What is a deemed tariff and why you should fix your small business energy tariff
We get that running a small business often leaves owners short on time. That can mean leaving things like energy contracts to expire, or not prioritising switching to a cheaper tariff when you move into a new premise. Not renewing your energy contract in these scenarios could lead to you needlessly spending too much on your bills and stunting your business’ growth.
Energy tariffs are pricing plans from suppliers for your gas and electricity usage that vary to suit customer needs. EDF offer fixed tariffs for 1,2,3 or 4 years which keep the unit rates and standing charges the same for the duration of the contract. Find out more about the different tariffs EDF offer small businesses here.
This blog explains why you should prioritise fixing your tariff early to avoid the risks associated with deemed tariffs.
What is a deemed tariff?
A deemed tariff is the default energy rate your business is automatically put on when you start using gas and electricity without an agreed contract.
Some deemed tariff prices are the same as Standard (Variable) tariff prices, where your unit rates and daily standing charges can go up or down based on wholesale market conditions. However, it is common for some suppliers to charge higher rates although your prices will never go above energy regulator Ofgem's price cap.
Find out more about Standard (Variable) and other tariff types in this blog.
Why small business owners should avoid deemed tariffs
Deemed tariffs are typically the most expensive rates a supplier offers because they are designed for customers who haven’t yet agreed to a contract. Suppliers offset the risk of potentially unpaid bills with higher charges, whilst also encouraging customers to fix with their supply. Without a fixed tariff in place, you don’t benefit from the lower, fixed rates offered due to the greater amount of certainty for the supplier. This means your business could be overspending on energy every month simply because your tariff hasn’t been reviewed or updated.
See how much you could save by switching from a deemed tariff with EDF by calling our sales team at 0333 188 6725.
Deemed tariffs also come with very little protection for business owners, with the potential for prices to rise at short notice. These price changes are based on global wholesale prices and as a result, your business could face unexpected increases, making it difficult to forecast and manage your operating costs. Fixing your energy rates will not only take away this uncertainty but also unlock greater potential for growth for your business.
Watch this short video to learn more about the downsides of deemed tariffs and the benefits of fixing.
Why are you on a deemed tariff?
Small businesses are automatically placed on a deemed tariff for two main reasons:
You have recently moved business premises
When moving to a new property, the supplier used by the previous tenants will continue to supply gas and electricity at a higher deemed rate until you get in touch and agree a new fixed.
Have you recently moved? Find out more about what you need to know in our moving in guide video below
Your previous fixed contract came to an end
You may have been with your supplier for some time having agreed a one-, two-, three- or four-year tariff in the past and not realised your renewal window had come around. In this scenario, your supplier will place you on a deemed rate until you agree to a new tariff (if you are with EDF and reach the end of your contract you will be placed on our Freedom tariff).The best cause of action to avoid this is to fix again before the end of your old contract.
How to check your current tariff with MyAccount
If you’re an EDF customer, checking which tariff you’re on and how long you have left is simple and can be done by logging into MyAccount here.
Once logged in check the “Tariff details” section. This will tell you everything you need to know e.g. tariff name, unit rates and standing charges.
Here is what you will see if you are on deemed tariff:
How to switch your tariff
So, you’ve checked your account and realised you’re on a deemed tariff, what next?
All you need to do is call our sales team at 0333 188 6725. Whether you are an existing EDF customer or not, they will be able to guide you through the process of agreeing your new tariff. In just a few minutes you can start saving money.
Related articles
Understanding rising TNUoS Costs – What small businesses need to know
