Business Energy Contract TerminationHow to Cancel Your Business Energy Contract
The process of contract termination is extremely important. All energy contracts with suppliers automatically renew themselves after the initial contract term. This occurs unless you terminate your agreement with them or if specific conditions in your contract specify otherwise, such as rules regarding micro businesses in the UK.
This can mean that your energy contract will be “rolled over” into a new annual contract at an noncompetitive price as the supplier knows you can not move away from them for a minimum of 12-months and in some cases even up to 2-years.
Unfortunately, in many cases, customers miss their renewal date. They often do not provide their supplier with a contract termination in time or accept price increases through inertia. This occurs because they are too busy trying to run their own business. Unbelievably, it is not the responsibility of the energy supplier to remind you that your energy contract is coming to an end. You need to initiate the contract termination with them to avoid an automatic renewal.
Let’s get one thing clear, the supplier does not want to draw your attention to the fact that they want to charge you higher prices for your new contract and they won’t attempt to remind you of your contract termination.
These letters are often disguised and headed as follows:
> British Gas – “We’ll protect your new prices for two years”
> EON Next – “Lock in your business energy prices today”
> SSE Business Energy – “Your electricity renewal offer”
> EDF Energy – “Offering your business more”
Most businesses do not recognise the importance of these letters from their suppliers. The letters do not specify the percentage of the increase or how much more it will cost you. If your supplier sends you a renewal offer, it is crucial to look at it immediately, as it may only be valid for a short period of time.
Speak to us before you proceed with your next electricity or gas renewal. As an award-winning energy consultant, we can help you find a better energy deal. Whether you are looking for a new business gas quote or looking to switch your commercial electricity supply, we will help you find the right supplier and the right product to fit your needs.
In short, if you do nothing you are accepting their new contract. You will not be able to shop around for a better deal instead, stuck on higher prices whether you like it or not. To prevent your current supplier from automatically renewing your contract you are required to give them a contract termination or notice of your intention to cancel your current contract when it finishes. This will need to be done in accordance with their supplied contract terms & conditions.
A contract termination letter is the best way for you to give this cancellation notice. We strongly advise you to refer to your original contract terms and conditions or contact your supplier to establish where this letter should be sent. This will also confirm the minimum period of notice that the supplier requires, which is typically between 30 and 120 days.
It is advisable to send this contract termination letter via recorded delivery. Suppliers often claim that they haven’t received your contract termination letter. If you do not send a contract termination letter, your current supplier will renew your contract at higher prices, preventing you from switching to another supplier offering a better deal. Many suppliers now also accept termination letters via email. A simple read and delivery report ensures you have proof that they received it.
If you send in your contract termination letter your current supplier will continue to supply your energy up until the day your current contract ends. If you decide to switch to a better deal your new supplier will supply you from your contract renewal date onward.
The Contract Termination Small PrintAlways be sure to check the contract terms and conditions
Business electricity and gas suppliers are offering moderate and medium sized business consumers a bad deal by hiding behind the contract small print. Price is the driving factor when negotiating a new business electricity or gas deal but don’t fall into the commodity trap as suppliers will catch you out.
Business Electricity and Business Gas suppliers in the UK are hiding behind the supply small print to the detriment of their customers.
Supply contracts for small and middle sized business electricity and gas customers are heavily weighted in favor of the supplier as many of the contract terms mystical in the small print, are very ambiguous and will undoubtedly win the consumer out if they are not explained before they agree to the contract.
Hidden in the small print is information about the cancellation clauses, price variability conditions, advanced termination timescales and how long the contract lasts for. These clauses are crucially important when a customer takes out a contract or switches electricity or gas provider. Always keep the terms and conditions that you agreed to, as these can change.
One of the most important questions the customer needs to ask before they agree to the business energy contract is how long the price is fixed for and what type of contract is being offered? Most business electricity and gas supply contracts for small and medium sized business customers in the UK are “evergreen”, which means that the contract will continue unless the customer serves notice within a specified number of days before the fixed term renewal date.
Although the contract price is the “carrot” when negotiating a new energy agreement please ask the company the following questions before agreeing to sign up:
> How long is my business electricity or gas price fixed for?
> What type of contract am I being offered, is it an evergreen contract that will assume renewal if I do not serve notice?
