A Guide to Business Energy Contract Renewals

We understand how crucial it is to stay on top of your business energy contract and secure the best possible deal. However, the process of navigating through the intricacies of business energy contract renewals can be overwhelming and isn’t as straightforward as domestic energy contracts. In this guide you will understand the ins and outs of the renewal process for businesses, the potential risks of overlooking renegotiations, and the steps you can take to make well-informed decisions for your energy needs. We will cover:

• What happens when your business energy contract is due to renew
• What happens if you don’t renegotiate your energy deal
• Can I leave my energy supplier without a penalty
• Deciding to renew your contract or switch suppliers
• Comparing alternative offers and finding a new supplier

What happens when your business energy contract is due to renew?

As business energy contracts are set for a fixed period of time (typically at least 2 years in duration) they will eventually end. Before they expire they enter a renewal period where you must provide formal notice of your intentions to either:

• Renew your contract with your existing supplier
• Leave your supplier and look for a new deal

When your energy contract is due for renewal you will receive a renewal letter. This letter provides the notice period (usually a minimum of 30 days) which is the amount of time you have to inform your supplier of your intentions.

What happens if I don’t renegotiate my energy contract?

If businesses neglect to renegotiate their contract before it expires, they are placed on a deemed tariff. These rollover contracts have higher rates for the same energy consumed. Despite this potential risk, many businesses opt to let their energy deals roll over automatically due to a lack of awareness regarding their rights at the end of an energy contract and not understanding the risk of a price increase.

Know your contract end date

To avoid rolling over onto a deemed tariff when your contract ends you need to know your contract end date. Ofgem has made it a requirement for all suppliers to write the end date and the notice period on all fixed price contract bills for micro businesses. End dates will also be on your renewal letter. However, if you are not a micro business and have not yet received your renewal letter you can contact your supplier and ask for the end date.

Can I leave my business energy supplier without penalty?

You can only leave your current business energy contract when you enter the notice period. There are no cooling-off periods when you enter a new contract. Also, there are high penalties if you try to exit an energy contract.

Deciding to renew your contract or switch suppliers

Businesses have the choice to either renew with their existing supplier or find a new energy supplier. During the renewal process, there are some key factors to consider to help you find the best energy deal such as:

• reevaluating your energy needs
• understanding your consumption
• checking your final bill
• assessing your current supplier’s performance

Once you have reviewed these factors you’ll be in a better place when considering your renewal options. Let’s explore them in more detail.

Reevaluating your energy needs

Make sure you are aware of any significant operational changes that will increase or decrease the demand for energy. Such changes could be a change in manufacturing methods, new technologies, headcount, fleet size or plans to move premises.

Understanding your consumption

Track your energy consumption using energy management software. This enables you to pinpoint areas where you can reduce your energy usage and cut down on costs.

Tracking energy usage can also help identify trends and spikes in your consumption, allowing you to address potential problems and implement corrective actions.

By understanding your energy consumption, you’ll be better equipped when negotiating rates on your next contract.

Check your final bill

It’s important to make sure your final bill is accurate so that you have not been overcharged. Energy consultants can support with energy bill validation as it is often a complex task. Understanding all your invoices in your original contract will help you in predicting future costs in new deals. It also helps you quickly identify the best prices in potential future deals.

Evaluating customer service

Assessing the quality of customer service provided by your existing supplier is crucial. Poor customer service can cause frustration and potentially cost your business time and money. If you were not satisfied with your existing supplier, you are not likely to renew with them.

Comparing alternative offers and finding a new supplier

The final step is to compare energy deals from different energy suppliers. An energy broker can help ensure the above factors are reviewed correctly. This ensures the energy prices presented by existing and new suppliers are accurate and a true reflection of your business needs. An energy broker can also help you evaluate offers from multiple business energy suppliers.

By considering the above factors you can make an informed decision about whether to renew your contract or switch to a new supplier. This approach can ultimately save your business money and ensure an efficient energy supply.

Remember to be proactive in your approach, stay informed about your energy usage, and continually evaluate your supplier’s performance. By doing so, you can make the best possible decisions for your business energy needs and secure a suitable energy supply for the long term.