TL;DR
Business energy contracts are not covered by the Ofgem price cap and carry significantly fewer consumer protections than domestic supply. Third-party intermediaries (brokers) are paid commission by suppliers that inflates the unit rate quoted to businesses, and disclosure of this commission is not always forthcoming. Auto-rollover clauses can lock businesses into above-market rates for years. Always request broker commission disclosure in writing before signing.
Last reviewed: June 2026 | Sources: Ofgem, Business Energy Claims
|
Energy Key Facts: Business Energy Contracts Price cap applies: no Contract lengths: 1 to 5 years typical Auto-rollover notice: varies, often 30-90 days Broker commission: embedded in unit rate Complaints body: Energy Ombudsman (micro-business) Regulator: Ofgem |
What is different about business energy contracts
Business energy supply operates under a separate regulatory framework from domestic supply. The Ofgem price cap, which sets a ceiling on unit rates for domestic customers, does not apply to business contracts. Suppliers can set rates freely based on wholesale market prices, commercial risk assessment and the commission paid to any broker involved in the sale. Business energy contracts are negotiated rather than standardised. Contract lengths typically range from one to five years. The unit rate, standing charge, exit fee and auto-rollover terms are all variable and subject to the negotiation at the point of sale. Micro-businesses with fewer than 10 employees and annual consumption below specified thresholds receive some additional protections under Ofgem's supply licence conditions, but the majority of SME contracts operate under commercial rather than consumer protections.The risks most businesses do not check before signing
Broker commission inflates the quoted rate. The business energy broker market operates on a commission model where the broker receives a payment per kilowatt-hour consumed over the contract term. This commission is embedded in the unit rate quoted to the business and is not separately disclosed in most cases. A broker earning 0.5p per kWh on a contract consuming 100,000 kWh per year receives £500 annually embedded in the customer's bills. The total commission over a three-year contract can be material relative to any saving negotiated by the broker. Ofgem's ongoing regulation of third-party intermediaries is specifically targeting this disclosure gap, with mandatory commission transparency requirements under development. Auto-rollover clauses are aggressively enforced. Business energy contracts typically contain auto-rollover clauses that renew the contract for a further fixed term if the customer does not notify the supplier of their intention to switch within a specified window. This window is often 30 to 90 days before the contract end date, and in some contracts as long as six months. Businesses that miss this window are locked into a further fixed term at rates set by the supplier. This has been the subject of significant regulatory scrutiny and a BBC Watchdog investigation that highlighted suppliers enforcing rollover clauses even where customers demonstrated they had attempted to switch within the required window. Deemed contract rates are the most expensive option. When a business takes over premises without arranging an energy contract, or when an existing contract expires without renewal, the business is placed on a "deemed contract" at rates set by the incumbent supplier. Deemed rates are typically significantly above the market rate and have no regulatory cap in the business context. New business occupiers and businesses approaching contract end without an agreed renewal are particularly exposed to this risk. Exit provisions may be more restrictive than anticipated. Business energy contracts frequently do not include a cooling-off period equivalent to the domestic 14-day right. Some contracts include no exit provision at all other than payment of the remaining contract value. Others include exit provisions that require 90 or 120 days notice. The exit terms are buried in the contract terms and conditions rather than headline pricing documentation. The complaints pathway is narrower for larger businesses. The Energy Ombudsman accepts complaints from domestic customers and micro-businesses, defined as businesses with fewer than 10 employees and annual consumption below 100,000 kWh of electricity or 293,000 kWh of gas. Businesses above these thresholds have no equivalent independent ombudsman and must rely on contractual dispute resolution or civil litigation.What the small print usually says
Business energy contracts contain clauses that are frequently glossed over during a broker-led sale: the auto-rollover notice period and renewal mechanism, the treatment of deemed contract periods between contract end and renewal, the commission or uplift paid to any broker or intermediary, the exit provision including notice requirements and charges, and the process for disputed bills or meter read disagreements. The Letter of Authority signed when engaging a broker deserves particular attention. It authorises the broker to contact suppliers and obtain quotes on the business's behalf, but in some cases grants broader authority than customers realise, including the ability to sign contracts on the business's behalf or to receive commission without specific disclosure.Who is most at risk and who is not
Businesses at highest risk are those that rely entirely on a broker to manage their energy procurement without independently reviewing contract terms, those approaching a contract end date without calendar reminders for the auto-rollover window, new business occupiers who do not arrange supply before taking occupation, and businesses that have not requested commission disclosure in writing. Businesses at lower risk are those that procure energy directly with suppliers without broker involvement, those with dedicated procurement staff who review contract terms independently, and micro-businesses that qualify for the additional Ofgem protections.What to verify before you sign
Before signing any business energy contract, request and retain in writing: the unit rate for electricity and gas, the standing charge, the contract start and end dates, the auto-rollover notice window and renewal mechanism, any exit provision including notice requirements and costs, and the commission or uplift paid to any third-party intermediary involved in the sale. If a broker is involved, ask specifically: "What commission do you receive per unit of energy I consume over this contract?" A broker unwilling to disclose commission in writing is a significant advisory risk. Compare the quoted rate against available direct supplier quotes for the same period and consumption profile. The difference, if material, is likely to reflect embedded broker commission rather than a genuine market rate.Where to complain if something goes wrong
Micro-businesses can take complaints to the Energy Ombudsman after completing the supplier's formal complaints process. Larger businesses have no equivalent ombudsman access and should document all communications carefully if a dispute arises. Ofgem's market compliance team handles systemic complaints about supplier or broker behaviour but does not resolve individual commercial disputes.|
Disclaimer This article is for information only and does not constitute regulated energy, legal or financial advice. Business energy contract terms vary significantly between suppliers and intermediaries. Always obtain independent legal review of any long-term business energy contract before signing. Kael Tripton Ltd is an independent editorial publisher and is not regulated by Ofgem or the FCA. |
Frequently asked questions
Does the Ofgem price cap apply to my business energy?
No. The Ofgem price cap applies only to domestic customers on default and standard variable tariffs. Business energy prices are unregulated and set commercially between supplier and customer.Am I entitled to a cooling-off period after signing a business energy contract?
There is no statutory cooling-off period for most business energy contracts equivalent to the domestic 14-day right. Some suppliers offer a short voluntary cancellation window, but this is not a legal requirement. Check the contract terms before signing.How do I know if I am on a deemed contract?
If your business moved into premises without arranging an energy contract, or if your contract expired without renewal, you are likely on a deemed contract. Contact the incumbent supplier to confirm your status and current rate. Arrange a market contract as quickly as possible to avoid prolonged exposure to deemed rates.Can I challenge an auto-rollover if I missed the notice window?
Challenging an auto-rollover is difficult once the rollover period has commenced. If there is evidence the supplier failed to notify within the required window, or that notification was unclear, this may constitute grounds for a dispute. Micro-businesses can take such disputes to the Energy Ombudsman.Is my broker required to disclose their commission?
Under current Ofgem rules, commission disclosure requirements for business energy brokers are limited compared to those in regulated financial services. However, a broker who refuses to disclose commission when asked directly in writing is acting in a way that warrants serious scrutiny of the advice being provided.|
Sources
Ofgem: Business Energy |
