July 2026, latest update
Out-of-Contract Business Energy- What It Means, What It Costs, and How to Escape
This guide explains exactly what an out-of-contract rate is, how to find out if you are on one, how much it is costing you, and most importantly, how to get off one as quickly as possible.
Being on an out-of-contract business energy rate is one of the most expensive mistakes a UK business can make, and most businesses on these rates do not know they are on them. If your energy contract ended without a new one in place, your supplier has almost certainly moved you onto a deemed or out-of-contract rate that could be 40-60% higher than the best available fixed price in the market today.
What Is an Out-of-Contract Business Energy Rate?
When a business energy contract reaches its end date, the supplier needs to continue supplying electricity and gas — the lights cannot just go off. If you have not arranged a new contract before your existing one expires, the supplier places you on what is variously called an out-of-contract rate, a deemed rate, or a rollover rate.
These rates are set entirely at the supplier’s discretion. There is no regulatory cap on how high they can be. In practice, out-of-contract rates are typically 40-60% higher than the best fixed rates available in the open market and in some cases, significantly more.
The reason suppliers can charge these elevated rates is straightforward: most businesses do not notice they have rolled off their contract, and the few that do notice are often unsure what to do about it. Suppliers effectively profit from inaction.
The Difference Between Out-of-Contract and Deemed Rates
These two terms are often used interchangeably, but they have a technical distinction. A deemed rate is what a supplier charges when they supply a property without any contract in place at all, for example, when a business moves into new premises where the previous occupant has left. An out-of-contract rate is what a supplier charges when a fixed-term contract expires without renewal.
In practical terms, both result in the same outcome: you are paying significantly more than you need to.
How Much Extra Are You Paying?
The exact premium depends on your supplier and market conditions at the time, but as a general guide in 2026:
– A small business using 30,000 kWh of electricity per year on an out-of-contract rate is likely paying £3,000-£5,000 more per year than on a competitive fixed deal
– A medium-sized business using 100,000 kWh per year could be overpaying by £8,000-£15,000 annually
– A large commercial or industrial site with high consumption can be overpaying by tens of thousands of pounds per year
Every month you remain on an out-of-contract rate is money that cannot be recovered. Unlike billing errors, which can often be claimed back retrospectively, the overpayment on an out-of-contract rate is simply lost once the period has passed.
How to Find Out If You Are on an Out-of-Contract Rate
The clearest sign is on your energy bill. Look for:
– A tariff name that includes the words ‘deemed’, ‘out of contract’, ‘rollover’ or ‘variable’
– A unit rate that seems unusually high compared to the market rates shown in this guide (currently 24-32p/kWh for most business electricity)
– A standing charge that has changed since your last renewal
– A note from your supplier indicating your contract has expired
If you are unsure, the simplest step is to contact your supplier directly and ask what tariff you are currently on and when your last fixed contract ended.
What Is a Rollover Contract?
A closely related issue is the rollover contract a clause found in many business energy contracts that automatically renews the agreement for another fixed term if you do not give notice of termination before a specified deadline. This deadline is typically 30 to 90 days before the contract end date.
If you miss this window, your supplier can legitimately lock you into another contract, sometimes at a significantly higher rate than your original deal. Rolled-over contracts are not the same as out-of-contract rates, but they share the same root cause: a failure to actively manage the renewal process.
Kilowatt Energy manages contract diaries for all our clients, making contact 90 days before every renewal date to ensure this never happens.
How to Get Off an Out-of-Contract Rate
Step 1 — Confirm you are out of contract
Contact your supplier or check your contract documentation to confirm that your fixed term has ended. If you are genuinely out of contract, you have the right to switch with as little as 30 days notice.
Step 2 — Get a market comparison
Contact a broker to access live market rates from 30+ suppliers. The difference between what you are currently paying and the best available fixed rate will immediately show you the scale of the saving available.
Step 3 — Give notice and switch
Once you have agreed a new deal, your broker manages the notice process with your current supplier and coordinates the switch date. In most cases, the process from initial contact to new contract in place takes 5-10 working days.
Step 4 — Set a renewal diary
The most important step after switching is ensuring it never happens again. Make a note of your new contract end date and ensure your broker contacts you no later than 90 days before that date to begin the next renewal process.
