In this piece, we’ll explore both of these factors and explain how you can save money by avoiding these rates wherever possible with Business Energy Comparison.
Out Of Contract And Deemed Rates
Why Has My Business Been Placed On Out Of Contract Rates?
Your business could be placed on deemed rates for a few different reasons.
- If your current contract expires and you don’t take out a new one before it ends, you will have to pay deemed rates.
- If your business moves to new premises, and you haven’t made any arrangements to secure a contract with your new supplier.
If you terminate your contract with your existing supplier and don’t take any further action.
Why Are Deemed Rates More Expensive?
Energy suppliers don’t just make deemed rates more expensive to force customers into contracts, as they have a few good reasons for this.
Deemed rates are more expensive, as suppliers buy their energy in advance and use their customer’s contracts to determine how much to buy.
If a lot of a supplier’s customers are on deemed rates, then they will have no idea how much energy they will need to purchase to meet the demand.
Suppliers make these rates expensive to discourage customers from staying on deemed contracts. Deemed rates are also more expensive and are used to penalise customers owing money to their supplier. Customers are also penalised if they don’t pay their accounts via direct debit.
Customers that don’t pay via direct debit also cost suppliers more money, so they charge expensive rates to compensate for this.
Another reason deemed rates more expensive is because out of contract customers can leave at any time. These customers will also not face any penalties for switching suppliers, as there is technically no contract in place. This unexpected loss of a customer also costs suppliers money, so they need to make up for this.
What Happens If I Don’t Pay Deemed Rates?
If you are on a deemed contract and don’t make payments, then you will face the same consequences that contract customers do.
If you miss payments from your deemed contract, you will become indebted to your supplier. If this amount accumulates significantly, then your energy supply could be cut off completely. This is not common, so your account will need to be seriously in arrears for this to occur.
Your supplier should notify you long before this occurs, though, so it would be best to pay your bill and secure a contract.
If your business is currently on a deemed contract, and you want to find a new supplier to save some money, contact Business Energy Comparison today.
We can provide you with free quotes from the best energy suppliers in minutes. This will help you avoid paying for expensive deemed rates as we compare business gas and electricity prices to secure the best deal for your business.
Frequently Asked Questions
No, you don’t need to cancel a deemed contract if you plan on switching to a new contract. Your deemed rates will fall away automatically once you secure a new contract, just as they were applied automatically when you were out of contract.
You can continue paying deemed rates for as long as you want, although this is not advised as they are much more expensive.
Deemed contracts are considered to be rolling contracts, as, after 28 days, they expire. After your deemed contract has expired, you will move to a new deemed contract that could be even more expensive. This will depend on the energy prices at the time your contract expires, though.
Fixed contracts don’t cause you to pay the same for gas and electricity every month. The “fixed” part of your contract applies to the price you pay per unit for energy. This means that if you use less energy, you will pay less for your bill.
Not necessarily. While variable tariffs will allow you to benefit when energy prices are low, you will need to pay more when prices rise.
Variable tariffs are slightly unpredictable, so if you are worried about the price of your energy bill, a fixed contract would be best.
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