Ending a Business Energy Contract

Short answer

You can usually leave a business energy contract at the end of its term without penalty, though some contracts require notice. Leaving early normally means termination fees, unless your contract allows it in specific circumstances.

Key takeaways

Leaving at the end of the term is usually free; leaving early usually isn’t.
Moving premises normally ends or transfers the contract; take dated readings.
Check termination clauses before signing anything new.

Ending at the end of the term

This is the simplest route. Agree a new contract to start on your end date. If your contract requires written notice, give it within the stated window, and keep proof that you sent it.

Leaving early

Fixed contracts are priced on the supplier buying energy for you for the whole term, so leaving early usually brings a termination fee. The fee may be a fixed amount or based on the energy you would have used. Check the termination clause before you sign anything new.

Moving premises

Contracts are tied to the supply point. When you move out:

Tell your supplier in writing, with the date you are leaving.
Take a final meter reading with a dated photo.
Ask whether the contract ends, transfers or can move to your new premises.
Arrange supply at the new premises promptly to avoid deemed rates.

Selling or closing a business

If the business is sold, the contract may transfer to the new owner or end, depending on the terms and the supplier. If the business closes, tell the supplier promptly with a final reading. Ask what fees, if any, apply.

Disputes

If you can't resolve a termination dispute with your supplier, micro and small businesses may be able to refer it to the Energy Ombudsman once the supplier's complaints process has been completed. Disputes with a broker can go to the broker's redress scheme.

Before signing a new contract, check

The notice period and how notice must be given
Termination fees and how they are calculated
What happens if you move, sell or close

How termination fees are often calculated

Methods vary, but many suppliers base the fee on the energy you would have used for the rest of the term, sometimes adjusted for how wholesale prices have moved since you signed. Ask the supplier for the calculation in writing before you decide.

If your business goes into administration

Administrators and insolvency practitioners deal with energy contracts as part of the process. Tell the supplier as soon as possible, and make sure final readings are taken.

Common mistakes

Signing a new contract before checking the old one's termination clause
Not keeping proof that notice was sent
Leaving premises without a final reading

Sources

Ofgem: Energy advice for businesses (ofgem.gov.uk)

Questions

Can I cancel a business energy contract?

Usually only at the end of the term without a fee. Early exit normally brings termination fees.

What if I sell my business?

The contract may transfer to the buyer or end, depending on its terms. Tell the supplier early.

Who can help with a dispute?

Your supplier first. Micro and small businesses may then be able to use the Energy Ombudsman.

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Ending a business energy contract