Cooling Off Periods for Business Energy Contracts Explained

Cooling off periods give customers the chance to change or cancel a contract within the first 14 days of signing. But how do cooling off periods for business energy contracts work? And how can you ensure your contract is right for you?  

We help you explore your options when it comes to cancelling or switching your energy contract and give you our top tips for finding the best plan for your business.  

Unlike domestic energy contracts, which have a mandatory 14-day cooling-off period, business energy contracts do not typically offer a cooling-off period. This means that businesses are usually bound by the terms of the contract as soon as it is signed. 

The lack of business energy contact cooling off periods affects contract flexibility, meaning that once you have signed a contract, you cannot switch away to a more favourable deal. This makes careful and thorough research an important step in choosing an energy plan. 

Mandatory cooling off periods for domestic energy customers were introduced by Ofgem in 2014 as a way to offer greater flexibility and protection. The reason this was not extended to business energy customers is to protect energy suppliers from huge losses. When a business signs a contract, the supplier buys the energy they need for the full duration of the contract upfront. So, cooling off periods and early cancellations can lead to suppliers losing money when a business energy customer is unable to continue with the contract.  

Since there are no cooling-off periods for business energy contracts, it is important that you carefully evaluate your options before entering into an agreement.  

The best thing you can do is carefully research and compare suppliers when looking for a new contract. This may involve gathering quotes or using a comparison site. It is also worth keeping an eye on energy market trends, so you can switch suppliers when prices drop, locking in lower rates.  

Another thing to consider when looking for an energy contract, is your renewal terms. Some contracts automatically roll over, so it’s important to give notice if you plan to switch. 

The lack of cooling off periods for business energy contracts makes choosing the right energy plan even more important. When it comes to picking a plan, there are several important things to consider: 

• Fixed or Flexible – One of your main considerations when choosing a plan will be if you should fix your energy prices. Fixing your energy prices gives you a better idea of what you can expect to pay each billing period. However, choosing the wrong time to sign can lead to you paying higher rates, if energy prices drop during your contract.  You can find out more about the best time to switch energy suppliers in our free guide.  

• Contract Length – Longer contracts may have more favourable rates, but you need to be sure you will be able to stay in your contract for the full term when you sign. 

• Notice Period Length – Whilst there is no cooling off period for business energy contracts, there will be a notice period for the end of your contract. Notice periods usually range between 30 to 90 days before the end of your contract. When signing, it’s important to check the specific terms outlined in your contract, so you know when your renewal window begins. 

• Green Options – Many energy suppliers now offer renewable energy plans to help reduce your carbon footprint, so if you’re looking for an easy way to go green, a renewable plan might be a good fit for you. 

• The Supplier You Choose – When it comes to finding a good deal on your energy, the supplier you opt for will make a difference too. Be sure to check out what other customers are saying about them, as well as checking to see if they have a good customer support section and are on hand to help you if you need it. 

For more information on business energy contracts, check out our free guides. 

When signing a business energy contract, you are agreeing to the terms set out by your supplier. This means that, because you do not have a business energy contract cooling off period, you will not be able to cancel your contract or change suppliers until your switching window begins.  

Here’s a breakdown of how and when you may be able to cancel or change your contract: 

• Paying an early termination fee – Most contracts include early termination fees if you cancel before the agreed end date. These fees can be high, and it may not be profitable for you to switch to a cheaper contract if you have to pay a fee to your old supplier, so it’s important to understand the costs involved before making any decisions. 

• Change of tenancy – If you’re moving your business to a new address, you may be able to change your energy supplier. In such cases, your supplier may allow you to switch, but you will need to settle all outstanding bills and potentially pay an early termination or Change of Tenancy (COT) fee. 

• Bankruptcy – If your business becomes bankrupt, you might be able to cancel your contract if you’re no longer able to meet your financial obligations. However, the contract could be transferred or assigned to a new party, such as the new tenant or the landlord of the property. 

• Wait until your renewal window – The easiest way to cancel or switch suppliers is to wait for your contract renewal window. Suppliers are required to notify you of this between 1 and 6 months before your contract end date.  

• Using a cancellation clause – On rare occasions, a contract may include a cancellation clause that allows you to terminate the agreement early. However, this option usually comes with high early exit fees, so it’s rarely a cost-effective choice. 

If you’re ready to find a new energy contract, we can help. Here at Yü Energy, we specialise in working with businesses just like yours, so you can get a great a great deal with a supplier you can trust. Get your free business energy quote in just 30 seconds and find out how much you could save!