into premises without agreeing a contract, you can land on a deemed contract. Ofgem warns that you could be put on deemed rates, which can change more often than fixed rates, and that you can choose a contract at any time. The cost gap can be large.
Indicative figures
Moneysupermarket Business (a comparison site) published these averages on 21 October 2026. They are indicative, the source does not say whether they include Climate Change Levy, and the page itself has some internal inconsistencies, so use them to see scale, not to budget.
| Fuel | Micro fixed average | Out-of-contract average |
|---|---|---|
| Electricity | 28.4p/kWh + 58.0p/day | 40.0p/kWh + 254.0p/day |
| Gas | 8.8p/kWh + 44.9p/day | 12.0p/kWh + 338.0p/day |
For context, the government's Q2 2026 non-domestic average was 24.51p/kWh for electricity and 5.28p/kWh for gas, including CCL, though the two measures are not calculated the same way.
Worked example: electricity
A small shop using 20,000 kWh a year, before VAT:
- Fixed: 20,000 x £0.284 = £5,680; standing charge 365 x £0.58 = £211.70; total £5,891.70.
- Out of contract: 20,000 x £0.40 = £8,000; standing charge 365 x £2.54 = £927.10; total £8,927.10.
- Difference: £3,035.40 a year, about 52% more.
Worked example: gas
A café using 30,000 kWh a year:
- Fixed: 30,000 x £0.088 = £2,640; plus 365 x £0.449 = £163.89; total £2,803.89.
- Out of contract: 30,000 x £0.12 = £3,600; plus 365 x £3.38 = £1,233.70; total £4,833.70.
- Difference: £2,029.81 a year, about 72% more.
Per month, that is about £3,035.40 ÷ 12 = £253 extra on electricity and £2,029.81 ÷ 12 = £169 on gas.
Why are deemed rates higher?
Suppliers aren't buying energy for you under a negotiated deal, there's no commitment, and the rates can move. There is no Ofgem price cap on business energy, so nothing limits them.
What protects you
- You cannot be charged a termination fee for leaving an out-of-contract deal.
- Microbusinesses can't be required to give notice to switch, except under evergreen contracts (up to 30 days).
Get off deemed rates quickly: see how to get off deemed rates, check the out-of-contract cost calculator and read moving premises and deemed contracts.
The cost of staying put
Using the electricity example above, the extra £3,035.40 a year works out at £3,035.40 / 12 = about £253 a month. For every month you stay on deemed rates unnecessarily, that is the premium. Check your own rates against the calculator.
Standing charges are the sting
In the electricity example, the unit rate is about 41% higher (40.0p against 28.4p), but the standing charge is more than four times higher (254p against 58p a day). A low-use premises feels this more. Annual standing charges: £927.10 against £211.70, a gap of £715.40.
What to do on day one
Sources
General information only. Energy prices, rules and supplier terms change; check the latest position with your supplier, Ofgem or the Energy Ombudsman before you act.