Get a business energy contract

If you’re starting a new business, moving premises or changing energy suppliers, you’ll need to set up a business energy contract. The terms, pricing and regulations differ from standard home energy contracts.

Find out more about what to do when moving premises or switching business contracts.

The type of contract you can get usually depends on the size of your business, and how much energy you use. Before you agree to a contract, it’s important to know:

• what type of contract it is
• how long the term is
• if there are any fees involved, for example those agreed in special clauses in your contract
• what protections you have
• if any broker fees or commissions are included in the price

It’s also important to know what happens at the end of your contract, for example if it will automatically renew, or if you will move to out-of-contract or deemed rates.

How business sizes affect energy contracts

The type of contract you need if you run a business will depend on the:

• number of people you employ
• income your business makes over a year
• amount of electricity or gas your business uses a year

Different sizes of businesses get different protections.

Microbusinesses

To qualify as a microbusiness, you must have fewer than 10 employees and an annual turnover or balance sheet total of no more than £2 million.

You can also qualify if you use up to 100,000 kWh per year (electricity) or up to 293,000 kWh per year (gas).

If you are a microbusiness, you have extra protections when arranging or renewing an energy contract. Your energy supplier must:

• provide clear information about your contract
• limit termination notice periods to 30 days (evergreen contracts only)
• acknowledge requests to end a contract within 5 working days (evergreen contracts only)
• provide information about renewal prices before your contract ends

Microbusinesses and small businesses can get support with their energy contracts from Citizens Advice. They can also get help with unresolved supplier complaints from the Energy Ombudsman.

Small businesses

To qualify as a small business, you must have 11 to 50 employees and an annual turnover of up to £6.5 million or balance sheet total of no more than £5 million.

You can also qualify if you use up to 200,000 kWh per year (electricity) or up to 500,000 kWh per year (gas).

Large businesses

To qualify as a large business, you must have 50 or more employees and an annual turnover of more than £6.5 million or balance sheet total of more than £5 million.

You can also qualify if you use more than 200,000 kWh per year (electricity) or more than 500,000 kWh per year (gas).

Some suppliers may use either your business size or your annual energy consumption when deciding which contract or protections apply.

Types of business contracts

There are a number of different types of business energy contracts. Energy suppliers may not offer all of them.

Fixed-rate contracts

Fixed rate contracts fix the price of unit rates and standing charges for the length of the contract. This means the cost per kWh remains the same no matter what happens to wholesale market prices.

Variable-rate contracts

With a variable-rate contract, the price you pay for energy can increase or decrease during the contract period. This may be because your prices change when the wholesale market prices change.

Deemed-rate contracts

You will be put on a deemed contract automatically when you move into a new premises without arranging a formal contract. Deemed rates are usually higher than negotiated contract rates.

You will also be put on a deemed rate if your energy supplier goes out of business.

Out of contract rates

Some suppliers move you onto out-of-contract rates if your fixed-term contract ends without you agreeing to a new deal. Like deemed rate contracts, these rates are usually more expensive than fixed-term contracts.

Rollover or evergreen contracts

Some contracts automatically renew at the end of a fixed term contract if you have not made a new arrangement, or switched to a new supplier. The new arrangement will be for a fixed term (usually 12 months), and may be on a higher rate.

Flexible contracts

Flexible contracts (sometimes called structured contracts) are suitable for large businesses that use a lot of energy. Rather than locking into a fixed price, they allow companies to buy energy in smaller portions when market conditions are better.

Get help to arrange your contract

You can arrange your business contract yourself, or you can use an energy broker, consultant or a price comparison service (also known as third-party intermediaries).

Using a price comparison service

Price comparison websites help you compare business gas and electricity contracts from different suppliers. Check which suppliers are included in the comparison, and whether the website compares the whole market or only a selection of suppliers. You should also check whether the website receives commission from energy suppliers or other sources.

Using an energy broker

Energy brokers can help you find a suitable contract for your business, and then negotiate with your chosen supplier. This can save you time and resources.

Brokers charge you for their services. Some charge an upfront fee, but most are paid a commission by the energy supplier you choose. If your broker is paid by an energy supplier, they must be a member of an approved redress scheme.

Before using one, check which scheme they belong to:

• Energy Ombudsman broker register
• Utilities Intermediaries Association (UIA) accredited member list

Because there is no cooling-off period after you agree to your contract, it’s important you make sure you use a trustworthy broker.