Here is a scenario that plays out in pubs across the UK every day. A landlord signs a twelve month contract. Life gets busy, because running a pub always is. The contract quietly expires. The supplier moves them onto a deemed rate without fanfare. The bills go up and the landlord assumes energy prices have risen again. Months pass. Sometimes years.
By the time anyone works out what happened, they have overpaid by thousands. Not because prices rose, though they did, but because they were moved onto the most expensive rate category in business energy.
If that sounds familiar you are far from alone, and it is fixable, often within days.
What exactly is a deemed rate?
When a fixed contract ends you are not cut off. The energy keeps flowing, but your supplier moves you from your agreed rate onto its out of contract or deemed rate. Deemed rates exist because Ofgem requires suppliers to keep serving you when there is no formal contract in place, and there is very little regulation of what they can charge for it.
The result is that deemed rates commonly sit 40 to 60% above a fixed deal you could agree on the open market. Unlike the domestic market, where a price cap gives households some protection, there is no price cap on business energy. Your supplier can charge what the market will bear, and when you are not shopping around, you are the market.
What that costs a pub
A typical UK pub uses between 50,000 and 100,000 kWh of electricity a year, with annual energy bills from £10,000 to £28,000. That is driven by cellar cooling running around the clock, heating a large floor area, long opening hours, glass washers, ice machines and a kitchen if you serve food.
Take a pub using 75,000 kWh a year. On a competitive fixed contract it might pay around 28p per kWh. On a deemed rate that can be 38 to 42p, which is an extra 10 to 14p on every single unit.
| Illustration: a 75,000 kWh pub | Annual cost |
|---|---|
| Fixed contract rate at 28p/kWh | £21,000 |
| Deemed rate at 38p/kWh | £28,500 |
| Difference | £7,500 |
Those figures are illustrative, based on typical market rates rather than on any real account. What you actually pay depends on your consumption, your meter and the tariffs available to you on the day.
Not sure whether you are out of contract? The bill checker compares your current unit rate and standing charge against the market in about a minute.
Why pubs are particularly exposed
- Long opening hours. Many pubs trade 12 to 16 hours a day, seven days a week, and late licence venues push that further. Every hour the doors are open, the meters are running.
- Cooling that never stops. Cellar cooling and beer line chillers run around the clock, which is roughly £3,900 to £7,900 a year just to keep the beer right.
- Large spaces that are hard to heat. High ceilings, big windows and open plan rooms are expensive to keep warm through a British winter.
- Seasonality. A garden packed in July and empty in January, a Christmas rush and then a flat month after it. Your trade fluctuates, but a deemed rate does not care.
How to tell if you are on a deemed rate
It is not always obvious. The telltale signs:
- Your bill shows no contract end date, or shows one that has already passed.
- Your unit rate looks higher than anything you remember agreeing to.
- You had a letter or email saying the contract was ending, which went the way of every other supplier letter.
- The words deemed, out of contract or variable appear anywhere on the bill.
- You cannot remember the last time you actively chose an energy deal.
If any of those apply, you are almost certainly overpaying. The silver lining is that being out of contract means you can move immediately. There are no exit fees, no notice period and no penalty. You just need a better deal to move to.
What to do about it
1. Find your current rate
Take your latest bill and write down the unit rate in pence per kWh and the standing charge in pence per day. Those are the numbers to beat. Our guide to your energy bill shows you where to find each one.
2. Know your annual consumption
Your bill should show annual consumption in kWh, or you can work it up from a few months of usage. That figure decides which tariffs you can be offered.
3. Compare the market
This is where most busy landlords stall, and fairly. Business energy is harder to compare than domestic: there is no single site showing everything, and suppliers price differently depending on your consumption profile, your region and your meter type.
That is where a specialist earns its keep. Pubs and bars sit inside hospitality, one of the ten sectors we cover, with dedicated pages for pubs and bars, inns with rooms and sports and social clubs. We compare a panel of UK suppliers against how your site actually trades.
4. Switch
The switch itself is straightforward. We handle the paperwork and both suppliers, and your supply is never interrupted. The lights stay on, the cellar stays cold and the bill comes down. Most switches complete within two to three weeks, and you can usually secure the rate straight away.
The cost of doing nothing
Every month on a deemed rate is money handed over that you never agreed to pay. Over a year that is a new cellar cooling system. Over two it is a meaningful chunk of a refurbishment budget.
Hospitality is under real pressure, and energy is one of the few costs you can move without changing anything about how you operate. Same hours, same equipment, same service, better rate.
Save on average 40% on your business energy bills.. More if you are on out-of-contract or deemed rates, which is exactly the situation described above. Savings are estimates: typical spend from published UK benchmarks, multiplied by a 30% to 50% band around the 40% our customers save on average (the business's own figure, not a published dataset). Your saving depends on your current contract, usage and live supplier prices. See how we estimate.
Do not let a contract you forgot about quietly drain the profit. Check your rate, compare the market, move. Get your free, no obligation comparison.