Deemed contracts, out-of-contract rates and moving business premises

A deemed contract is what you are put on when you use gas or electricity at a business premises without having agreed a contract. It usually has some of the dearest rates on the market, but it has no exit fee, so you can leave whenever you like. This page covers deemed and out-of-contract rates, what to do when you take over premises, and what to do when you move out.

Deemed, out-of-contract and rollover: the differences

Situation	How you got there	Typical result
Deemed contract	You moved in and used energy without agreeing a contract	Supplier's default "deemed" rates, which can change
Out-of-contract	Your fixed term ended and you did not renew or switch	Out-of-contract rates, or a rollover if the supplier followed the rules
Rollover	The supplier renewed you into a new fixed term	A new fixed term, 12 months at most

The terms overlap in everyday speech and suppliers use them differently, so check which one your paperwork says. In all cases the law gives you a way out. For definitions see the glossary entries for deemed contract, out-of-contract rate and rollover contract.

Why you end up on a deemed contract

Ofgem warns that if you move into new premises without agreeing a contract, your supplier could put you on a deemed rate contract, where rates can go up and down more often. It also says you are responsible for the energy you use before your own contract starts. E.ON Next, in its guidance, adds that a deemed contract can also follow a supplier failure, until you pick a new deal. In practice the supplier already registered at the address becomes yours by default.

You can arrange a contract before you move in, or any time after. Most suppliers will not let you switch before an existing contract ends, though, so see exit a business energy contract early.

What deemed and out-of-contract rates cost

There is no price cap on business energy, so these rates are set by the supplier; see business energy price cap. Moneysupermarket's business price trends page (21 October 2026) gives average figures that are indicative only, and we use them for the sum below.

Moneysupermarket averages, Oct 2026	Unit rate	Standing charge
Micro business, fixed electricity	28.4p/kWh	58.0p/day
Out-of-contract electricity	40.0p/kWh	254.0p/day

Worked example: 20,000 kWh a year

1. Out-of-contract: 20,000 × £0.40 = £8,000, plus 365 × £2.54 = £927.10. Total £8,927.10.
2. Fixed: 20,000 × £0.284 = £5,680, plus 365 × £0.58 = £211.70. Total £5,891.70.
3. Difference: £8,927.10 − £5,891.70 = £3,035.40 a year before VAT, about £253 a month.

Your actual figures will differ, so run your own through the out-of-contract cost calculator, and see how much more deemed rates cost.

Your rights on a deemed or out-of-contract rate

• No termination fee. Out-of-contract customers cannot be charged a fee to leave.
• No notice for microbusinesses. Suppliers cannot require a microbusiness to give notice to switch, except on an "evergreen" contract, where up to 30 days can be asked. See evergreen contract.
• Rollovers are capped for microbusinesses. A supplier can only roll a fixed term over if it gave the required renewal information (its renewal letter must explain what you need to do and by when), you did not serve notice stopping it, and the new term is 12 months or less. See rollover contracts and business energy renewals.

Check whether you are a microbusiness; many of these protections apply only to micro and, for some, small businesses.

Change of tenancy: taking over premises

When you move in, or out, tell the supplier at the premises as soon as you can. Ofgem's change of tenancy guidance says:

1. Notify the current supplier, with a meter reading if you can. This can be done by you, your broker or a third-party intermediary.
2. Provide evidence when asked, such as a lease, sale documents or title deeds.
3. The supplier has 10 working days to review. It will close the old account and open a new one, reject the change giving reasons, or ask for more evidence.
4. If you are changing supplier too, notify both suppliers. The new supplier starts the switch; the current supplier accepts it if it agrees a change of occupier has occurred.

Protect yourself on day one

• Photograph every meter, with date and serial number visible, on the day you get the keys.
• Give the supplier your opening readings. Otherwise it may estimate from past use, which could reflect the previous occupier.
• Keep the lease or contract of sale. Pointing to the date you took the premises is the best defence against bills for earlier use.
• Confirm every meter point, since one address can have several. See find your MPAN and MPRN.

Evidence of the date you took over the premises is your main protection against being billed for the previous occupier's use. If a supplier tries to pass on earlier charges, ask it to show why they are yours. See who pays if the previous tenant left energy debt.

Moving out

Ofgem advises checking your terms, whether you are in credit or debt, and whether energy is in your tenancy agreement, before you move, and telling your old supplier. Give a final reading on the day. Also read do I tell my supplier when I move premises and close a business energy account. If your fixed contract is still running, can I take my energy contract to new premises explains the options.

Getting off a deemed contract

1. Work out your annual use. Use the business energy cost calculator if you have no history.
2. Get quotes (see how to switch business energy).
3. Agree a contract. As there is no termination fee, you can leave at once.
4. Note that unpaid debt can complicate a switch; see can I switch if I owe money.

The step-by-step version is in how do I get off deemed or out-of-contract rates.

If something goes wrong

If you receive an unexpected bill, disagree with the change-of-tenancy decision, or the supplier takes more than the 10 working days, use the supplier's complaints process first. If it is unresolved after 8 weeks, or you get a deadlock letter, you can take it to the Energy Ombudsman within 12 months, if you are a micro or small business. See energy disputes and ombudsman.

Next steps

1. Moving in: photograph meters, tell the supplier, and book a quote within days.
2. Out of contract: compare quotes this week; every month costs.
3. Moving out: give the final reading and settle the account.

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