According to a report published by energy regulator Ofgem, small businesses are paying close to double the standard rate for energy when they move into new premises.
The reason for this is that small companies are often considered bad risk clients, regardless of their previous payment records.
150,000 SMEs paying deemed rates
Although they should only be kept on higher rates for three months before being switched to a standard plan, companies which frequently move premises find themselves frequently paying higher rates.
Ofgem estimates that 150,000 companies are currently paying higher, also referred to as deemed, rates.
Ofgem: We will remind energy suppliers of their obligations
A spokesperson for Ofgem commented: “Since last year, suppliers have been required to tell firms that they are on deemed rates and inform them about more competitive rates available to them.
“We will be reminding providers of this”.
Deemed contracts offer additional flexibility
When This is Money contacted British Gas for a statement, the energy supplier said: “The majority of firms spend only weeks on deemed rates but some choose to stay on the deemed rates because it offers more flexibility than signing up to a contract.
“We always try to help customers move to the right contracts for their circumstances”.