Business Energy Contracts Explained

Trying to find the right energy contract for your business can be tricky. With so many options to compare, how do you know what’s right for you? In our handy guide, we’ll explore the types of contracts available, what to look for when comparing energy suppliers, and how to choose a business energy contract that works for you. 

So, whether you’re looking to reduce costs, commit to renewable energy sources, or combine all your utilities under one roof, we have a contract that aligns with your business objectives. 

Depending on your business size, type, and requirements, there are several different contract types available. It’s important to compare business energy contracts so you can ensure you’re choosing one that meets the needs of your business. Each supplier will offer different contract types, but we’ve listed some of the more common business energy contract options below: 

Fixed-Term Business Energy Contract
The most common type of contract offered by suppliers. By signing a fixed-term contract you’ll be locked into the agreed-upon rates which cannot be altered for the period of your contract regardless of the market situation. This can be very beneficial if you lock in your rates when they are low, as it protects your business from fluctuating energy prices.  

We offer separate gas and electricity plans tailored to your business needs. For electricity, there are options for both non-half hourly and half-hourly contracts, so you can get the best rates for your usage patterns.  

These rates are split into day rates, night rates and evening/weekend rates, depending on when your business uses the most energy. These options can be discussed with your sales agent who will factor in your requirements to help you find the perfect energy contract for you. 

Fixed-term contracts can be 12, 24, or 36 months, depending on your preference. 

Variable or Freedom Contract 

Variable or ‘Freedom’ contracts have fixed prices that are periodically reviewed. They also give customers a 30-day notice period if they wish to leave. Your supplier will email you in advance to advise you of any changes to your rates and you will be able to switch to a fixed-term contract, either with the same supplier or another supplier, at any time. 

These plans are most beneficial for businesses that need to be able to move their energy supply frequently or at short notice. 

Pre-Pay Plans 

Pre-payment plans allow businesses to pay for their energy usage in advance by ‘topping up’ a meter with a pre-payment card. This is a good way for smaller businesses to keep track of exactly how much energy they are using, what they are spending, and can help with reducing consumption. 

If you are on a pre-payment meter, you can also build up credit during times when your usage is lower. For example, if you pay for a little more than you use over the summer months, when your usage increases in the winter, you will already have credit in your account to go towards the costs.  

Green Energy Contracts  

Green energy contracts are designed for businesses looking to reduce their carbon footprint and demonstrate Corporate Social Responsibility (CSR). Our green business energy plans use renewable energy, backed by accredited sources.  

In recent years, green energy has been rising in popularity as more businesses are doing their bit for the planet. When you switch to one of our green plans, we’ll also provide you with a Green Energy Certificate which can be used to showcase your initiative towards fighting global warming. Find out more about the benefits of green energy in our guide. 

Blend & Extend Contracts 

This contract allows businesses to benefit from lower market rates whilst being locked into an existing fixed-term contract. Blend and extend allows you to ‘extend’ your existing contract length whilst ‘blending’ your current rates with reduced market rates. This means businesses can take advantage of a drop in market prices, even if they’re already locked into a fixed contract. 

Deemed or Out-of-Contract rates
If your business does not have a contract in place, you will automatically be placed on out-of-contract rates. These include ‘Freedom Tariffs’, which are applied when your existing business energy contract has come to an end and a new contract hasn’t been agreed upon or signed yet.  

A ‘Deemed Contract’ applies when you move into new business premises but haven’t got an energy contract in place. As a result, you will automatically be placed on deemed rates until a fixed-rate contract can be agreed upon. This means you may not be getting the best deal for your energy and your prices can go up or down. It is recommended that you get a fixed rate contract as soon as possible, to stay protected from price fluctuations. 

Smart Meters 

Some business energy contracts are smart meter mandatory, meaning you will need to agree to having a smart meter installed in order to secure the rates offered to you. Smart meter tariffs are usually lower than non-smart tariffs, as suppliers will receive accurate meter readings and can better estimate your usage. 

Smart meters are a popular option for businesses wanting to keep track of their consumption and save time on taking meter readings. Once your meter is installed, you will no longer need to take and submit regular readings, as your meter will do this for you. This means you get more accurate bills and will only pay for what you use. You will also be able to track your usage more efficiently, so you can identify areas where savings can be made.  

For more information on smart meters and how they can benefit your business, check out our free guide.  

Before you sign a contract, you should read your terms and conditions thoroughly. If you are unsure of anything set out in your agreement, contact your supplier for more information. 

Different businesses have different energy needs, so it’s important to choose a contract that suits your business. 

Benefits of fixed contracts:

• These contracts usually offer the cheapest consistent rates 

• You will not be affected if market prices rise during your contract period. 

• You can pick a contract length to suit you.  

• You can budget more effectively, as you will know your outgoings for energy. 

Benefits of variable contracts 

• Easier to switch contracts or leave your supplier without exit fees. 

• You can save money during periods of low market prices. 

Benefits of pre-payment contracts  

• Easily monitor your usage and adjust where needed. 

• Possible to build up credit for winter months/periods of higher usage. 

Benefits of green energy contracts 

• Do your bit to reduce your carbon footprint. 

• Meet your Corporate Social Responsibility goals. 

• Elevate your image and attract eco-conscious customers. 

Benefits of blend & extend contracts 

• Immediately lower your rates if you locked in whilst prices were high. 

• Secure rates over a longer period. 

The best time to get an energy contract for your business depends on several factors, including your current energy situation, market conditions, and your business’s specific needs.  

Here are some key considerations to help you determine the best time to secure an energy contract: 

• Contract Expiry or Renewal: If your current energy contract is due to expire soon, it’s time to start thinking about securing another energy contract for the coming years. Renewing your contract ahead of time ensures continuity of energy supply, means you avoid higher, out-of-contract rates, and allows you to take advantage of any lower rates offered at the time. 

• Market Situation: Keep an eye on energy market trends. If market prices are currently low or projected to rise in the near future, it might be advantageous to secure a contract sooner rather than later. If you locked in an energy contract whilst prices were high, and your contract is not due to renew soon, you could benefit from a blend & extend energy contract to lower your rates immediately. 

• Changing Business Needs: If your business is expanding, relocating, or undergoing significant operational changes, this is a good time to reevaluate your energy contract. Your new energy requirements might warrant a different type of contract that better suits your evolving needs. 

• Avoiding Out-of-Contract Rates: If your business is currently operating without a contract (out of contract), you might want to consider switching to a fixed-rate contract to secure lower rates. 

The best time to get an energy contract depends on your unique situation. However, starting the process early, conducting thorough research, and engaging with your trusted suppliers can help you secure a contract that meets your energy requirements and financial goals. 

Securing the best rates for your business energy requires careful research and a good understanding of your business’s needs. 

Here are some steps you can take to help get the best energy contract rates. 

Understand Your Energy Needs: Start by analysing your business’ energy consumption patterns, peak demand periods, and any seasonal variations. Understanding your energy needs will help you tailor your contract to align with your usage. 

Monitor Market Trends: Stay informed about energy market trends, including fluctuations in commodity prices and regulatory changes. Timing your contract negotiation for when market rates are favourable can lead to better rates. 

Request Quotes: Request business energy quotes from different suppliers based on your energy consumption data. 

Go online: Some business energy suppliers, such as ourselves, offer their best rates when you get a quote and buy your business energy online. 

Consider getting a smart meter: Smart meters give energy suppliers a better view of your energy usage, meaning they can purchase wholesale energy more effectively. Suppliers often offer lower rates on smart-mandatory contracts. 

Consider Contract Length: Longer-term contracts may offer more stable rates, whilst shorter-term contracts could allow you to take advantage of market fluctuations. Evaluate the pros and cons of each option based on your business’ goals and budgets. 

Consider Renewable Energy: Explore options for renewable energy sources, as they may come with special incentives, tax credits, or lower rates in certain regions. 

Review and Renew: Regularly review your energy contract before it expires. Don’t automatically renew without evaluating whether the terms still meet your business needs, or if you’d be better off with a different type of contract. 

Read the Fine Print: Carefully review the contract terms, especially clauses related to rate adjustments, contract renewal, and termination. Seek clarification from your supplier on any unclear terms. 

For more information on our energy contracts or to find out how Yü Energy can help your business, head over to our business energy quote page. 

Alternatively, check out our full range of business energy news, guides and advice.