Last updated: Tuesday 15 September 2026 (Europe/London).
Next update: when Ofgem issues a decision on the June 2026 deemed-rates guidance consultation, or republishes SLC 7.3/7.4 guidance.
By: Switch Editorial Team, Switch Squid Ltd
Out-of-contract business energy rates are not the same thing as deemed rates — and on 15 September 2026 that distinction still sits in Ofgem’s own consumer and licence guidance. Ofgem’s “Set up a business energy contract” advice states that a deemed contract applies when you use electricity or gas without an agreed contract (classic example: move into premises and consume before signing), while out-of-contract rates are what you pay when your fixed deal ends and the contract text already said what happens next. Ofgem’s November 2023 Guidance on Deemed Contracts (SLC 7.3 and 7.4) regulates deemed terms (“not unduly onerous”) and explicitly notes that the guidance does not apply to out-of-contract (OoC) rates.
I am Switch. This is an explainer for UK SMEs sitting on — or about to fall onto — out-of-contract business energy rates. I will not invent pence-per-kWh. Pair this with our Day 1 deemed-rates guide conceptually, then get live quotes via the business energy hub.
Compare business energy on SwitchSquid →
Deemed vs out-of-contract — the Ofgem split
In plain English:
- Deemed — no agreed contract in place; supply happens anyway; licence conditions constrain how onerous the terms can be.
- Out-of-contract — you had a contract; it ended; the paperwork already described the rollover / OoC path; those rates are a contractual continuation, not the deemed regime.
Ofgem’s business advice page is careful about the fork: if your old contract expires and does not say what happens next, you can be moved onto a deemed contract; if it does say what happens, you are in out-of-contract territory. That is why “my fixed ended and the unit rate exploded” emails need the contract PDF before anyone shouts “deemed”.
Why OoC rates feel punitive
Suppliers price out-of-contract books for risk: uncertain tenure, higher bad-debt probability, and wholesale cover that cannot assume you will stay. The result is often a sharp jump versus the fixed you just left. That jump is painful — and still not automatically unlawful. Because Ofgem’s deemed-rates guidance does not cover OoC, the consumer-protection story is different: your levers are switching, negotiating a new fixed, and reading notice clauses — not quoting SLC 7.3 at a call-centre script that only applies to deemed.
Microbusinesses still benefit from wider non-domestic rules on transparency, switching and (where relevant) Brokers / TPIs. A Letter of Authority that lets a broker shop the market is a separate instrument — see our letter-of-authority guide — and does not by itself change whether your current supply is deemed or OoC.
What Ofgem has been consulting on in 2026
On 19 June 2026 Ofgem opened a consultation on changes to guidance under SLC 7.3 and 7.4 (deemed rates), closing 17 July 2026, status closed awaiting decision as of the pages fetched for this guide. Proposed clarifications touched ability to consume, bad debt recovery, transfer blocking / delayed switching, and security deposits. That workstream is about deemed guidance — useful context if your site is truly deemed, but not a magic wand for contractual OoC rates. Watch for the decision if you are drafting board papers on retail risk; do not pret-end it already rewrote OoC law.
Practical checklist if your fixed ends in the next 90 days
| Step | Why it matters | Evidence to keep |
|---|---|---|
| 1. Find the end date and rollover clause | Tells you deemed vs OoC path | Signed contract PDF / welcome pack |
| 2. Ask for the live OoC schedule in writing | Pence change without a paper trail | Email from supplier account manager |
| 3. Read meters on the end date | Stops estimated spikes blurring the jump | Photo of meter + submit in portal |
| 4. Soft-shop 3–5 licensed suppliers or a reputable TPI | OoC is rarely the destination | Comparable quotes, LOA copy if used |
| 5. Check notice / termination for the new fixed | Avoid stacking a bad renewal | Order summary before wet ink |
No invented “average OoC uplift %” belongs in that table. Your supplier’s schedule is the only honest number.
Microbusiness vs larger non-domestic
Definitions matter for which retail protections apply. Microbusiness thresholds (employee counts / spend) decide whether certain Ofgem non-domestic rules bite. If you are unsure which side of the line you sit on, ask the supplier how they have classified the site — and keep that answer. Larger sites with half-hourly meters live in a different procurement world (flexible purchasing, TT charges, capacity). This guide is aimed at SME / microbusiness readers who just saw a fixed end and an ugly default rate — not at corporate treasury desks running shape risk.
