How can you get out of a business energy contract?

If you’re looking to save money on your business’s bills, it’s worth examining your gas and electricity contracts. The most effective way of saving on your energy bills is often by running a business energy comparison – or simply switching to a cheaper deal with your current supplier.

However, while businesses are free – and encouraged – to switch to better deals, they must follow the terms and conditions specified in their current contract. Whether you signed a contract or accepted a verbal agreement over the phone, agreeing to an energy contract means you are then bound by its terms and conditions. Your supplier will make sure you have a copy of these available so you can refer to them if you need to.

The terms and conditions of your energy contract will specify when and how you can switch suppliers, the circumstances in which you might not be able to switch, and what may happen if you do not agree a new deal when your contract expires. If you’re looking to get a better energy contract, you need to be aware of this information to make sure you do so correctly.

When can I switch suppliers?

You can typically arrange to switch suppliers – or agree a new deal with your current supplier – up to six months before your current deal is due to expire. Attempting to switch any earlier is not recommended, as it can be difficult for suppliers to provide an accurate quote for your new contract, and you may end up with an unnecessarily expensive deal as a result. You can find out when your current deal is due to expire in your terms and conditions of your contract.

Another important date you can find in the terms and conditions is the ‘notice period end date’ which is the date by which you must notify your supplier that you intend to switch. This notice period varies between suppliers and can be between one and six months. It is important not to miss this date if you intend to switch to a different contract. Visit our Smallprint Pointer Tool and learn how to find your contract end date. 

Once you have arranged a switch, your new deal – and your new prices – will come into effect when your existing contract ends.

The following is a short guideline on how to properly terminate your energy contract:

How to terminate your energy contract

You will need to give written notice to your current supplier that you intend to terminate your energy contract with them, although some brokers will be able to do so on your behalf. You must make sure this is done before the notice period end date. Some suppliers may provide a dedicated cancellation or termination form which you can simply complete with the relevant details and post or email to the provided addresses. Alternatively, you can write a termination letter from scratch, use our termination letter template, or give your supplier a call.

Whatever option you decide to go with, make sure to keep copies of all correspondence with your supplier, making note of the date and time at which each correspondence occurred. If you gave your termination notice over the phone, you can request a transcript of the phone call.

If you’re writing to your supplier by mail or email, your termination notice should have the following details:

  • Your supplier’s name and address
  • Your name and company title
  • Your company name and address
  • The date
  • Customer number or account number
  • Meter numbers (MPAN or MPRN)
  • A request to confirm in writing that your supplier has received the notice of termination.

Once you have given them a notice of termination, your supplier will prepare a final bill with any outstanding charges you owe – and any credit the supplier owes you. They may ask for a final meter reading to help prepare the final bill. There is usually a specified date by which this final bill is payable. You may be subject to extra administration charges if you fail to pay by the specified time.

What happens if I don’t switch?

If you have not arranged a switch by the time your current contract expires, your supplier can move you onto an ‘out of contract’ deal that is often more expensive. If this happens, in most cases you’ll be able to switch to a better deal at any point following a 30 day notice period.

Why might I be prevented from switching?

Even if you’ve got the timing right, you may still be prevented from switching by your energy supplier. Usually, your supplier will only block a switch if you have outstanding debt you still need to pay or if you are a tenant and do not have the authority to switch suppliers for your business premises. Your supplier may also prevent your switch and move you to their out of contract, more expensive deal if you have not given them the proper notice by your notice period end date. Read more about why a business may not be able to switch, here

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