If You Are Locked Into a Rollover Contract
If your supplier has rolled you into a new contract automatically, the situation is more complex. You may have the right to challenge the rollover if:
– Your contract contained an automatic renewal clause but the supplier did not give you adequate advance warning of the deadline
– The new contract rate is significantly different from what you were quoted or expected
– You were not given adequate opportunity to review the new terms before they took effect
In these circumstances, a formal dispute with the supplier may be warranted. Kilowatt Energy manages energy billing disputes for businesses and can advise on whether your situation gives grounds for a challenge.
If you are currently on an out-of-contract or deemed rate, the most important thing you can do right now is call us. The sooner you move onto a competitive fixed contract, the sooner the overpayment stops.
FAQs
What is an out-of-contract energy rate?
An out-of-contract rate, also called a deemed rate or rollover rate, is what your supplier charges you when your fixed energy contract expires, and you have not arranged a new one. These rates are set entirely by the supplier and are typically 40-60% higher than the best available fixed rates in the market. There is no regulatory cap on how high out-of-contract rates can be.
How long can a supplier keep me on an out-of-contract rate?
Technically, indefinitely until you switch to a new contract or change supplier. Some suppliers roll customers onto a short-term variable rate that can change monthly. Others charge a fixed out-of-contract rate that remains stable but expensive. Either way, the longer you remain on an out-of-contract rate, the more you overpay.
Can I switch supplier immediately if I am out of contract?
If you are genuinely out of contract, meaning your fixed term has ended and you have not agreed a new one, you have the right to switch supplier with no notice in most cases. This is one of the few advantages of being out of contract. Contact a broker to get the process moving.
What is a rollover contract?
A rollover contract occurs when your energy contract contains a clause that automatically renews it for another term if you do not give notice before a specific deadline. If you miss the renewal window often 30 to 90 days before your contract end date the supplier rolls you onto a new contract, often at a worse rate than you could negotiate in the open market. Always check your contract for rollover clauses.
How do I find out when my energy contract ends?
Your contract end date should be stated on your energy bill or in the contract documentation you signed. If you cannot locate it, contact your supplier directly or ask your broker. Kilowatt Energy can check your contract details for you as part of a free energy review.
Can an energy broker help me escape an out-of-contract rate?
An energy broker can access the live market across 30+ suppliers simultaneously and find the best available fixed rate for your business. The switch from an out-of-contract rate to a fixed contract can be completed in a matter of days, and the savings begin from the moment the new contract takes effect. Kilowatt Energy’s service is completely free to businesses.
An out-of-contract rate, also called a deemed rate or rollover rate, is what your supplier charges you when your fixed energy contract expires, and you have not arranged a new one. These rates are set entirely by the supplier and are typically 40-60% higher than the best available fixed rates in the market. There is no regulatory cap on how high out-of-contract rates can be.
Technically, indefinitely until you switch to a new contract or change supplier. Some suppliers roll customers onto a short-term variable rate that can change monthly. Others charge a fixed out-of-contract rate that remains stable but expensive. Either way, the longer you remain on an out-of-contract rate, the more you overpay.
If you are genuinely out of contract, meaning your fixed term has ended and you have not agreed a new one, you have the right to switch supplier with no notice in most cases. This is one of the few advantages of being out of contract. Contact a broker to get the process moving.
A rollover contract occurs when your energy contract contains a clause that automatically renews it for another term if you do not give notice before a specific deadline. If you miss the renewal window often 30 to 90 days before your contract end date the supplier rolls you onto a new contract, often at a worse rate than you could negotiate in the open market. Always check your contract for rollover clauses.
Your contract end date should be stated on your energy bill or in the contract documentation you signed. If you cannot locate it, contact your supplier directly or ask your broker. Kilowatt Energy can check your contract details for you as part of a free energy review.
An energy broker can access the live market across 30+ suppliers simultaneously and find the best available fixed rate for your business. The switch from an out-of-contract rate to a fixed contract can be completed in a matter of days, and the savings begin from the moment the new contract takes effect. Kilowatt Energy’s service is completely free to businesses.
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