Before You Exit an Energy Contract Early: Exit Fees and Your Rights

Energy Key Facts: Exiting an Energy Contract Early Typical exit fee: £25 to £75 per fuel Dual-fuel maximum: up to £150 Fee-free window: 49 days before end date Moving home: fees may still apply Regulator: Ofgem

What happens when you exit a fixed energy contract early

When a customer leaves a fixed energy tariff before the contract end date, the supplier charges an exit fee per fuel as specified in the contract. This fee compensates the supplier for the cost of hedging the energy purchase on wholesale markets in advance. The fee is disclosed at point of sale and confirmed in the contract documentation. The switch itself proceeds in the same way as any other switch. The exit fee appears as a charge on the final bill from the departing supplier, not as a payment required before the switch can proceed. This means the switch can be initiated and completed before the exit fee invoice is received, though the obligation to pay it remains.

The risks most people do not check before leaving early

The net saving may be negative after fees. A typical dual-fuel exit costs up to £150 in fees. If the saving on the new tariff is £10 per month, breaking even on exit fees takes 15 months. If the new tariff is fixed and itself carries exit fees, the calculation compounds further. The correct comparison is: total cost remaining on current contract versus total cost of new tariff for the same period plus exit fees. Moving home does not automatically waive exit fees. Some suppliers allow customers to transfer a fixed tariff to a new property, which avoids exit fees. Others do not offer this. Suppliers are not legally required to waive exit fees for customers who move home. The contract terms specify the position, and it varies significantly between suppliers. A supplier raising standing charges is not automatic grounds for fee-free exit. Only if a supplier makes a change to a contractually fixed element, such as the unit rate on a fully fixed tariff, does this trigger a right to exit fee-free. Changes to non-fixed costs, or increases to variable standing charges on a tariff that only fixed the unit rate, do not necessarily grant this right. The specific contract wording determines this. Supplier administration does not always waive outstanding fees. When a supplier enters administration and customers are transferred under Ofgem's Supplier of Last Resort process, the original exit fee obligation may be extinguished depending on how the administration proceeds. However, this should not be assumed and customers should seek confirmation from the administrator or Ofgem if relevant.

What the small print usually says

Exit fee clauses in fixed energy contracts specify the fee amount per fuel, the conditions under which the fee is waived or reduced, and whether the fee is charged on a per-switch or per-tariff basis where multiple tariffs are held. Some contracts include a fee waiver for customers who are transferring to another product with the same supplier rather than switching away entirely. This is a retention mechanism rather than a consumer right and its availability depends on the supplier's commercial policy at the time. Contracts also specify whether exit fees compound in cases where both gas and electricity are on fixed deals. Most dual-fuel contracts charge separately for each fuel, meaning a customer exiting one fuel early while retaining the other still incurs a single-fuel exit fee.

Who early exit works for and who it does not

Early exit makes financial sense where the saving on a new tariff materially exceeds the exit fee within a reasonable payback period, where the customer is moving to a property where the current supplier does not operate, or where the current supplier's service has deteriorated to the point of a legitimate dispute. Early exit is not financially rational where the remaining contract period is short and fees represent a significant proportion of the potential saving, or where the new tariff being considered also carries exit fees that would compound the cost of any future switch.

What to verify before you proceed

Before initiating an early exit, obtain in writing from your current supplier: the exact exit fee per fuel currently applicable, whether any tariff-transfer option exists that avoids the fee, the remaining contract end date and the 49-day fee-free window start date, and whether any outstanding balance or credit will be affected by the exit. Calculate the net saving over a 12-month period: total cost on current tariff minus total cost on proposed new tariff minus exit fees. If the result is positive and represents a material sum relative to the exit fee risk, early exit may be rational. If the result is marginal, waiting for the fee-free window is almost always the better option.

Where to complain if an exit fee is applied incorrectly

If a supplier charges an exit fee that was not disclosed at point of sale, applies a fee during the 49-day fee-free window, or charges a higher amount than specified in the contract, this is a complaint matter. The escalation path is a formal written complaint to the supplier followed by the Energy Ombudsman if unresolved within eight weeks.

Disclaimer This article is for information only and does not constitute regulated energy or financial advice. Exit fee terms vary between suppliers and contracts. Always verify your specific contract terms directly with your supplier before making any switching decision. Kael Tripton Ltd is an independent editorial publisher and is not regulated by Ofgem or the FCA.

Frequently asked questions

Can a supplier refuse to let me leave even if I pay the exit fee?

No. Payment or acceptance of an exit fee obligation does not entitle a supplier to prevent a switch. The switch proceeds through the normal Ofgem process and the exit fee is settled on the final bill.

Are exit fees charged if I switch within the same supplier?

This varies by supplier. Some waive exit fees for internal product transfers; others do not. Confirm in writing with your supplier before initiating any switch, internal or external.

What if I cannot afford to pay the exit fee on my final bill?

Contact the supplier before the final bill is issued. Some suppliers will arrange a payment plan for exit fees, though this is at their discretion. The Energy Ombudsman can be engaged if a supplier applies disproportionate pressure over an exit fee debt.

Does the 49-day fee-free window mean I can switch immediately?

The 49-day window is when exit fees are waived, but a switch still takes approximately 17 days to complete. Initiating a switch in the last 17 days of the window carries a risk of the switch completing after the contract has already auto-rolled over.

If I move abroad, do exit fees still apply?

Yes, unless your contract contains a specific clause for customers relocating abroad. Standard exit fee terms apply regardless of destination.

Sources Ofgem: Energy Contracts and Moving Home Ofgem: Switching Your Energy Supplier Energy Ombudsman