Out of contract and deemed rates are both rates charged for gas and electricity when a customer doesn’t have a fixed-term contract in place, or it has ended. But, they are not the same.
Out of contract (OOC) rates
Out of contract rates apply when a fixed-term energy contract between the customer and supplier comes to an end and no new or alternative rate is put in place. When a gas or electricity contract expires, the rates for supply revert to a default charge — otherwise known as the out of contract rate. This rate is often very expensive, but you must pay them until you arrange a new energy contract with your current supplier, move out of the premises or switch to a new supplier on time.
Deemed tariff rates
Deemed tariff rates are similar to out of contract rates, but deemed tariff rates are charged for gas and electricity use when there was never a contract in place to begin with. For example, if you move into an existing premises. In such circumstances, you will be charged the deemed rate by the property’s existing gas or electricity supplier.
Deemed rates are usually higher than rates available under contract, so it’s best to move off this rate as quickly as possible as these rates will continue to apply until a new contract is put in place with the existing supplier, or a switch is made to a new supplier.
Your energy supplier will also automatically move you over to a deemed contract if your old energy contract expires and it does not say what will happen after it ends. Whereas the difference being, out of contract rates apply if your contract says what will happen when your contract comes to an end.
Both of these rates can be found on your energy suppliers websites.
There are many circumstances that can lead to you paying deemed or out of contract rates. Here are just a few:
- Moving into a new premises and using the existing supplier without a contract in place.
- Cancelling a contract, either yourself or your energy supplier.
- Ignoring communication from your current supplier regarding your contract coming to an end.
- Not reading or understanding the out of contract terms in your current contract.
- Not properly processing a switch in your energy suppliers.
How TPIs can help you avoid paying out of contract or deemed rates:
- They can help you understand your business energy bills by taking care of the small print – understanding what happens if you fall out of contract and explaining this in plain English.
- Act as your human reminder of your contract end date- it’s in their diary.
- Managing and arranging your energy contracts throughout your business life span- dealing with any payment queries, arranging new contracts to be put in place of old ones or processing your switch in energy suppliers on time and in line with your contract live date.
- Ensuring you are on a suitable rate for your energy needs and ensure the right contract is in place from the start up of your business.
- Deal with complex switches on your behalf such as changes of tenancy (CoT). There is a period of communication which needs to be monitored for issues and objections to transfers. These can be complex with short windows to be addressed.
For more information on the benefits of using a TPI to manage your energy contract take a read of our blog (three things you didn’t know TPIs did).
If you’re looking at moving premises or wanting to ensure you are getting a smart business energy deal, get in touch with us today.
