Navigating the energy landscape: What are deemed prices?

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As a business owner, you may be confused about energy contracts and unsure about the deal you have. This could mean you get placed on a deemed energy contract. Simply put, this is the default or standby contract you’ll be put on.

If you can't find an energy contract, the deemed tariff will keep your business running by ensuring the lights stay on. However, it is more expensive than other options. About 10% of UK micro businesses use this tariff. It's important to take a closer look at your energy options. These tariffs are often a lot more expensive than a fixed term contract, sometimes up to 80 per cent more according to Ofgem. If you are on a high energy tariff, don't worry. It's easy to switch to a better one and start saving money quickly.

Why are deemed rates more expensive?

As we’ve mentioned, deemed energy rates can often be more expensive than fixed rates. This is mostly due to the fact that the energy supplier knows little at this point about what your business is doing and thus how your energy will be used. Businesses would normally be charged based on how and when they used their energy, so until the supplier knows this, they usually charge higher rates. Once the supplier knows more about how your business operates, they’ll be more well informed to offer you a good deal. Other factors impact this too, such as credit score for example.

How can I tell if my business is on a deemed contract?

Suppliers must inform you if they are placing you on a deemed contract and explain the type of contract they are transferring you to. They should also let customers know about the other available contracts that are on offer to them. If you have not received this information, contact your supplier directly to confirm what contract type you are on. The suppliers must also publish the deemed rate prices online.

Why is my business on a deemed energy price?

If you know your business is paying a deemed energy rate and are unsure why, you won’t be alone. If your business has recently moved into a new premises, it can often be the case that you’ll find yourself on a deemed energy tariff. If electricity and gas is used before a deal is agreed, the building’s existing energy supplier will place you on a deemed rate until this is organised. To avoid this, make sure you get in touch with the energy provider as soon as possible to avoid being put on to a deemed contract.

What should I do if I’m on a deemed contract?

Deemed contracts can sometimes work out as a positive thing for a business as they do change very frequently in line with energy market climates so you might choose to stay on one.

However, if you’re looking to bid farewell to your deemed tariff and gain a more competitive rate for every watt of energy utilised, why not talk to us and we can help you make the SmartChoice.