Switching suppliers seems like a headache but in reality the process can take as little as 5 days for electricity and 16 days for gas.
Whether you’re running a small shop or juggling multiple business locations, finding a better energy deal could put money back into your business. To help you, suppliers now must publish their commercial customer prices online, making comparison easier than it’s ever been before.
This guide walks you through what you need to know about switching your business energy supplier, without the complicated jargon that puts most business owners off making the change.
Let’s Figure Out What You’re Currently Paying For
Before you rush off to switch your business energy supplier, you need to scrutinise your current setup. This bit really is key and many business owners skip it only to end up with deals that aren’t much better than what they already had.
Understanding your current energy arrangement doesn’t just mean knowing how much you pay each month. It means digging into the small print of your contract terms, rates, and exactly what type of business customer you are. This knowledge gives you better bargaining power when shopping around for better deals.
The smaller details hidden in your current contract could be the very things costing you hundreds, possibly thousands of pounds every year. And whilst some aspects of business energy can be complex, getting clarity isn’t nearly as difficult as might anticipate so find your most recent bill and your contract paperwork to work out exactly where you currently stand.
Understand Your Current Energy Setup
Check if you’re on a deemed or rollover tariff
Deemed contracts are the default tariff automatically applied when you move into new premises and start using energy before sorting out formal terms with a supplier. These contracts nearly always come with much higher rates compared to negotiated deals.
A rollover contract is when your existing contract expires and you haven’t arranged a replacement. Your supplier keeps your service running but the terms change to a new tariff, which in most circumstances is not as favourable as your previous contract, in fact is probably considerably higher. You can’t avoid your termination notice so if you do not put that in before the end of your contract, you will be put on the rollover contract which you cannot leave without notice or exit charges
Identify if you’re a microbusiness
Your business classification matters when it comes to energy contracts and the protections you’re entitled to when switching. You qualify as a microbusiness if you meet any of these criteria:
- Your business employs fewer than 10 full-time equivalent staff and has an annual turnover or balance sheet total not exceeding £2 million
- Your business uses no more than 100,000 kWh of electricity per year
- Your business uses no more than 293,000 kWh of gas per year
You might fall into the microbusiness category for one type of energy but not another, depending on how much you’re using . This status isn’t just a label, microbusinesses get extra protections from energy regulators that larger businesses don’t receive.
Running your business from home? You’ll need to work out whether you should be on a domestic or business contract. While home-based operations typically use domestic energy, those formally registered as a business generally need a business energy contract.
Understanding your current classification and contract type gives you more leverage when negotiating with suppliers. Before you start the switching process, make sure you know how long you’ve got left on your contract and the termination notice required.
Don’t Fall Into These Switching Traps
Switching energy suppliers should save you money, not cost you more, however many business owners end up worse off because they rush the process and if you’re running on tight margins already, you can negatively impact your business.
The energy market does not have the best reputation for transparency. Whilst it slowly improves, most switching problems stem from simple oversights that could have been easily avoided with a bit of homework. Energy suppliers won’t necessarily volunteer information about potential penalties or contract restrictions so its on you to do your due diligence.
Take a moment to understand the common mistakes that can trip up even seasoned business owners as prevention is much cheaper than cure when it comes to energy contracts.
Avoid Common Switching Mistakes
Don’t switch before checking exit fees and notice.
Breaking your business energy contract early will almost certainly land you with exit fees. These charges usually come as a percentage of your remaining estimated charges, plus extra market rate fees if prices have fallen.
Regulations state that exit fees must be “proportionate and justifiable”, but you really just want to avoid them altogether so that’s why you should always check what penalties you’ll face before you start the switching process.
The same is for termination notices, which can be up to around 120 days. These work hand in hand with triggering and the calculation of exit fees so that’s an important detail to also know.
Despite all this, sometimes paying the exit fee actually still makes better sense than staying put. Get your exit fee sum from your current supplier and calculate this against the savings to be made with the new one over the termination notice period as you may still come out ahead.
Avoid agreeing to contracts over the phone without written terms
Unlike domestic energy contracts, business energy agreements have no statutory cooling-off period. This means a phone call can become a legally binding commitment, with no way back. Pressure tactics or misleading sales pitches can rush you into quick decisions.
To keep yourself safe, always:
- Request all contract terms in writing before agreeing to any deal
- Carefully review contract length, rates, and termination conditions
- Never provide verbal agreement until you’ve seen written documentation
Remember, business energy contracts become binding even when agreed verbally. You don’t need to sign on any dotted line to be legally committed. This makes reading all the small print before giving any kind of agreement essential as well as being very clear in a conversation that you have not agreed to a contract.
