PowerExperts
Telephone 0844 472 1567

Managing the commercial energy switching cycle

Business electricity and gas switching cycleMicro businesses are required by the regulator Ofgem to receive notification when their contract is due to expire.

The letter is sent out three to four months prior to expiration outlining new rates for the next period.

If you don't act, then you'll be automatically accepting rollover rates that effectively increase your prices by at least 30% at the same duration as your original contract.

Activating the termination clause while remaining out of contract places your business on more expensive tariffs.

The advantages of switching your trade from one supplier to another far outweigh the disadvantages of either doing nothing or staying loyal under your current agreement.

The information in this guide helps you understand the process and potential pitfalls in the commercial energy market of changing your contract. Use the content links above to jump to a particular section or continue to browse the page.

Understanding your renewal letter

Rollover tariff rates

Ignoring your renewal letter automatically extends your contract for another term. Your new fixed rates will increase from between 30% to 65% depending on your consumption and meter.

Accepting your renewal rates increases your prices by at least 30% for one to three years.

While embarking on checking current deals may feel somewhat inconvenient, once your contract has rolled over you're unable to either switch or reduce your rates during this period.

Out of contract rates

Notifying your supplier of your decision to cancel your contract is the first stage in the switching process. Time limited personnel may not remember to enter negotiations for a new agreement.

Forgetting to renew automatically invokes uneconomical "out of contract" rates.

However, new changes by the regulator means you have the flexibility and the ability to move suppliers or tariffs at any time. The processing period could take up to six long weeks.

Guide to switching business gas and electricity

Your ability to claim lower bills revolves around managing the renewal cycle that culminates after the important third stage. Below are the three main steps during the window of opportunity that arises towards the end of your contract.

Step 1: Terminate your existing gas or electricity contract

Unlike residential agreements, commercial energy contracts are for specific periods for at least one year. There are no options to exit the agreement during the contract terms, but you must ensure you cancel the contract before the expiry date.

If you ignore this step, do nothing, or cancel and forget to change your supplier, your existing provider increases your rates until you take action.

Therefore, you need to contact your current energy company by phone, fax, or email, and send in a termination letter within the timeframes stipulated in your contract.

The structure of the letter is straightforward and you can download a range of example termination letters on this site to use for your circumstances.

Step 2: Get new energy quotes

After activating step 1 above, you're effectively out of contract when your agreement finishes.

Now is the time to find the lowest prices in the market. You have several choices to get quotes from the 30 companies that supply the commercial market.

  • Contact all 30 companies yourself. You'll have to provide all your details to each supplier and that's going to take time. The advantage of doing it yourself is that you receive so-called "direct" prices that are usually the cheapest available.
  • Enter your details into an online comparison website. You usually just need your postcode, consumption data, and contact details to get started. Most of these services offer "whole of market" comparisons, but some do not, so carefully check your results.
  • Find a reputable business energy broker that has vast industry experience to know the right supplier for your circumstances. There are no additional costs associated with brokers, but the prices could be a little higher than you could get yourself. However, all tariffs will beat any renewal offer you receive.
  • You can also barter with your existing supplier based on your current tariff. You should be able to get similar rates with one phone call.

Step 3: Switch your energy supplier

Once you're happy with the prices you've received, it's time to switch to a new electricity or gas company. Your current and new energy company manage the majority of the administration work. You just need to sign the new contract. Just ensure you take meter readings on the day of the switch to guarantee your bills stay accurate.

We forward all engagement letters to your office for approval that begin the day after the end of your existing agreement. Why not add a calendar reminder based on the new clauses you receive to manage the process next time?

Switching Checklists

To ensure you cover all steps efficiently, you should download this business energy switching spreadsheet to mark off when you complete each section.

Frequently asked questions about switching energy suppliers

Q1: When should I terminate my contract?

A: Termination windows vary from 90 days to 120 days depending on your supplier. Your current contract contains the specific terms of cancellation, or you can obtain them from your present provider. You can communicate your cancellation rights at any time during the termination window.

Q2: What happens if I don't terminate my agreement?

A: If you forget to renew, you get placed onto expensive rollover contract rates.

  • If I terminate and don't switch what happens? - You'll automatically switch to expensive out of contract rates.
  • I have other questions, what should I do? - Telephone our experts on 0844 4721 567 for advice.

Q3: Should I just switch to the cheapest rates?

The answer to this question depends on the size of business you have. Most small to medium-sized companies should just choose the cheapest product available. As you're unlikely to require additional services, and as energy is a commodity product, then the cheapest is the preferred solution.

For larger businesses that may want environmental advice, tips to reduce consumption, or have multiple sites to manage, you should check on any additional services bundled into your contract at no extra cost.

An example of an electricity renewal letter

We received the following letter in our offices for our own electricity supplier. As highlighted, our rates would have been extremely expensive if we had accepted these conditions. Fortunately, we had already switched to a new contract at similar charges as the current year.

Renewing your fixed term electricity contract

Thank you for being a customer. We believe in delivering much more than just energy. We value your business and our products, services and customer benefits all reflect our commitment to putting our customers' needs first.

I am writing to let you know that we will be renewing your fixed term contract automatically for one year from midnight on 22nd January at the prices shown below. Your terms and conditions will also change. You don't need to lift a finger for continued peace of mind. Your contract will renew automatically, your prices protected, and your supply will not be affected.

Included in this letter are your statement of renewal terms. Please note, in the event that you decide that you do not wish to renew, you'll need to send us a written termination by email or post by no later than 23rd October. (Note: that was five weeks after we received the letter and three months before the end of the contract).

Your new prices

  • Standing Charge 37.18p per day
  • Unit charge 17.59p per kWh

I would like to end my fixed term contract

If you do not wish to accept these prices and you wish to end this fixed term, fixed price contract period, you need to send a written termination by email or post to the address shown. You can send your termination at any time but not later than 23rd October to prevent the contract from being extended for a further period.

If you send a termination letter to us but don't agree another fixed term contract with us, or arrange to change supplier, you'll be transferred onto our out of contract prices on 23rd January. This change means you could be paying more. Below are our current out of contract prices. You can find your profile class on your invoices, but if you're unsure we'll be happy to confirm it for you.

Our out of contract prices

  • Standing charge (01 - 04 profiles) 103.50p per day
  • Standing charge (05 - 08 profiles) 304.75p per day
  • Unit charge (01 - 04 profiles) 23.03p per kWh
  • Unit charge (05 - 08 profiles) 25.15p per kWh

Notes for this renewal notice

Your profile class is the first two digits of your meter number.

Most smaller companies will have 03 or 04.

There was no mention of our current prices, so a comparison was impossible. We signed a new deal at 10.8p/kWh and 21.2p/day that is 39% and 43% lower than the proposed charges.

Deemed Rates

Your business has a deemed rate usually when you take over another meter from someone else or under a change of tenancy agreement. You need to move away from these tariffs as quickly as possible.

Supplier Meter Type Unit Price Standing Charge
British Gas 03-04 21.69p/kWh 57.44p/day
British Gas 05-08 23.04p/kWh 93.94p/day
Extra Energy 03-08 24.00p/kWh 99.00p/day
SSE 03-08 16.57p/kWh 17.17p/day

Sources for the prices quoted above: