Business energy contracts: how they work in the UK

The four contract types you'll see

Business energy contracts come in four main shapes: fixed-rate, variable, flexible (for large users) and deemed / out-of-contract (the default when nothing is agreed).

• Fixed — unit rate and standing charge locked for 12-60 months.
• Variable — rate moves with wholesale, usually with a supplier margin.
• Flexible — 'basket-purchase' contracts for users over ~400,000 kWh/year.
• Deemed / out-of-contract — the punitive fallback rate.

Contract length trade-offs

Longer contracts (24-36 months) usually price sharper than 12-month deals because suppliers can hedge further out. In a low-wholesale market, locking a longer fix compounds savings; in a high market, 12 months keeps your options open for a re-quote.

Letter of Authority (LOA)

A Letter of Authority is a short document that lets a broker request quotes and bill data on your behalf. It doesn't switch your energy or commit you to anything — it just lets the broker legally see your MPAN/MPRN details with suppliers. All reputable UK business energy brokers use them.

Cooling-off and cancellation

Business energy contracts don't carry the same 14-day cooling-off consumer protection as domestic contracts. The window to cancel a signed business contract is very narrow (typically 24-48 hours in writing, and only before the supplier has 'objected in' with the losing supplier). Read the terms carefully before signing.

Termination and renewal windows

Most contracts require written notice inside a specific window (commonly 1-6 months before end date) if you plan to leave. Miss the window and you can end up rolled onto expensive out-of-contract rates. Set a calendar reminder the day you sign.