What Happens If Your Energy Contract Expires? Deemed Rates Explained

Unlike a mobile phone contract, an energy contract that reaches its end date doesn't simply stop. Your gas and electricity keep flowing — the supplier is obligated to keep supplying you — but if no new contract has been agreed, you're automatically transferred onto what's known as a "deemed" or "out-of-contract" rate.

Deemed rates exist because a supplier can't legally cut off a business's energy supply just because paperwork wasn't signed in time. But because there's no negotiated agreement in place, suppliers are permitted to charge their standard variable rate for out-of-contract customers — and under Ofgem's microbusiness protections, this rate is disclosed but not capped in the way some end-user protections work in the domestic market. In practice, these rates typically sit well above what the same business could have secured on a fixed-term tariff, often by a large margin.

This catches out more businesses than you'd expect, and usually for an avoidable reason: many commercial contracts auto-renew or roll onto a deemed rate silently, with the only warning being a renewal letter sent months in advance that gets filed away and forgotten. By the time a business notices its bill has jumped, it may already be several billing cycles into the more expensive rate.

The fix is straightforward but requires proactivity: know your contract end date, and start the renewal conversation well before it arrives — most brokers recommend beginning the process a few months ahead so there's time to compare the market properly rather than signing whatever's offered under time pressure. If you're not sure when your current contract actually ends, your most recent bill or your supplier's online portal will show it; it's worth checking today rather than waiting for a renewal letter to surface.

If you've already been moved onto a deemed rate, you're not stuck — you can still shop the market and switch onto a new fixed contract at any time, there's no lock-in period on a deemed rate itself. The sooner that happens, the sooner the higher rate stops applying.