Why Small Businesses Should Review Their Energy Contracts Before Renewal
For small businesses, energy bills remain one of the most unpredictable overheads. With unit rates rising again in 2025 and government support limited for many SMEs, locking into the wrong contract—or worse, letting it roll over—can cost thousands annually. In this post, we explain why reviewing your business energy contract before renewal is essential, what to look for, and how a broker can help.
What Happens If You Let a Contract Auto-Renew?
Many business energy contracts come with an automatic renewal clause. If you don’t act before your current term ends, you could be locked into a new rate—often at the supplier’s “default” or “out-of-contract” prices, which are significantly higher than negotiated rates. Out-of-contract rates can be:
- Up to 80% more expensive than standard deals
- Subject to daily market volatility
- Without the protection of fixed-rate guarantees
- By reviewing your contract 3–6 months before expiry, you give yourself time to compare suppliers and negotiate better terms.
Energy Prices Are Changing — Again
After a brief dip in early 2024, electricity and gas prices are rising once more:
- Electricity unit rates for small businesses now average 25–27 p/kWh
- Gas rates range from 7–9 p/kWh depending on consumption
- Fixed contracts signed before Q2 2025 may avoid projected mid-year increases of up to 12% (electricity) and 10% (gas)
Wholesale markets remain volatile, driven by global supply risks, carbon pricing, and domestic regulatory changes. Waiting too long to act could mean renewing when rates are at their highest.
Common Mistakes to Avoid
Too many small businesses get caught out by the same avoidable mistakes:
1. Ignoring Renewal Notices
Suppliers usually issue a renewal notice 60–90 days before your contract ends. If you miss it, you may lose the opportunity to exit or renegotiate.
2. Assuming You’ll Be Offered the Best Deal
Loyalty doesn't pay in the energy market. Renewal offers are rarely the most competitive. Comparing utility suppliers is essential to check your rate against what’s available elsewhere.
3. Rushing to Lock in the First Quote
Rates can vary significantly between providers. Use an energy supplier comparison tool or broker service to benchmark offers across the market.
What to Review in Your Energy Contract
Before signing any renewal or new agreement, review these key details:
-Unit rates (p/kWh) for gas and electricity
- Standing charges – often overlooked but add up over time
- Contract length – typically 12–36 months; shorter terms may offer more flexibility
- Exit fees – some contracts include hefty penalties for early termination
- Green energy options – useful for ESG credentials and PR
- Payment terms – monthly direct debit is often cheaper
These details affect not only your bill but your ability to switch or scale later.
When Should You Start the Process?
Ideally, begin your energy review 3–6 months before your contract ends. This allows:
- Time to compare quotes
- Flexibility to wait for market dips
- A smoother switching process without risk of being charged out-of-contract rates
- Waiting until the final 30 days often means higher quotes and limited choices.