> How many days termination notice do I have to give you before my fixed price expiry date?
> What method do you use to offer me renewal prices prior to the end of my fixed price expiry date – post, email or telephone?
> If required, can I cancel the contract mid term and how much will it cost?
Ofgems Micro-Businesses Reform
Small businesses vary significantly in their size and in their energy buying expertise. An investigation and probe from Ofgem identified that the smallest businesses struggle to engage in the energy market. So, Ofgem introduced new rules to give them better protection. The majority of small businesses in Britain are micro-businesses and Ofgem’s reforms only apply directly to these companies.
It is not the responsibility of the energy supplier to remind you that your energy contract is coming to an end. You need to terminate with them to avoid automatic renewal.
Under the new rules an energy micro-business is defined as a company which*:
> Consumes less than 200,000 kWh of gas a year, or
> Consumes less than 55,000 kWh of electricity a year, or
> Has fewer than ten employees (or their full-time equivalent) and an annual turnover or annual balance sheet total not exceeding €2m.
A business only has to meet one of these criteria to qualify as a micro-business customer. These micro-business protections are now well-established and apply to all qualifying supply contracts. Ofgem continues to update its guidance on micro-business rights, so it is worth reviewing your position at each renewal. Please contact us if you would like us to provide notice of termination of contract for your current energy contract. We can ensure that your Contract Termination has been processed and provide a range of quotes for comparison purposes.
Contract Termination Check ListQuick Guide To Terminating Your Energy Contract
It is not the responsibility of the energy supplier to remind you that your energy contract is coming to an end and that you need to terminate with them to avoid an automatic renewal.
> Suppliers renewal letters are often disguised
> Our advice is to reject the offer by sending a termination letter or email to your supplier
> A termination letter or email is the best way for you to give this cancellation notice
> We strongly advise that you refer to your original contract terms & conditions or contact your supplier to establish where this letter should be sent
> It is always advisable to send this letter or email recorded delivery, as suppliers will often claim that they haven’t received your termination letter
> Is your energy contract coming to an end? Give us a call before you renew any contract and let us find the best quote for you.
> Use our end of contract letter template for your own use, as we are happy for you to use our notice of termination of contract letter template.
Frequently Asked QuestionsBusiness Energy Contract Termination
How do I cancel my business energy contract?
Check your contract terms and conditions for the notice period — typically between 30 and 120 days before your contract end date. Send a formal termination letter or email to your supplier. It is best to do this via recorded delivery or with a read receipt. Keep a copy for your records. If you need help, Catalyst can manage the entire termination process on your behalf and source competitive renewal quotes at the same time.
What happens if I miss my termination window?
If you miss the notice window, your supplier will automatically roll your contract over for a further term — usually 12 months — at potentially higher prices. You will be locked in and unable to switch supplier during that rollover period. Always diarise your renewal date and set a reminder at least 90 days before the contract end to give yourself time to act.
How much notice do I need to give to cancel a business energy contract?
Most business energy suppliers require between 30 and 120 days’ written notice before your contract end date. The exact period is stated in your terms and conditions. Failing to give notice within this window means the contract will automatically renew. Contact your current supplier or call Catalyst if you are unsure of your required notice period.
Can I cancel my business energy contract early?
Early termination is usually possible but will incur an exit fee. The calculation method varies by supplier. Some charge a flat fee per meter, while others charge based on the remaining months multiplied by estimated consumption value. Always ask your supplier or energy broker for a formal termination quote before committing to a mid-contract switch, so you can weigh the exit cost against any potential savings.
What is an evergreen energy contract?
An evergreen contract automatically renews at the end of each fixed term unless you actively serve notice to cancel it. The vast majority of UK business electricity and gas supply contracts are evergreen. This means you must always take action to prevent rollover, as your supplier is under no obligation to remind you that the contract is renewing or that prices are changing.
Am I protected as a micro-business customer?
Yes. Ofgem’s micro-business rules provide enhanced protections to businesses that consume less than 200,000 kWh of gas or 55,000 kWh of electricity per year. This also applies to businesses with fewer than 10 employees and an annual turnover under €2m. Under these rules, suppliers must provide clear contract terms and fair renewal notices in plain English. They cannot automatically roll over your contract without proper prior notification.
