Explainer
What are out-of-contract electricity rates?
The default prices that start the day your contract quietly ends, and the fastest way off them.
Part of our business electricity guides
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, so it’s easy to stay on them without noticing.
- 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 electricity rates are the default unit rates and standing charges a supplier bills once a fixed electricity contract has expired with no replacement agreed. They’re set by the supplier rather than negotiated, aren’t capped for business customers, and apply to each MPAN until a new contract goes live, whether the meter is half-hourly or non-half-hourly.
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. A deemed supply has no fixed term and ends once a contract is agreed, though some suppliers’ deemed terms ask for notice, so check them. 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.
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 track end dates rarely end up on out-of-contract rates.
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.
Related guides
Common questions
Are out-of-contract rates legal?
Yes. Consuming electricity without an agreed contract creates a deemed contract under Schedule 6 of the Electricity Act 1989, priced at the supplier’s published default rates. The protection is procedural, not price-based: business rates aren’t capped, though Ofgem requires deemed terms not to be unduly onerous.
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?
Suppliers must send microbusinesses their renewal terms around 60 days before the end date, 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.
More business electricity guides
Business electricity vs domestic electricityEON Deemed RatesEDF Deemed RatesDeemed ratesBusiness electricity, explained
Your questions on this, answered in order
The questions businesses actually ask about this topic, in the order they tend to ask them. Each answer leads to the next; where we can help, there is a link.
Why has my business electricity bill suddenly gone up after my contract ended?
When a fixed contract ends and nothing new is agreed, suppliers usually move you onto out-of-contract or rollover rates. If you’ve moved into premises without agreeing a contract, you’ll be on deemed rates. Both are typically higher than negotiated contract prices. You can usually leave these rates without a termination fee by agreeing a new contract.
What’s the difference between deemed and out-of-contract rates?
Deemed rates apply when you use electricity at a premises without ever agreeing a contract, such as after moving in. Out-of-contract rates apply when an agreed contract has ended and you haven’t renewed or switched. Both tend to cost more than fixed contracts, and both can usually be left by agreeing a new contract with the current or a new supplier.
Can I leave out-of-contract rates straight away?
In most cases, yes. Deemed and out-of-contract arrangements aren’t fixed terms, so you can usually agree a new contract and switch without an exit fee, subject to any short notice in the supplier’s terms. The main thing that can delay a switch is outstanding debt on the account, so it helps to clear or agree arrears first.
Should I just accept my current supplier’s renewal offer to get off rollover rates?
Accepting your current supplier’s offer is the quickest route, but it isn’t always the most suitable. Suppliers price new customers and renewals differently, and a quote prepared when you’re already on rollover rates may not reflect the wider market. Comparing a few offers on the same term and checking standing charges as well as unit rates gives you a fair view.
Can I get my electricity on a contract today if I’m on deemed rates?
Usually you can agree a new contract quickly, with the supply moving across once the switch completes. Clearsight Energy can gather prices from suitable suppliers based on your MPAN and usage, explain the options, and help you move off deemed or out-of-contract rates in a measured way. We’ll be clear about the term, the rates and the broker fee. Get in touch →
How long will it take to move off deemed rates once I sign?
If you agree a contract with your current supplier, the new rates can often start within days. Moving to a new supplier usually takes a few weeks while the switch is registered. You’ll stay on the deemed or out-of-contract rates until the new contract begins, so agreeing it promptly limits the time spent on higher prices.
Will I be charged deemed rates until the new contract goes live?
Usually, yes. Your existing supplier bills at its deemed or out-of-contract rates until the switch date, and new contracts generally can’t be backdated. Some suppliers will start a new contract with them from an earlier date if you renew directly, so it’s worth asking. Take a reading on the start date so the change is billed accurately.
Can someone check my deemed rate bills are correct?
Clearsight Energy’s bill validation can check the deemed or out-of-contract rates you’ve been charged, the dates they applied and the reads used. It’s useful for spotting estimates and making sure the switch date is billed correctly. Send the bills from the period and your meter readings. Get in touch →
Can I claim back money I paid on out-of-contract rates?
If your supplier didn’t send the required renewal information or rolled you onto a contract you didn’t agree, you may have grounds to complain. Raise it in writing with the supplier first. If it isn’t resolved within eight weeks, or you reach deadlock, eligible small businesses can take it to the Energy Ombudsman.
How do I complain to my business electricity supplier?
Put the complaint in writing, quoting your account number, MPAN, the dates involved and what you’d like to happen. Keep copies of bills, contracts and emails. Ask the supplier for a deadlock letter if you can’t agree. Suppliers must signpost small businesses to Citizens Advice and the Energy Ombudsman, so you shouldn’t be left without a next step.
Can someone review my bills before I complain?
Having bills checked first often makes a complaint clearer and quicker to resolve. Clearsight Energy’s bill validation compares your invoices with the contract, meter reads and tax treatment, then sets out any discrepancies in plain terms. You can use that summary when raising the issue with your supplier or, if needed, the Energy Ombudsman. Get in touch →
How do I know if I’m on out-of-contract rates?
Look at your latest bill for a tariff name such as variable, rollover, out-of-contract or deemed, and check whether a contract end date is shown. A noticeable rise in unit or standing charges after a fixed date is another sign. If you’re unsure, your supplier must confirm your tariff and any end date when you ask.
Where do I find my contract end date?
Your contract end date should appear on your bills, your online account or the principal terms you received when you signed. Since 2015, suppliers have had to show the contract end date and notice period on microbusiness bills. If you can’t find it, ask your supplier in writing, as you’ll need the date to compare renewal offers properly.
Can someone run a business electricity quote for me?
Yes. Clearsight Energy can compare suitable contracts across the suppliers on our panel for you. A recent bill helps, though your MPAN, address, current supplier, contract end date and an idea of annual usage are usually enough to start. We’ll set out the options, the term, the rates and the broker fee so you can decide in your own time. Get in touch →
What is a deemed business electricity contract?
A deemed business electricity contract kicks in when a business starts using electricity at a premises without a formal agreement in place. This typically happens when you move into new premises or let an existing contract expire without renewing. The supplier puts you on their default rates, which are almost always higher than what you’d get on a negotiated contract. It’s worth checking whether you’re on a deemed contract and comparing providers to move onto something more competitive.
The related default state is covered in out-of-contract electricity rates.
Why has my business electricity bill suddenly gone up after my contract ended?
When a fixed contract ends and nothing new is agreed, suppliers usually move you onto out-of-contract or rollover rates. If you’ve moved into premises without agreeing a contract, you’ll be on deemed rates. Both are typically higher than negotiated contract prices. You can usually leave these rates without a termination fee by agreeing a new contract.