Short answer
A deemed contract applies when you use energy at a business premises without having agreed a contract, typically after moving in. Deemed rates are usually much higher than agreed contract rates, so it pays to put a contract in place quickly.
Key takeaways
- Deemed rates apply when you use energy without agreeing a contract.
- Take dated meter readings the day you move in.
- You can usually leave deemed rates without an exit fee.
When deemed contracts happen
- You move into new premises and start using the existing supply
- The previous occupier's contract ended when they left
- A new supply is connected and no contract has been agreed
Why deemed rates are higher
The supplier hasn't agreed a price with you or assessed your consumption and credit. Deemed rates reflect that uncertainty and are usually considerably higher than agreed rates. Staying on them for months can be expensive.
What to do when you move in
- Take meter readings on the day you take over, with photos showing the date.
- Find out who supplies the premises. For gas, use Find My Supplier. For electricity, your regional network operator can help.
- Tell the current supplier you are the new occupier, with your readings and the date you took over.
- Agree a contract, with them or another supplier.
Leaving deemed rates
Because you haven't agreed a fixed term, you can usually move off deemed rates without exit fees. You can agree a contract with the existing supplier or switch to another one.
The previous occupier's debts
You are generally responsible only for energy used from the date you took over. That's why dated meter readings and a copy of your lease or completion date matter. If you are billed for the previous occupier's use, challenge it with that evidence.
Deemed versus out-of-contract
Both are usually expensive, but they are different. Deemed applies when you never agreed a contract. Out-of-contract applies when a contract you did agree has ended. See out-of-contract rates.
Taking over a business as a going concern
If you buy an existing business rather than just taking over premises, the energy contract may transfer with it, or it may end. Ask the seller for copies of current contracts and confirm the position with the supplier before completion.
New connections
If you are having a new supply connected, arrange a contract before it goes live. Otherwise the first supplier registered to the meter may bill you on deemed rates from day one.
Evidence to keep
- Dated meter reading photos from the day you took over
- Your lease, licence or completion date
- Written confirmation from the supplier that you are the new customer
Common mistakes
- Leaving the previous occupier's name on the account
- Not taking an opening reading
- Waiting for the first bill before acting
Sources
- Ofgem: Energy advice for businesses (ofgem.gov.uk)
Questions
Am I responsible for the last tenant’s bill?
Generally no, only for energy used after you took over. Keep dated meter readings as evidence.
Will I pay an exit fee to leave deemed rates?
Usually not, because no fixed term was agreed.
How quickly should I act?
As soon as you move in. Every month on deemed rates is likely to cost more than an agreed contract.
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