What are out-of-contract electricity rates?
The default prices that start the day your contract quietly ends, and the fastest way off them.
Out-of-contract electricity rates are the default prices a supplier bills when a fixed contract ends and nothing replaces it. They’re set by the supplier, sit well above negotiated rates, and carry on until you agree a new contract. Nothing switches off and nobody warns you twice, which is precisely why they’re profitable.
Quick snapshot
- Out-of-contract, deemed and rollover are three different states with different rules.
- The gap against a negotiated rate is substantial. The live comparison sits in our deemed rates glossary entry.
- Getting off them usually takes weeks, not months, and typically without exit fees.
Three default states, not one
Out-of-contract applies when a contract you held has expired without renewal: the relationship continues, the agreed prices don’t. Deemed rates apply where no contract ever existed at the meter, typically after moving into a premises. A rollover contract is different again: the supplier has created a fresh fixed term automatically, at prices you didn’t negotiate, and that one binds until it ends.
The distinctions matter because your rights differ. Deemed supplies can be left on a maximum of 30 days’ notice with no exit fee. Out-of-contract billing is usually similar in practice. A rollover has you contracted, and escaping mid-term is a different conversation.
How businesses end up here
Almost never by decision. A termination notice window closes unnoticed. A tenancy changes and the paperwork doesn’t follow. A multi-site portfolio has one meter whose end date lived in a spreadsheet nobody opened. The pattern across all of them is silence, not error. The full detail on each state is in our out-of-contract rate glossary entry.
What it actually costs
Default rates sit at the expensive end of every supplier’s book, and the comparison table in our deemed rates glossary entry shows the current gap against negotiated pricing. The number that matters more is time. An illustrative case: a site whose contract lapsed in March and gets sorted in September hasn’t overpaid once. It’s overpaid every day for six months, silently, at the worst prices available.
Getting off them
Agree any negotiated contract and the default billing ends when it starts, usually within weeks. Out-of-contract arrangements generally carry no exit penalty, so there’s nothing to buy your way out of; you just need the new deal in place. Have your MPAN, annual kWh and a recent bill ready, and the process is genuinely quick. Our guide to getting the best electricity quotes covers the details.
Then fix the root cause: diarise the new contract’s end date and its notice window the day you sign. Businesses that do this once never meet out-of-contract rates again.
The multi-site angle
Portfolios collect default rates the way lofts collect boxes. Twenty meters means twenty end dates, and the one that slips is rarely the flagship site anyone watches. It’s the small supply at the depot that was on someone’s spreadsheet three restructures ago.
The cure is one calendar for the whole estate, with every end date and notice window on it, owned by someone whose job survives reorganisations. That’s precisely what our multi-site and multi-utility management service exists to be.
Frequently asked questions
Are out-of-contract rates legal?
Yes. Consuming electricity without an agreed contract creates an implied one under UK law, priced at the supplier’s published default rates. The protection is procedural, not price-based: you can leave quickly, but nobody caps what you pay while you stay.
How quickly can we get off out-of-contract rates?
Typically within a few weeks of agreeing a new contract, and there’s usually no exit fee on the default arrangement itself. The transfer runs like any switch: the new supplier takes over billing, the power never blinks.
Does the same happen with gas?
Yes, on a parallel legal framework, and often to the same business at the same time since contracts frequently end together. The gas version is covered in our guide to out-of-contract gas rates.
Can we claim back what we overpaid on default rates?
Generally no, if the billing was correct: the rates were lawfully applied to a contractless supply. Billing errors are a different matter, and if the period included wrong reads or misapplied charges, our bill audit service can pursue those.
Do suppliers have to tell us our contract is ending?
Renewal notices are standard practice and micro-businesses have extra protections around renewal terms, but the responsibility for acting sits with you. A notice that arrives in a shared inbox nobody owns has legally been sent. Diarising your own dates beats relying on the post.
Is a rollover better than out-of-contract billing?
Usually cheaper per unit, and considerably worse for your options, because a rollover binds you to a fresh term at prices you didn’t negotiate. Out-of-contract costs more per day but can be escaped in weeks. Neither is a state anyone chooses on purpose.
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