Know What You’re Getting Into Before You Commit
Choosing the right energy contract isn’t just about finding the lowest price, it’s about understanding what services you are signing up for to avoid contracts that don’t suit their business needs.
The energy market is complicated and this complexity keeps most business owners from truly understanding their options. The supplier may not be happy to let you pick a deal that benefits them more than it does you.
Energy contracts come with all sorts of terms, conditions and features that might seem trivial now but could become major headaches later. Standing charges, unit rates, contract lengths, these things matter more than you might think.
Before you put pen to paper, or give that verbal agreement over the phone, make sure you’ve got your head around the different types of contracts available. The right choice depends entirely on your specific business circumstances, your appetite for risk, and how much flexibility you need.
Know Your Options Before You Commit
Compare fixed vs variable contracts
Business energy contracts come in two main charge structures, each with their own perks and drawbacks:
Fixed-rate contracts lock in your unit rates and standing charges for the entire contract period, which can stretch up to five years. Brilliant for budgeting, you’ll know exactly what you’re paying regardless of what happens in the energy market. The downside? If energy prices crash, you’re still stuck paying your agreed rate. Fixed rates come in term based contracts with exit fees and termination notices.
Variable-rate contracts let your unit rates fluctuate up and down with wholesale energy costs and they’re a bit of a gamble. When market prices tumble, you’ll benefit from lower bills, but when they rise, your costs follow suit. Variable tariffs tend to not tie you in, allowing you to move to another supplier (check terms)
Understand broker commissions and fees
Energy brokers can be handy middlemen for finding competitive deals, however they receive commission from suppliers based on the value of the energy contract they secure for you. This commission can be attached onto your unit rate secured by them on your behalf.
Before shaking hands with a broker, check:
- Which suppliers they’re in bed with (a small amount or whole of market)
- How they take their cut (upfront payment or attached to your costs)
- Whether they’ll give you everything in writing before commitment
If you’re a microbusiness, brokers serving your segment must be signed up to a Qualifying Dispute Settlement Scheme.
Standing charges and unit rates
Two key components determine the costs:
Unit rates are what you pay per kilowatt-hour (kWh) of energy used. These vary based on your contract type, where your business is located, and how much energy you use.
Standing charges are fixed daily fees you pay regardless of whether you used any energy or not. They cover network maintenance and admin costs. These charges can swing wildly between suppliers.
The right choice boils down to your usage patterns. Low energy usage might be better serviced with a low standing charge contract, but high energy users might find the complete opposite more cost effective.
Switching Done Right: Best Practises
If you’ve decided to switch, then you need to manage your transition carefully to avoid double billing, accidental contract extensions, or finding yourself without supply. The switching process itself isn’t complicated, but it’s easy to miss important steps if you’re not familiar with it.
Coordinating the end of one contract with the beginning of another is about accurate paperwork, timing, and close monitoring of the stages.
Switching Done Right: Best Practises
Give proper notice to your current supplier
Most energy suppliers require at least 30 days’ notice before you can terminate your contract. It’s important to identify your “switching window” which is between the end of your notice period, before the contract ends
Miss this window and you’ll find yourself automatically rolled over onto those expensive default terms, a mistake that costs UK businesses millions of pounds every year.
Your termination notice isn’t complicated, but it needs to include:
- Your company’s registered address
- The contract number
- Your metre numbers
- A clear statement that you’re terminating
Send this letter by recorded delivery and a digital copy via email. Retain copies of all correspondence and store just in case disputes crop up later.
Confirm switch date and contract terms in writing
Verbal agreements are legally binding for business energy contracts.Always, without exception, insist on getting written confirmation of:
- The exact switch date
- Contract duration
- Unit rates and standing charges
- Payment terms
- Early termination conditions
The switching process usually takes anywhere from 2-6 weeks depending on your contract terms and how quickly your supplier responds. Line up the end of your notice period with the start of your new one. Take metre readings on your switch date and send them to both suppliers to avoid billing issues.
Is It Worth Me Switching?
Switching business energy suppliers initially seem complicated but with the right approach it can be straight forward. Getting your head around your current setup, understanding contract terms and knowing your options puts you in a much stronger position when negotiating with suppliers.
Double-check those exit fees, steer clear of verbal agreements, and always get written confirmation of your new contract terms. Timing makes all the difference. Start your research earlier to avoid being caught in rollover contracts or high exit fees.
Energy suppliers benefit when business owners are too busy to bother with the details. So it’s time to save your business money you could invest back into growing your business rather than padding your supplier’s profit margins.