Want out of your business energy contract before it ends? If you’re on a fixed-rate deal, you can usually only leave early if you agreed a termination clause or you pay an exit fee. If you’re on deemed or out-of-contract rates, you can usually move whenever you’re ready. Variable and rolling contracts vary: some still run for a set term or need notice. Whichever it is, talk to us before you do anything, and we’ll work out the right time to move and line up your next contract.
Key points
- Fixed contracts hold you: Most suppliers won’t release you before the end date unless there’s a termination clause or you pay an exit fee.
- Some contracts don’t tie you in: Deemed and out-of-contract rates can usually be left at any time; variable and rolling contracts depend on their terms.
- Mid-contract? Plan, don’t pay: Tell us your end date and we’ll plan your switch for the right time.
- Arrange it early: We always advise arranging your next contract as early as possible, normally 12 months before your renewal date.
On a Fixed-Rate Contract? Here’s Where You Stand
Most businesses are on a fixed-rate contract, where the unit rates and standing charges are set for the length of the deal. Business contracts can run for up to five years, and most suppliers won’t let you switch before the end. Unless you agreed a termination clause or you pay an exit fee, you’ll be held to the contract. You can check the basics of setting up a business energy contract with the energy regulator, Ofgem, but we’ll go through your own terms with you.
Before you pay anything to leave, ask yourself why you want out. If it’s because prices have fallen, an exit fee can easily wipe out the gain. If you’re closing, selling or moving, there may be a better way through, which we cover below. And remember, a contract end date is a contract end date. Moving shouldn’t cost you anything, but only if you see out your contract; leave before the end and suppliers will almost always charge a cancellation fee. Your renewal window normally opens 12 months before your end date, so you can line up your next contract well ahead, ready to start the day the current one finishes.
Imagine you run a bakery with a fixed contract that has eight months left. Prices have dropped since you signed and you’re tempted to jump. Paying to leave might make sense, or it might cost you more than you’d save. The smarter move is usually to lock in your next contract early, ready to start the day the current one ends.
If you’re thinking of leaving early, talk to us before you contact the supplier. Tell us your contract end date and we’ll talk you through what leaving would cost against staying, tell you straight what we’d do, and plan your switch for the right time.
Which Contracts Can You Leave at Any Time?
Not every contract ties you in. If you’re on out-of-contract rates or a deemed contract, you can usually switch whenever you’re ready. Variable-rate and rolling (“evergreen”) contracts are less clear cut: some have variable rates but still run for a set term, and others need notice. Send us your terms and we’ll tell you exactly when you can move, then compare supplier prices for you straight away.
Deemed contracts are the clearest case. You usually end up on one when you start using energy at new premises without agreeing a contract, or when a contract ends and doesn’t say what happens next. On a deemed contract, a supplier can’t stop you switching for any reason or at any time, can’t make you give notice and can’t charge a termination fee. And deemed prices are on average 80% higher than negotiated contract rates. If you’re on a deemed rate, moving quickly is almost always the right call.
Evergreen contracts work a little differently for microbusinesses. The supplier can ask for notice, but no more than 30 days, and has to acknowledge your request to end the contract within five working days. We’ll build that notice into the timetable so your new contract starts when it should.
The same freedom applies if your energy supplier has gone bust and you’ve been moved to a new one: you’ll be on a deemed contract you can leave without exit fees. Check with one of our energy experts before you settle on anything, and we’ll find you a proper contract to move onto.
How Do You Leave on Time?
The most common “early exit” question is really about leaving on time. If nothing’s arranged, a fixed contract can roll over onto a new term, usually for 12 months and almost always at a more expensive rate. For a microbusiness, that rollover is capped at 12 months, and since 1 October 2022 a supplier can’t make a microbusiness give notice to end its contract unless it’s an evergreen one. Suppliers also have to set out the main terms before and after you sign, and show any broker costs as a total in pounds and pence for the length of the contract, so you can see exactly what you’re paying.
Your bills should show a fixed-term contract’s end date and notice period, and if you’re a microbusiness, you must be given renewal prices before the contract ends. If you’re a larger business, the notice terms in your contract set the timetable, and we’ll plan around them for you.
We always advise arranging your next contract as early as possible, normally 12 months before your renewal date. That way you can take advantage of forward pricing instead of short-notice prices, and you never end up on the rollover or deemed rates that apply when your energy contract is ending with nothing in place. Our retentions team keeps every end date across your sites on record in one place and sends renewal reminders well ahead, so once you tell us your contract end date, it’ll never sneak up on you.
Moving Premises or Closing Down?
Moving premises is one of the most common reasons for wanting out of a contract, and it needs handling properly. The current supplier needs to know as soon as possible, whether you’re moving in or out, even if new suppliers are already quoting. When someone new moves in and switches, the current supplier accepts the switch only if it agrees a change of occupier has taken place.
Picture a shop moving across town. The old site goes to a new tenant, the supplier hears early with a meter reading, and the new unit has a contract lined up before the keys change hands. That’s the move we’d plan with you, and when you’re moving premises we sort the water as well as the energy. With a signed Letter of Authority (LOA), we’ll deal with the suppliers on your behalf. Our Letter of Authority (LOA) lets us help you, not make decisions for you. Help with your contracts, bills and supplier queries: yes. Enter into a contract on your behalf: no. Some brokers ask for a “level 2” LOA that lets them sign contracts for you. Ours is a level 1 LOA, so only you can agree a contract.
What Does This Mean for Your Business?
Whatever contract you’re on, the answer is the same: talk to us before you do anything. If you’re mid-contract, we’ll plan your next one for the right time. If you’re out of contract or on a deemed rate, we’ll get you moving straight away.
- Talking it through: We’ll go through your contract’s exit, notice and rollover position with you and tell you straight what we’d do.
- Comparing prices: We compare prices from suitable suppliers for your business electricity and business gas and present the options that best suit your business.
- Timing the next contract: We arrange your next contract so it starts when your current one ends. You approve and sign; we do the leg work.
- How we’re paid: You don’t pay us a separate fee. We’re paid commission by the supplier, which is included in the rates and charges in your supply contract, and we disclose it in full, in writing, before a contract is signed.
If you’re ever unhappy with how we’ve handled your energy, you have somewhere to turn: we’re members of an alternative dispute resolution scheme with the Energy Ombudsman. We’re also members of the Energy Consultants Association (ECA), our trade association.
Final Thoughts: Talk to Us Before You Pay to Leave
Paying to leave a contract early is rarely the best way out. Whether you’re mid-contract, out of contract or stuck on a deemed rate, we’ll find the right moment to move and a fixed price that suits you. Book a call with our Energy Team, request a callback or call us on 01273 914000. You don’t have to do it alone.