What is a deemed rate?

You may have heard of a deemed rate, but what exactly is this and what are the associated cost implications? We’ve created this blog to answer some of the more common questions surrounding deemed rates and how they may affect your energy charges.

What is a deemed rate and how much can it cost?

When your business consumes energy without having a specific fixed-term energy contract in place, you are placed onto a rolling default energy tariff known as a deemed rate.

It’s important to note that Ofgem estimates that deemed rate energy prices are approximately 80% higher than a negotiated contract rate.

Why do we have deemed rates?

Deemed rates are there to ensure that all energy consumed is charged for, including when an energy contract is not in place. They are also there to provide automatic energy coverage for businesses that fail to renew their energy contract.

There can be many scenarios that can result in an organisation being placed onto a default energy tariff, most commonly they can come into effect when:

• Your business has moved into a new premises and started consuming energy before sourcing an energy contract.
• Your current energy contract has expired, you’re continuing to use energy but have yet to arrange a new fixed-term contract.

How long should you stay on a deemed rate?

The rolling contract typically lasts for 28 days, after which prices are likely to increase. It is possible to stay on a rolling default energy tariff for any length of time. This could be until your business either arranges a negotiated energy contact or vacates the premises. However, with Ofgem predicting deemed rate charges being around 80% higher than a negotiated rate, you should consider how this will affect your business costs and budgeting.

How to avoid deemed rates

Review your energy contract(s)

You should always keep a track of your current energy contract(s) and know when they are due to expire. Additionally, you should review your tariff options before the contract expires.

Assess supplier options

By contacting the Consultiv Utilities team, we can discuss energy options available to your business, with an objective of finding you a best fit solution.

Tariff negotiation

It may be that you need support with negotiating a new fixed-term contract. This is something we are able to help with. We can swiftly access energy tariff information and support you in purchasing an energy contract for your organisation’s requirements.

Do you want to move away from a deemed rate?

Have you currently found yourself on a deemed rate? Or perhaps you’re nearing the end of your business energy contract and would like to explore what energy options are available to you? We are here to help.

We have extensive experience of effectively supporting organisations across a comprehensive range of industries, including manufacturing, education, and retail. Our helpful team of energy analysts and consultants can liaise with you to source an energy solution that meets both your business’s energy, and budgeting requirements.

Help with securing your business energy contract

Our objective is to take the pressure off you and provide a seamless service that will ultimately benefit your organisation.

If you would like to arrange a free consultation with one of our energy specialists to discuss how we can assist you with your energy, please contact us.

We hope you have found this blog both interesting and valuable. Feel free to share your thoughts or questions on this via email at [email protected].