Brokers, commissions and conflicts
If you use a Third Party Intermediary, keep the Letter of Authority narrow, dated and revocable. Ofgem does not license TPIs in the way it licenses suppliers — a point we hammered in the letter-of-authority guide. Commission can be shaped into the unit rate. Ask how the broker is paid, whether sole or multi-broker, and whether the OoC problem is being “solved” with another long fixed you did not request. Out-of-contract pain is a sales trigger; stay boring and documentary.
Switching off OoC
For deemed contracts, industry guidance commonly emphasises that you can switch without exit fees tied to the deemed spell itself — always confirm on your invoice path. For OoC, you are leaving a contractual default: switching to a new fixed with another licensed supplier is still the standard escape, subject to any notice the OoC schedule imposes. Do not assume “deemed switching folklore” applies word-for-word to OoC. Read the schedule. Submit accurate reads. Keep supply continuous — empty shops still burn standing charges.
How this pairs with deemed guidance
If you moved into a unit last month and never signed, start with deemed. If you signed a 24-month fixed in 2024 that expired yesterday and the PDF had a rollover clause, start with OoC. Same bill shock feeling; different rulebook. Our Day 1 deemed guide covers the SLC 7.3/7.4 “not unduly onerous” story. This page stays on the contractual default path. Use both when the paperwork is messy.
What I will not do on this page
- Invent a national average out-of-contract p/kWh.
- Pretend Ofgem’s deemed guidance caps OoC rates.
- Promise a specific saving from switching without a quote.
- Recommend a broker by name without a commercial review.
When you are ready for live procurement, use the business energy hub and keep Ofgem’s business contract advice page bookmarked.
Multi-site portfolios and the “one site on OoC” trap
Groups with five shops often discover one forgotten leasehold still sitting on OoC while the others were renewed in a bulk tender. That orphan site can distort group KPIs and confuse brokers who only received meters for the tendered list. Build a simple register: MPAN/MPRN, end date, deemed-or-OoC flag, account number, and who holds the LOA. Review it quarterly. Out-of-contract rates love silence.
When a site changes hands mid-contract, chase the change-of-tenancy path immediately. Leaving supply in the previous tenant’s name is how deemed and OoC nightmares start — sometimes both, in sequence, if paperwork is late.
Dispute hygiene without burning the relationship
If the OoC schedule was never sent, ask for it once in writing and set a calendar reminder. If invoices look estimated across the jump, submit reads and request a corrected bill. If a broker claims Ofgem “caps” your OoC unit rate, ask them to cite the licence condition — and keep our reminder that the deemed guidance does not apply to OoC. Stay polite, stay documentary, and move the volume onto a priced fixed as soon as a comparable quote clears your internal approval.
FAQ
What is the difference between out-of-contract and deemed business energy rates?
Ofgem: deemed applies when you use energy without an agreed contract; out-of-contract rates apply when your contract already said what happens when it ends. They are different.
Does Ofgem’s deemed rates guidance cap my out-of-contract rates?
No. The November 2023 Guidance on Deemed Contracts says it does not apply to out-of-contract rates.
Why are my rates higher after my fixed ended?
OoC books are priced for uncertain tenure and risk. Ask for the schedule in writing and compare a new fixed — do not assume the jump is “deemed”.
Can I switch away from out-of-contract rates?
Usually yes by taking a new contract with a licensed supplier, subject to the notice terms in your OoC schedule. Read that schedule; do not rely on deemed-switching folklore.
What changed in Ofgem’s 2026 consultation?
Ofgem consulted (19 June–17 July 2026) on updates to deemed-rates guidance under SLC 7.3/7.4. As of this guide it was closed awaiting decision — watch the decision, and remember it targets deemed guidance.
Should I sign a Letter of Authority to escape OoC?
Only with a narrow, dated, revocable LOA and clear commission disclosure. An LOA is not required to request your own quotes.
Do standing charges still apply on OoC?
Almost always yes — empty or quiet sites still accrue standing charges. Read meters and invoices carefully.
Where can I compare business energy deals?
Start at switchsquid.com/business-energy/ and keep supplier quotes in writing.
I am Switch. Paperwork first, panic later — and never confuse OoC with deemed.
