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Deemed Out of Contract Rates

You can drive up your, business energy bills by paying out-of-contract or considered prices.

We clarify what they are in this brief guide and how to prevent paying them.

Out - of-contract rates are the rates you'll have to pay if you're not signed up to an energy supplier contract.

This may not sound like a normal thing to happen, but it might happen to your business if:

  • You tell your provider that you want to terminate your energy contract, but you don't have a fresh agreement when it ends,
  • You are trying to change your supplier, and your switching process takes a longer time than expected to go through, meaning that your contract ends before you can migrate to your new supplier.

Out - of-contract rates may more than double your supplier's typical market rate, such as a standing charge of £ 1 a day and a 20p / kWh unit rate compared to a typical 25p a day and 11p / kWh.

There is no limit on the rates that can be charged by a supplier to out-of-contract customers so that the cost of a simple mistake can be significant for your business.

Pay close attention to out-of-contract rates when your contract is due to end and make sure you arrange a new contract well in advance. Don't just refuse a contract offer in a pique fit-contact Lloyd energy and we'll give you advice about your offer's competitiveness or otherwise.

If you decide to refuse the offer, make sure that you use Lloyd energy’s expert guide to obtain a contract that starts instantly after the end of your current agreement.

If you get stuck paying considered or out-of-contract prices but eventually switch to a contract with the same supplier, Lloyd energy can ask the business to backdate the price from your new tariff to cover the time period you were on higher rates. Some (but not all) suppliers will consider doing this as an act of goodwill, but it will depend on why you first faced these rates, how long and the payment history of your business.

The prices you may have to pay when you move into a fresh premise are considered. Because you may not have an active contract with a supplier for that premise at the point of movement in you, you are' considered' to be supplied by the supplier of the previous tenant or owner. As a consequence of being provided by, but not having an active agreement, the provider must pay you something for the energy you consume, and that's where prices are considered to come in.

Deemed rates are greater than contract rates negotiated but will be much smaller than out-of-contract rates.

This is because it's not your fault that you don’t have a contract, whereas you made an active choice not to have a contract with out-of-contract prices.

However, be careful as quickly as your previous supplier contacts you and you refuse to accept their offer, you will be technically responsible for out-of-contract prices.

However, Ofgem, confusingly, had to describe contract prices as considered prices and vice versa. A number of suppliers followed suit and this can be a false region as a consequence.

The best way to prevent paying deemed prices is to organize yourself-if you move into fresh premises, attempt to organize your energy agreement before you move in, or if this is not possible, put it close to the top of your list when you move in.

Using the Lloyd energy service will guarantee that you can secure a deal well in advance for your move-in date. If time is against you, we can minimize your exposure to penalty rates and even negotiate any penalty rates lifted with your hereditary provider on your behalf.

More Information

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To avoid exposure to penalty prices there is no better solution than consulting with our energy expert. If you are worried about the prices you are paying we'd be happy to hear from you, simply give us a call on 0800-0488-472.

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