What is Deemed Pricing?

deemed contract is normally in place when any type of customer moves into new premises and starts to consume gas, electricity, or both, without agreeing a contract with a supplier. A deemed contract may also exist where an existing contract comes to an end but the customer continues to consume energy.

deemed contract is when you move into a new business premises and start to use gas, electricity or both without negotiating a new contract with the supplier.

Deemed pricing describes the pricing you pay if we are supplying a site with electricity and/or gas and a contract is not yet in place. Think of it as a temporary rate. This usually applies if a customer has moved to some new premises and not yet set up their contract with us.

Deemed pricing applies until a contract is put in place or we stop supplying the site.

The UK legislation covering the supply of gas stipulates that when an individual takes over the responsibility of a property, they are deemed to have entered into an agreement with the registered supplier of that property. This means that the supplier is required to provide gas to the customer who, in turn, is required to pay for that gas at the supplier’s published rates (until a new contract has been negotiated).  This is known as ‘deemed’ rates.

  • Example: a business owner moves into a property and there is already a gas and electricity supply. The customer is charged the ‘deemed rate’ by the utility company up until the customer purchases an energy plan.

The reason deemed rates exist is because of the nature of energy supply – it’s inefficient to disconnect a property when one occupant leaves and to reconnect it when another arrives, so the utility company just leaves it connected.

A deemed contract may also exist where an existing contract comes to an end, but the customer continues to use energy from their supplier. This second possibility could arise in two ways:

1. If a contract is terminated (by either the supplier or the business) but the supplier continues to supply the business, there is likely to be a deemed contract if:

  • the original contract does not say what will happen after termination. For example, if it does not say that the original contract terms must apply when you are ‘out of contract’
     
  • the existing business continues to use gas, electricity, or both at the premises.

2. Where a contract expires but the business is still using gas, electricity, or both from the same supplier, a deemed contract is likely to exist if:

  • the original contract does not say what will happen after expiry (eg, it does not contain renewal provisions or state that the original terms still apply)
     
  • the existing business has told the supplier that they don’t want the original contract to continue.

How Are Deemed Rates Calculated? 

There are rates that you will receive when your contract with us expires or is terminated and you have not signed a new contract or moved supplier, or in some other specific situations for which we will provide appropriate guidance at the time.

  • A deemed rate is provided when there has never been a contract in place between you and the utility company.
  • It is merely a ‘temporary’ rate until you take out a contract.
  • Deemed rates are not the same as ‘out-of-contract’ rates.
  • There is an Ofgem cap on deemed rate prices; however, deemed rates are more expensive than contracted rates.
  • Deemed rates can apply to gas and electricity.
  • Deemed rates can apply to PAYG and regular energy supply.
  • The new owner or tenant is responsible for paying the deemed rate; the old one is responsible for paying for any energy prior to your arrival.

If you’re in the process of moving your business to new premises, you may have come across out of contract or deemed tariff rates on your most recent energy bill. These rates apply to gas and electricity contracts, and usually come into play when an energy contract expires, or when a business moves to new premises and no suitable arrangements are in place for using energy at the new premises.

Deemed contract prices apply if we supply a site with electricity and/or gas and a contract has not been agreed. It applies until a contract is put in place or we stop supplying the site.

Out of contract prices apply if we supply a site with electricity and/or gas under a contract which has since expired after a termination notice has been served. It applies until a contract is put in place or we stop supplying the site. You can find pricing for these contracts and Deemed contracts in the table below.

Electric Price Profile 01-04 (p/Kwh)

Electric Standing Charge Profile 01-04 (p/day)

24

120

Electric Price Profile 05-08 (p/Kwh)

Electric Standing Charge Profile 05-08 (p/day)

24

240

Electric HH Price (p/Kwh)

Electric HH Standing Charge (p/day)

Electric HH KVA (p/kva/day)

24

600

9

Gas Price (p/Kwh)

Gas Standing Charge (p/day)

6.5

150

If you’re paying deemed or out of contract prices you can get a better deal with us. Call us on 0800 669 6697 for our contract prices from 9am-5:30pm, Monday to Friday.

 

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