The Hidden Cost of Doing Nothing
For most businesses, the energy contract sits quietly in the background until something goes wrong. The biggest risk is usually not a bad decision but doing nothing at all. When a fixed contract ends without a new one in place, suppliers move customers onto
out-of-contract rates, which are typically much higher than the fixed deal that just expired, sometimes by 50 per cent or more. The same applies to deemed rates, which kick in when a business takes over premises without arranging a fresh contract. The supplier sets the price, and you have very little room to push back until you negotiate a new deal. Loyalty rarely pays in energy. Long-standing customers often end up on worse terms than new ones, simply because nobody renegotiated.
When Can You Switch? Your Step-by-Step Plan
The 12 month switching window
Most UK business energy suppliers will let you sign a new contract up to 12 months before your current one ends. The rate is locked in from the moment you sign, and the new contract starts the day after your old one expires. Here is how to make the most of that year.
Dig out your latest invoice or original contract, check the end date, and pop a reminder in your calendar. Everything else hangs off this date.
Wholesale prices move every day. Sign up to a daily market report so you have a feel for whether prices are rising, falling, or sitting flat as your renewal approaches.
Get quotes from at least three suppliers, or hand it over to a broker. Supplier quotes are usually only valid for 24 to 72 hours, so be ready to move when a good one lands.
This is when you want to commit, ideally when prices dip rather than spike. Leaving it later narrows your options.
Miss this window and your supplier will roll you onto out-of-contract rates.
Out-of-contract rates can be 50 per cent higher or more than the fixed rate you were paying. Suppliers apply these automatically the day after your contract ends if you have not signed a new deal.
You have extra protections under Ofgem rules, including the right to clear written renewal information from your supplier. Larger businesses do not, so it is on you to track the dates.
What to Check Before You Sign
A few things to handle before you put your name on anything. Settle any outstanding charges with your current supplier, and check whether early termination fees apply if you are still mid-contract. Sometimes those fees outweigh the savings from switching early, so it is worth doing the maths first.
Once you sign, you are tied into the
contract for its full length, so read it carefully. The unit rate,
standing charge, contract length, and any pass-through clauses all matter. Pass-through contracts can look great on the headline rate, but they leave you exposed to other charges that can creep up without warning. A fully fixed contract is usually the safer bet if you want a predictable bill. And if you are using a broker, you will be asked to sign a
Letter of Authority. That just lets them gather quotes from suppliers on your behalf, and it is usually valid for 12 months.
Watch the Market Before You Sign
Wholesale gas and electricity prices move every day, driven by weather, storage levels, world events, and demand. The price quoted on a Tuesday may not be available on a Friday, and most supplier quotes are only valid for 24 to 72 hours. Signing a 36-month contract on the wrong day can cost a business thousands.
This is why we publish the
Purely Daily Market Report, a free email covering wholesale price movements, the drivers behind them, and what they mean for businesses coming up for renewal. If your contract ends in the next 12 months, sign up. It takes the guesswork out of timing your switch and helps you spot the right moment to lock in.
Your Renewal Checklist: Do's and Don'ts
A quick reference for any business approaching renewal.
- Diary your contract end date and start tracking the market 12 months ahead.
- Gather quotes from at least three suppliers, or appoint a broker to handle it.
- Check the full contract: unit rate, standing charge, length, and pass-through clauses.
- Pick contract length to suit your priority: 3 years for budget certainty, 1 year if you want to shop the market again.
- Subscribe to a daily market report so you can time your renewal.
- Let your contract auto-roll onto out-of-contract rates, which can run 50 per cent higher or more.
- Judge a deal on the headline unit rate alone; standing charges and clauses matter just as much.
- Assume loyalty earns a better price; it rarely does.
- Leave the switch to the final weeks; allow 4 to 6 weeks minimum to process cleanly.
- Switch mid-contract without checking exit fees first; they often outweigh the saving.
Take Control of Your Energy Costs
Reviewing contracts at the right time delivers three things: lower unit rates through competitive tendering, protection against future price rises through fixed deals, and predictable budgeting. In a challenging market, those savings often make the difference between rising costs and stability.
Finding the right contract should be simple. If you would like a free quote, please fill in the box below, or compare the most competitive business energy rates.
For more information, contact us on 0161 521 3400 or email us at info@purelyenergy.co.uk
Written by Elizabeth Heverin and edited by Faith Labong at Purely Energy.
