Out-of-Contract Business Energy Rates

Short answer

Out-of-contract rates apply when a fixed business energy contract ends and no new contract has been agreed. They are usually higher than agreed contract rates and continue until you take action.

Key takeaways

Out-of-contract rates apply after a contract ends with nothing new agreed.
They are usually higher than contract rates.
You can generally agree a new contract or switch, subject to any notice terms.

How businesses end up on them

The end date passed without a renewal being agreed
A renewal letter was missed or ignored
A notice period wasn't met, so a switch couldn't go through in time
The business moved or changed ownership and the contract wasn't updated

How to tell if you're on them

Check your latest bill. Look for words such as out of contract, variable, rollover or standard rates, and compare the unit rate and standing charge with your previous bills. A sudden jump after your end date is the usual sign.

What to do now

Find out exactly which rates you are paying and since when.
Check whether any notice is needed to leave. For microbusinesses, suppliers can't require notice of intent to switch.
Get options. You can usually agree a new contract with your current supplier or switch to another.
Agree the new contract promptly, as the clock is running.

Rollover contracts

Some business contracts, particularly older ones or those for larger customers, may automatically roll over onto a new fixed term if you don't act. For microbusinesses, rollover terms are restricted by Ofgem rules. Read your principal terms or ask your supplier to confirm in writing what applies.

Avoiding it next time

Note every end date somewhere you'll see it
Start reviewing three to twelve months ahead
Ask for renewal reminders, which many brokers provide

See renewals: a practical timeline.

Why out-of-contract rates are higher

When you agree a fixed contract, the supplier can buy energy for you in advance at a known price. Without a contract, it doesn't know how long you'll stay or how much you'll use, and it has to cover that risk. Out-of-contract prices reflect that uncertainty, and they also give customers a reason to agree a contract.

Multi-site businesses

Out-of-contract rates are a particular risk for businesses with many sites, because one forgotten supply can sit on high rates for months. A single site list with every end date is the best defence. See multi-site procurement.

Checking past bills

If you discover you have been on out-of-contract rates for some time, check when they started and whether you received renewal information beforehand. For microbusinesses, suppliers have obligations to provide information about the end of a contract. If you believe this wasn't done, raise it with the supplier through their complaints process.

Common mistakes

Assuming the supplier will automatically move you to a good rate
Not checking bills after an end date passes
Waiting until the next quarter to act

Renewing with a particular supplier?

Sources

Ofgem: Energy advice for businesses (ofgem.gov.uk)

Questions

Can I be stuck on out-of-contract rates?

Usually not. You can generally agree a new contract or switch, subject to any notice terms.

Will I pay an exit fee?

Generally not for leaving out-of-contract rates, but check your terms.

Is out-of-contract the same as deemed?

No. Deemed applies when you never agreed a contract; out-of-contract applies after an agreed contract ends.

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Out-of-contract energy rates