What is a deemed tariff?

9th Nov 2023 | Mollie Pinnington | 2 minute read

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With business energy, deemed rates are often waiting to unsuspecting businesses with their inflated prices and lack of transparency. These contracts are automatically assigned to businesses that fail to secure alternative arrangements and can have a detrimental impact on a company's bottom line.

What does a Deemed Rate tariff mean?

Deemed rates are default energy tariffs that businesses get put on when they have not actively chosen an energy supplier or contract. These tariffs are typically higher than negotiated contracts, placing a significant financial burden on businesses that are unaware of their existence or lack the resources to secure better deals.

Why do energy companies have deemed rates contracts?

Energy companies raise prices for customers who don't sign a new contract when they move premises. This can sometimes happen when you first move into a business premise and you are using gas and electricity without negotiating a new contract with a supplier.

What is the difference between out of contract rates and deemed rates?

Your supplier will put you on out of contract rates if your contract ends and you do not sign a new one. Whereas, deemed tariffs are for those business customers that never sign a contract in the first place.

Why Should Businesses Avoid Deemed Rates?

The reasons to steer clear of deemed rates are numerous. Here are some of the most compelling:

  1. Higher Costs: Deemed rates are often significantly higher than negotiated rates, leading to increased energy costs that can strain a company's budget.
  2. Lack of Control: With deemed rates, businesses relinquish control over their energy costs, as they are unable to negotiate favorable terms or switch suppliers to take advantage of better deals.
  3. Limited Flexibility: Deemed rates often come with inflexible terms and conditions, limiting businesses' ability to adjust their energy consumption or switch to more suitable tariffs as their needs evolve.
  4. Unforeseen Expenses: The unpredictable nature of deemed rates can lead to unexpected spikes in energy bills, making it difficult for businesses to accurately forecast expenses and budget effectively.


Protecting Your Business from Deemed Rates

Businesses can safeguard themselves from the pitfalls of deemed rates by taking proactive measures:

  1. Shop Around: Compare energy tariffs from various suppliers to identify the most competitive and cost-effective options.
  2. Negotiate Contracts: Engage with energy suppliers to negotiate favorable rates and terms that align with your business's specific needs.
  3. Monitor Usage: Track your energy consumption patterns to identify potential areas for reduction and cost savings.
  4. Seek Expert Guidance: Consult with energy brokers or consultants who can provide tailored advice and assist in securing the best energy deals.

By staying informed about deemed rates and taking proactive steps to secure better energy arrangements, businesses can protect themselves from unnecessary expenses and ensure they are not paying more than they should for their energy needs.

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