Business energy contracts lock in your electricity and gas rates for a fixed period, typically 1-3 years. Fixed-rate contracts are recommended for most hospitality businesses as they protect against wholesale market price increases. Failing to renew before your contract end date can result in out-of-contract rates that are 30-50% higher.
| Contract Type | Best For | Risk Level | Flexibility |
|---|---|---|---|
| Fixed Rate (1yr) | Businesses planning changes | Low | High |
| Fixed Rate (2yr) | Most hospitality businesses | Low-Medium | Medium |
| Fixed Rate (3yr) | Stable operations, large venues | Medium | Low |
| Variable Rate | Not recommended for hospitality | High | High |
The price you pay for each unit of energy consumed. This is the main component of your bill and the rate that varies between suppliers and contract types.
A fixed daily charge for being connected to the energy network, regardless of how much energy you use. This varies by region and supplier.
A government tax on business energy usage designed to encourage energy efficiency. This is charged per kWh on top of your unit rate.
The period before your contract end date when you can switch or renew without penalties. This is typically 1-6 months before the end date.
The cost of the energy itself on the wholesale market. This is the component that fluctuates with market conditions and is what your contract rate is based on.
Charges from your local distribution network for transporting energy to your premises. These are regulated and non-negotiable.
Including CCL, Renewables Obligation, and VAT (5% for most businesses, 20% for some). These are fixed costs that apply regardless of supplier.
The supplier's profit margin and operational costs. This is where competitive procurement makes the biggest difference.
Some business energy contracts contain automatic rollover clauses. This means if you don't actively switch or renew before the deadline, you are automatically locked into a new contract at the supplier's standard rate - which is usually much higher than what you could negotiate on the open market.
At Nationwide Energy, we track all contract end dates for our clients and contact you well in advance of any renewal window. This ensures you never get caught by an auto-rollover or slip onto out-of-contract rates.
A fixed-rate contract locks in your unit rate (p/kWh) for the duration of the agreement, typically 1-3 years. This means your rate stays the same regardless of wholesale energy market fluctuations. Your total bill can still vary based on how much energy you use, but the rate per unit is guaranteed. Fixed contracts are recommended for most hospitality businesses.
A variable-rate contract means your unit rate fluctuates with the wholesale energy market. While you may benefit from price drops, you are also exposed to sharp increases. For hospitality businesses with tight margins, this unpredictability makes budgeting difficult. Variable rates are generally not recommended for pubs, restaurants or hotels.
For most hospitality businesses, a 1-2 year fixed contract offers the best balance of price security and flexibility. Shorter contracts (1 year) suit businesses planning changes such as relocating or expanding. Longer contracts (3+ years) suit stable operations but reduce your ability to take advantage of market drops.
When a business energy contract expires without a renewal or switch in place, the supplier places you on their deemed or out-of-contract rate. These rates are typically 30-50% higher than contracted rates and can cost a pub or restaurant thousands of pounds per month. This is why monitoring contract end dates is critical.
Our team will review your current contract, compare rates from multiple suppliers, and ensure you never pay more than you need to. Free, no-obligation energy review.
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