TL;DR
- Business energy is not protected by the Ofgem price cap that applies to domestic consumers.
- Business energy contracts are negotiated directly between the business and the supplier.
- Fixed contracts provide price certainty. Variable and flexible contracts track market rates.
- Start comparing at least 6 months before contract renewal to avoid costly automatic rollover.
- Micro-businesses (under 10 employees, under 100,000 kWh electricity per year) have additional Ofgem protections.
Key Facts
How Business Energy Differs from Domestic Energy
Business energy operates under a fundamentally different regulatory framework from domestic energy. The Ofgem price cap, which protects households from paying above a set unit rate and standing charge, does not apply to business energy customers. Business energy prices are negotiated directly between the business and the supplier, with rates determined by the market, the business consumption profile, and the contract terms agreed. During the energy price crisis of 2022 to 2023, many businesses saw dramatic cost increases with no cap protection.
Types of Business Energy Contract
Fixed-rate contracts lock in a unit rate for the contract duration, typically 1 to 5 years. The agreed price applies throughout regardless of wholesale market movements. Fixed contracts provide budget certainty, which is valued by businesses with tight margins. The trade-off is that if wholesale prices fall during the contract, the business continues paying the contracted rate.
Variable-rate contracts move in line with the supplier reference rate, which typically tracks wholesale market prices with a lag. Variable rates can be cheaper when wholesale prices fall but expose the business to increases when market prices rise. Most variable contracts allow the supplier to give 30 days notice of a rate change.
Deemed or out-of-contract rates apply to businesses with no active contracted rate, either because they have never negotiated or because their fixed contract has ended and they rolled over automatically. Deemed rates are typically the most expensive available from any given supplier and businesses on them are usually significantly overpaying.
Business Energy Rates in June 2026
Business electricity unit rates in June 2026 range from approximately 18p per kWh for larger businesses with high annual consumption and strong negotiating positions, to 28p per kWh for smaller businesses on less favourable terms. Business gas unit rates range from approximately 4p to 8p per kWh depending on contract type and consumption volume. These are significantly above the domestic Ofgem-capped rates, partly because the cap does not apply and partly because business energy contracts include different charging structures including capacity charges, network access charges, and climate levies.
The Renewal Trap: Rollover Contracts
One of the most common and costly mistakes business energy customers make is missing the contract renewal window. Most business energy contracts include automatic rollover clauses: if the business does not give notice within a specified window before the contract end date (typically 30 to 90 days before expiry), the contract automatically renews for a further period, often at a higher rate than the expiring deal.
Rolled-over contracts are rarely competitive and the business may be locked in at above-market prices for another year or more. Diarise the notice window at the start of any energy contract and begin comparison shopping at least 6 months before the renewal date. This provides time to compare the market, negotiate, and arrange a switch if appropriate.
Micro-Business Protections
Micro-businesses have additional protections under Ofgem regulation. A micro-business is defined as having fewer than 10 employees and annual consumption below 100,000 kWh for electricity or 293,000 kWh for gas. Micro-businesses can escalate unresolved supplier complaints to the Energy Ombudsman after 8 weeks. They also have stronger rights around contract transparency and termination notice requirements than larger business customers.
From 2027, Ofgem is expected to introduce a mandatory code of conduct for Third Party Intermediaries (TPIs), including energy brokers and consultants who arrange business energy contracts. The TPI code addresses concerns about undisclosed commissions and conflicts of interest following widespread media and parliamentary scrutiny of broker practices in the business energy market.
Frequently Asked Questions
Is business energy covered by the Ofgem price cap?
No. The Ofgem price cap applies only to domestic household energy customers. Business energy prices are determined by direct contract negotiation.
When should I renew my business energy contract?
Start comparing at least 6 months before your contract end date. Most suppliers require 30 to 90 days notice before the contract end to avoid automatic rollover at a potentially higher rate.
What is a deemed rate?
The supplier default tariff when a business has no agreed contract. Deemed rates are typically the most expensive available. Businesses on deemed rates should seek a new contracted rate immediately.
Can I use a broker for business energy?
Yes. Business energy brokers compare deals across the market on your behalf. Most earn commission from the supplier rather than a fee from you. Ask any broker to disclose their full commission arrangements before accepting a quote.
