When your business energy contract is coming to an end, it can be tempting to accept the first renewal offer and move on.
That may be convenient, but it does not always mean you are getting the right contract for your business.
Before renewing, take a little time to check your current usage, compare the full costs, and understand what will happen if you do nothing.
When does your business energy contract end?
Your contract end date should be shown on your agreement, renewal notice or energy bill.
Do not rely on your supplier or broker to remind you. Record the date somewhere your business will see it and start reviewing your options before the contract expires.
Business energy contracts can last for several years, and most suppliers will not allow you to switch before the agreed end date.
If you are a microbusiness and your fixed term contract is ending, your supplier should normally contact you around three months before the end date to explain your switching options.
What happens if you do nothing?
What happens next depends on your current agreement.
You could move onto:
- An out-of-contract rate
- A deemed contract
- A rollover or evergreen agreement
- Another rate described in your existing terms
Ofgem explains that an out-of-contract rate applies when your agreement already states what you will pay after it ends. A deemed contract may apply when your old contract expires without setting out what happens next.
These arrangements can offer short term flexibility, but the rates may be higher than those available through a negotiated contract. Citizens Advice describes deemed and out of contract tariffs as usu-ally expensive.
The best approach is to understand your options before the current agreement finishes.
What should you check before renewing?
1. Your current unit rate
The unit rate is the amount charged for each kilowatt hour of electricity or gas you use.
Compare your current rate with the renewal offer, but do not look at this figure on its own.
A lower unit rate may be offset by a higher standing charge or other costs.
2. Your standing charge
The standing charge is a fixed daily amount that may apply regardless of how much energy your business uses.
For businesses with relatively low consumption, the standing charge can have a noticeable effect on the total annual cost.
When comparing quotes, calculate the likely yearly cost rather than simply choosing the lowest-looking rate.
3. Your annual consumption
A supplier will usually need your annual energy consumption to prepare an accurate business energy quote.
You should be able to find this on your bill or annual statement.
Check whether your usage has changed since the last contract began. You may be using more or less energy because of:
- Different opening hours
- New equipment
- A change in premises
- Business growth
- Energy efficiency improvements
- Changes in staffing or production
Using old consumption information could give you an unrealistic comparison.
4. Whether your bills are estimated
Check whether your recent bills use actual or estimated meter readings.
Estimated information may not reflect what your business has really consumed, particularly if operations have changed.
Smart meters automatically provide usage information to suppliers, reducing the need for manual readings and supporting more accurate billing.
Smart Pay uses smart meter information to support clearer billing and give customers greater visibility of their energy use. You can learn more through the Smart Pay help centre.
5. The full contract length
A longer contract may provide more certainty, but it also commits your business for a longer period.
Think about whether you expect to:
- Move premises
- Sell or close the business
- Change your operating hours
- Install new machinery
- Reduce consumption
- Add renewable generation
A contract that works today may become less suitable if the business changes significantly.
6. Which prices can change
Do not assume every cost is fixed simply because the quote is described as a fixed contract.
Ofgem advises businesses to check whether the agreement includes conditions that allow parts of the rate to change during the contract.
Ask the supplier to explain:
- Which charges are fixed
- Which charges may change
- How taxes and levies are treated
- Whether network costs are included
- Whether there are extra service charges
Get the full details in writing before agreeing.
7. Any broker fees or commissions
Businesses can arrange an energy contract directly with a supplier or through a broker.
Brokers charge for their service. This may be an upfront fee or an amount included within the energy rate. Ofgem confirms that business energy costs can include third-party services such as sales commission and brokerage.
Ask how any broker is being paid and how much that adds to the contract.
Smart Pay provides businesses with a direct quote journey, without using an external broker between the customer and supplier. Get a direct business energy quote.
Should you accept your current supplier’s renewal offer?
Your existing supplier may offer a suitable contract, but it should still be compared with other options.
Check:
- The unit rate
- The standing charge
- The estimated annual cost
- The contract length
- Which prices can change
- Payment terms
- Exit conditions
- Any commissions or additional fees
Citizens Advice recommends comparing the energy rate, extra costs, contract length, cancellation fees and notice requirements before choosing a business energy contract.
Do not feel pressured into agreeing during a phone call. Ask for the complete offer and terms in writing.
Most business energy agreements do not provide a cooling-off period once accepted, so you need to understand the contract before committing.
Can you switch business energy supplier?
You can normally switch when your fixed term contract has ended or when you are on a deemed or out of contract tariff.
Your current supplier may object to a switch in some circumstances, such as when there is an outstanding debt or the existing contract has not finished.
When a switch goes ahead, take an accurate meter reading and provide it to the relevant suppliers. Citizens Advice states that a business energy switch can be completed within five working days, although you can request a later date to match the end of your contract.
Do not renew without checking the numbers
A renewal should not be treated as routine admin.
Before agreeing, make sure the quote reflects your actual consumption, your plans and the level of certainty your business needs.
Smart Pay is built for small businesses that want a clearer, more direct way to arrange their energy.
Our online quote journey is quick, straightforward and does not involve an external energy broker. Smart Pay customers also receive monthly bills through the Enfiniti customer portal.
Your contract may be ending, but that does not mean you need to accept the first offer you receive.
Get a business energy quote from Smart Pay.
Frequently asked questions
How early should I review my business energy contract?
Start reviewing your options before the contract ends. Microbusiness suppliers should normally explain switching options around three months before the end of a fixed term agreement.
Will my energy supply stop when my contract ends?
No. Your supply should continue, but you may move onto the rate or contract type stated in your agreement.
Can I renew before my current contract ends?
You may be able to agree a future contract in advance. Check when the new agreement will begin and whether it overlaps with your current contract.
Can I switch supplier before my contract ends?
Most business suppliers will not allow you to switch during a fixed term agreement unless the contract permits it or an exit arrangement is agreed.
What information do I need for a business energy quote?
You will normally need your business details, supply address, current supplier, annual consumption, contract end date and meter information. A recent bill should contain most of this.
Is the lowest unit rate always the cheapest quote?
No. The standing charge, contract length, additional fees and your annual consumption all affect the overall cost.
