There is no price cap on business energy. The cap you read about every quarter applies to households, and nothing equivalent protects a company. That matters most when a business slips onto a deemed or out of contract rate, where Ofgem's own figures put deemed prices at around 80% above a negotiated contract. It is the most expensive way to buy energy, and almost nobody chooses it deliberately.
The 30-second version
- There is no price cap on business gas or electricity. The Ofgem cap is domestic only.
- Deemed rates apply when you use energy with no contract agreed, most often after moving into a premises.
- Out of contract rates are different: they apply when a fixed term ends and nothing replaces it.
- Ofgem puts deemed prices around 80% above negotiated rates. That is the scale of it.
- It is more common than people think. Ofgem's 2024 survey found a fifth of businesses had gone out of contract.
- Getting off it is quick, and deemed contracts have no exit penalty.
On this page
Why there is no cap for businesses
Every quarter the energy price cap is in the news. It is worth being clear that it has nothing to do with your business supply. The cap applies to domestic default tariffs. Non-domestic customers, including the smallest microbusinesses, sit outside it.
That is not an oversight. Business energy is treated as a negotiated market where customers are expected to shop around, which works well if you do and badly if you do not. The practical consequence is that there is no backstop price. If you end up on a supplier's default rate, there is no regulator-set ceiling on what that can be.
Deemed rates, and how you end up on them
A deemed contract is what you get when you are consuming energy without having agreed a contract for it. You have not signed anything, but you are using the supply, so terms are deemed to exist.
The classic way in is moving premises. You take on a unit, the lights work on day one, and nobody thinks about energy because nothing has gone wrong. What has actually happened is that you inherited the previous occupier's supplier on their deemed terms, and you are paying for it from the moment you got the keys.
- Moving into new premises without contacting the supplier and agreeing a contract.
- Your supplier going out of business and your supply being moved to another one.
- Taking on a lease where energy was never discussed.
The first bill is usually the warning
Businesses rarely discover this on day one. They discover it when a bill arrives that looks far too high for the size of the premises, often months later. By then the overpayment has been running the whole time. If you have moved in the last year and never signed an energy contract, you are almost certainly on deemed rates right now.
Out of contract rates are a different thing
These get used interchangeably and they are not the same. Ofgem is explicit that out of contract rates are not deemed rates.
An out of contract rate applies when you did have a fixed term contract, it ended, and you did not agree a new one. The supply carries on, and the supplier moves you to their default rate. You are not on deemed terms, you are on the contract's fallback.
It is extremely common. Ofgem's 2024 business survey found that a fifth of businesses went onto an out of contract rate after their contract ended, with a further one in eight ending up on a deemed contract. Between them, that is a third of the market paying a default price.
What it actually costs
Ofgem's own consumer guidance puts deemed prices at around 80% more than rates charged under a negotiated contract. An earlier Ofgem microbusiness review found average deemed unit rates about 75% higher.
Put a figure on your own bill and the number stops being abstract. A business spending £1,000 a month on electricity at a negotiated rate is potentially paying something closer to £1,800 on deemed terms for exactly the same energy, consumed in exactly the same way, in the same building.
The frustrating part is that nothing is wrong. No fault, no error, no disputed charge. You are simply buying at the worst available price because nobody agreed a better one.
What protections you do have
There is no cap, but there are rules, and they are worth knowing.
- Deemed terms must not be unduly onerous. Suppliers are bound by licence conditions on this, and Ofgem compares a supplier's deemed rates against that supplier's own contract rates. Setting deemed rates high simply to push customers onto contracts is not an acceptable justification.
- Deemed contracts have no exit penalty. You can leave at any time, which is the single most useful fact in this article.
- Microbusinesses get extra protections, including clear contract information, renewal price information before a contract ends, and a termination notice period on evergreen contracts limited to 30 days.
- Suppliers must acknowledge a request to end an evergreen contract within five working days.
Whether you count as a microbusiness depends on employee numbers and consumption, so it is worth checking rather than assuming you are too big to qualify.
How to get off it
- Find out what you are actually on. Your bill will say, though not always clearly. Deemed, out of contract and standard variable all mean you have not agreed a price.
- Find your supply numbers. The MPAN for electricity and MPRN for gas are on the bill and are what any quote needs.
- Check whether you are in contract and when it ends. If you are in a fixed term, note the renewal window now rather than finding out afterwards.
- Get the market checked. Deemed contracts have no exit fee, so there is nothing stopping you moving as soon as a better price is agreed.
- Diarise the end date of whatever you sign. This whole article describes what happens when nobody does.
We broker business energy rather than supply it, and our commission is set out in writing before you agree to anything, so you can weigh it against the rate like any other cost. The full detail of how that works, including the redress scheme, is on our business energy page. If the deal you are already on beats what the market will give us, we will tell you to stay put.
Moved premises in the last year?
Then you may well be on deemed rates without knowing. Send us a recent bill and we will tell you what you are on, what it is costing you against a contracted rate, and whether it is worth moving. There is no exit penalty on a deemed contract.