Out of Contract and Rollover Rates: How to Stop Overpaying at Renewal
Out-of-contract and deemed business energy rates can be far higher than a negotiated deal. Here is how they arise and how to avoid them.
Out of Contract and Rollover Rates – The most expensive energy a business ever buys is the energy it buys by accident, after a contract ends and before a new one is agreed. These out-of-contract rates are avoidable, but only if you know when your window opens.
The three ways a contract can end badly
> Deemed rates: if you occupy a site with no contract in place, for example after moving in or after a contract lapses, the supplier puts you on a deemed contract. These carry the highest unit rates and standing charges the supplier offers, because there is no agreement holding them down.
> Out-of-contract rates: if your fixed term ends and you have not signed a new deal, you roll onto the supplier’s out-of-contract tariff, again typically well above a negotiated rate.
> Rollover contracts: some suppliers automatically roll you into a new fixed term if you do not act, locking you in at rates you never agreed. For microbusinesses, automatic rollovers of this kind are restricted under Ofgem rules, and suppliers must set out renewal terms and contract end dates clearly. Larger businesses have fewer such protections, so the responsibility to act sits with you.
Why the renewal window matters
Business energy contracts have a switching window ahead of the end date, and suppliers are required to tell microbusinesses when a contract is ending. Miss that window and your options narrow fast: you either accept whatever the incumbent offers or fall onto expensive default rates while a new deal is arranged. Prices are also live, so leaving it to the last week means buying on whatever the wholesale market happens to be doing that day.
How to stay in control
> Know every contract end date across your portfolio and diarise the renewal window well ahead of it.
> Start the market review early, so you can time your purchase rather than being forced to buy on the deadline.
> Never let a site sit out of contract, even for a few weeks, because deemed rates add up quickly.
If flexibility matters to you, a flexible procurement approach can also take some of the timing pressure off a single renewal date.
Chris Hurcombe is Managing Director of Catalyst Commercial Services, an independent business energy consultancy based in Birmingham. He works with UK businesses on energy procurement, contract management, and carbon strategy, and writes on energy markets, compliance, and the commercial implications of the UK's net zero transition.
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