Out-of-contract rates

Out-of-contract rates are the default prices a supplier charges when a fixed contract ends and nothing replaces it. Unlike deemed rates, which arise where there was never an agreement, out-of-contract rates follow a contract you did sign but did not renew or replace in time. The supplier sets them, publishes them, and applies them automatically. They are priced well above negotiated rates. The premium runs in the same range as deemed rates: 25 to 45% more per kWh for electricity and 40 to 65% more for gas, with standing charges two to five times higher. That is not a coincidence. Deemed and out-of-contract rates are, in practice, the same rate class. Most suppliers hold a single default card and apply it whether a site never had a contract in the first place or a fixed term simply lapsed.

This is one of the quietest forms of overpayment in the market. Nothing visibly breaks. Bills keep arriving and keep being paid. The unit rate has jumped, but on a business energy bill the unit rate is one number among many, and unless someone is comparing it against a reference point, the increase passes unnoticed. Energy bills are designed to be accepted, not understood, and out-of-contract rates depend on exactly that.

Why the market works this way

Suppliers carry genuine cost when a business sits outside a contract, because they cannot hedge that business’s consumption efficiently. That justifies some premium. It does not justify the size of the premium, and it does not explain why the transition happens silently. The commercial reality is that lapsed accounts are profitable, and there is no incentive for a supplier to shorten the period a business spends on default rates.

The trap sits in the notice window, not the end date. Most business energy contracts specify a period, often opening months before the contract ends and closing weeks before it, during which you must give written notice to prevent an automatic rollover or a drop to default rates. Miss that window and the terms you are used to no longer apply, even though the end date on your original paperwork has not yet arrived. Two contracts with the same supplier and the same site can carry different notice windows, worded differently, because they were signed at different times under different terms. Nothing forces a supplier to flag the window as it opens. A letter may arrive, or it may not, and by the time an invoice reflects the change, the window that would have avoided it has already closed.

The multi-site problem

For a single site, staying in contract is a calendar entry. Across a portfolio it becomes a data problem: dozens of meters, staggered end dates, different suppliers, and renewal letters addressed to sites rather than head office. Portfolios drift out of contract one meter at a time, which is why multi-site organisations are disproportionately exposed. The fix is not more diligence from busy people. It is a system that tracks every supply, every end date, and every notice window in one place.

Vester treats this as a measurement problem before it is a negotiation problem. Every supply point a business is responsible for goes into a single register: supplier, contract type, end date, notice window, and current status, contracted, inside a notice window, or already out of contract. That register is reviewed on a fixed cadence rather than left to trigger only when a bill looks wrong, and it sits alongside the half-hourly data collection Vester runs anyway, so when a notice window does open, the evidence needed for a proper tariff decision is already in place. A portfolio of forty meters does not need forty people paying attention. It needs one place where the dates live and someone whose job is to check it.

What to do now

Establish your contract position in writing for every meter you are responsible for. Where a supply is out of contract, put a negotiated contract in place to stop the loss, then make the longer-term tariff decision on proper evidence rather than under time pressure. Businesses that have been out of contract for a period may also have grounds to review historical charges.

If you want your current rates checked against the market, request a benchmark at /benchmark or book a review at /book.