Change of Tenancy Energy: What Happens If You Inherit a Bad Contract

If You’ve Just Taken Over Business Premises, You May Have Inherited an Energy Problem You Don’t Know About Yet.

Every year, thousands of UK businesses move into new premises and inadvertently take on energy liabilities, above-market contracts, and supply arrangements that belong to the previous occupant. The Change of Tenancy (COT) process in the UK energy market is supposed to protect incoming occupiers — giving them a clean start with a contract of their choosing on a rate they’ve agreed. In practice, the process is inconsistently applied, poorly understood, and frequently exploited to leave incoming tenants on out-of-contract or deemed rates that bear no resemblance to the competitive market.

Understanding how COT energy works — and acting quickly when you take on new premises — is the difference between inheriting someone else’s problem and starting with a clean slate.

What Happens to Energy Supply When You Take Over Premises

When a business vacates premises, they are responsible for notifying their energy supplier and providing a final meter read. When the new occupier moves in, there is typically a gap — ranging from a matter of hours to several weeks — during which the supply continues but has no named contract holder.

During this gap, the energy supply continues to flow. Someone has to pay for it. The energy supplier serving the premises defaults to a “deemed contract” — a supply arrangement that comes into effect automatically, without any agreement from the new occupier, at rates set entirely by the supplier.

Deemed rates are not competitive. They are set at the supplier’s discretion and typically represent some of the highest unit rates available in the non-domestic market — frequently equivalent to or above out-of-contract rates, which as a benchmark run 40–80% above contracted rates. If you move into premises and don’t notify the energy supplier and establish a new contract promptly, you are on deemed rates for every day until you do.

The Deemed Contract Trap

The deemed contract problem is particularly acute for businesses that:

Are unaware they’re responsible for energy from day one of occupancy. The legal position is clear: once you are in occupation, you are liable for the energy consumed, regardless of whether a formal contract exists. Many business owners assume that because they haven’t signed anything with the energy supplier, they can’t be charged. This is incorrect. Deemed contracts are legally binding even without your signature.

Inherit premises from a previous tenant with ongoing supply arrangements. If the previous tenant failed to notify their supplier of the vacancy, the incoming tenant may find the premises still under the previous contract. This creates a complex situation: you’re consuming energy on someone else’s contract, potentially with a supplier you didn’t choose, on terms you haven’t agreed. The supplier’s approach to this varies — some will retroactively apply deemed rates from the change-of-tenancy date; others will pursue you under the previous tenant’s contracted rate. Neither is straightforward.

Move into premises where the previous occupant’s supplier is one you’d prefer not to use. Under deemed contract, you don’t get to choose your supplier. Supply continues with whoever was serving the premises. You can switch, but the process requires proper COT notification and a new contract, and takes time. During that time, you’re on deemed rates.

What to Do Immediately When Taking on New Premises

The priority actions, in order, on or before day one of occupancy:

1. Identify the current supplier. Check the existing meter for the MPAN (electricity) or MPRN (gas). Use this to identify the current supplier — your broker can check this through industry databases, or you can use the Electralink/Xoserve data access routes. If there’s an existing energy bill on the premises, the supplier is named on it.

2. Take a meter reading on the day you take occupation. Photograph the meter reading with a timestamp. This is your evidence of the energy consumed before you were in occupancy versus after. Without this reading, you have no basis for disputing bills that include pre-occupancy consumption.

3. Notify the existing supplier immediately. Contact the existing supplier, provide your business name, the premises address, the MPAN/MPRN, and the meter reading taken on your first day. Confirm that you are the new occupier from that date. This establishes the liability boundary — energy from that read is your responsibility; energy before it is not.

4. Arrange a new contract as quickly as possible. Don’t leave the premises on deemed rates for longer than necessary. The moment you have the supplier’s details and your meter read, you can begin the process of obtaining competitive quotes and contracting with a supplier of your choice. Your broker can often have a new contract in place within 3–5 working days for straightforward premises.

5. Check for any outstanding debt on the meter point. In some cases, the previous occupant will have left debt against the supply point — unpaid bills that the supplier may attempt to recover from the new occupier, or that may complicate the transfer to a new supplier. Checking this early — and ensuring you’re not liable for a predecessor’s debt — is a standard part of COT management.

Disputing Deemed Rate Charges

If you’ve been in premises for some time and have only just realised you’re on deemed rates, you may have been billed at uncompetitive rates for weeks or months. The ability to challenge these charges depends on:

Whether you provided timely notification. If you notified the supplier promptly of your change of occupancy but they continued to bill at deemed rates rather than moving you to a contracted rate, you have grounds to challenge and request that bills be recalculated at more reasonable rates.

The supplier’s own codes of practice. Most major energy suppliers have codes of practice that set expectations around deemed contract rates and the transition to new contracts. Charges that materially exceed the market rate for an extended period, where the occupier wasn’t aware of their options, are sometimes negotiable.

Dispute Resolution Ombudsman referral. If you’ve been overcharged on deemed rates and the supplier won’t negotiate, a formal complaint to the Dispute Resolution Ombudsman (formerly the Energy Ombudsman) is an available route. The Ombudsman can direct suppliers to refund excess charges in cases where the deemed rate applied was unreasonable relative to market rates at the time.

The COT Process for Businesses Moving Out

The obligations run in both directions. If your business is vacating premises, you are responsible for:

• Notifying your energy supplier of the vacating date with a final meter read
• Ensuring your final bill is settled to the vacating date
• Not leaving ongoing supply arrangements that create liability for an incoming occupier

Failure to notify your supplier when vacating can result in continued billing after you’ve left — a situation where you’re paying for energy consumed by someone else (or no one) in premises you no longer occupy. This is more common than it should be, particularly in businesses where energy management is not actively overseen.

Multi-Site Businesses: COT at Scale

For businesses that regularly open and close sites — retail chains, restaurant groups, serviced office operators — COT management is a recurring operational process rather than a one-off event. Getting this right at scale requires a systematic approach: a standard checklist for new site openings, a designated person responsible for energy notification, and ideally a broker relationship where COT management is included as part of the ongoing service.

Telnergy manages COT processes for multi-site clients as a standard part of our service. When you open a new site, we identify the existing supplier, take the initial meter read, notify the incumbent, and arrange competitive contracts — typically before deemed rates have had the opportunity to accumulate materially. When you close a site, we manage the exit and final read process to ensure you’re not carrying liability beyond the closure date.

Moving Into New Premises? Talk to Telnergy First.

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