quote
menu

Business Energy Contract Lengths Explained


Benefits of longer energy contracts

Long-term business energy contracts begin at 24 months and can last up to 5 years in some cases. Using a longer time period can provide strong price advantages for businesses, as well as renewal benefits.

Locking in low energy rates

Firstly, longer contracts allow businesses to lock in low energy prices for an extended period of time before they change. Gas and electricity rates change on a daily basis, and if prices were to suddenly increase, having a longer contract will delay your business from having to pay higher energy rates until it is time to renew.

Accurate budgeting

Locking in energy prices also allows your business to budget more accurately when organising finances. Having an idea of what you are likely to spend on energy can provide a clearer insight into cost projections, meaning you can operate with greater accuracy.

However, this benefit is more applicable to customers who know how much energy they are likely to use within a 12 month period. If your actual usage amount exceeds the agreed usage within your contract, you could be facing high charges from your energy supplier.

Longer time between renewals

Long-term contracts also allow you to stay with an energy supplier you are happy with for a longer period of time, and if you’ve found a great deal on energy rates, then you can enjoy them for longer. It also means you don’t need to renew your business energy contract as frequently either, which we understand can be a frustrating task.

SwitchMyBusiness.com allows you to switch without any hassle, finding and comparing energy tariffs from a wide range of gas and electricity suppliers to make sure you get the best deal for your business. Plus, when it’s time to renew your contract, we’ll call you to discuss your options and help you find another great energy plan.

Benefits of shorter contracts

Shorter contracts typically last no longer than a year, and are often initially cheaper than longer contracts. However, with short-term contracts, there is the risk of price increases occurring when it is time to renew your business energy tariff. Under these circumstances, this may mean your business would be paying more for its energy than if you had used a longer term contract.

However, shorter contracts do present a lot of benefits to businesses that longer contracts cannot offer. Short term contracts can be a great choice because:

Your energy usage may change

When entering into an energy contract, you need to tell your supplier how much gas and electricity your business is likely to consume over the agreed period. This estimated usage figure may change over time as operations may expand or decrease, and if you have taken a multi-year contract with a supplier, this may cause problems for your business.

If you go over the usage amount you are contracted then you could face hefty charges from your business energy supplier which could increase your gas and electricity costs dramatically.

Using a short-length contract allows your business the flexibility to find a higher usage contract if its demands increase without as much time to wait between switching. Whereas a longer contract would delay this opportunity and you may end up incurring more charges over an extended period of time if your usage consistently exceeds the figure that has been agreed.

You want to try different suppliers

We understand that one energy supplier may work well for one business, but another business may not have the same positive experience with the supplier. Shorter term contracts can really help in this situation as it allows businesses the freedom to search around for a supplier they are happy with.

If a business customer is dissatisfied with the service they are receiving from a supplier, using a short-term contract means they do not have to wait too long before switching to a supplier who meets their needs better than other providers.

You may move premises

If you plan to move business premises soon, using a short-term contract is the most logical option. Short term contracts incur lower cancellation charges than long-term contracts, so if you were to move premises while still within an agreed contract, the charges you incur would not be as high.

You’re a new business

As a new business, it can be hard to gauge how much energy you are likely to use if you have not been operating for long enough to produce appropriate estimations. Using a short-term contract in this situation can benefit your business by allowing it to monitor how much energy it is likely to consume within a year, and then you can find a longer term contract that is more suited to its usage needs upon renewal.

Short-term energy contracts are worth considering for new businesses as they can be relatively fragile, circumstances may arise where the business may not succeed. Suppliers are likely to apply a charge if you default on a contract, no matter what the reason is. So if your business does not last, you may still be out of pocket.

Related Articles

DCP228 and Business Electricity

What is DCP228? DCP228 is a regulation to be introduced by Ofgem in April 2018 which will change the way busin...

Read More
energy news

DCP 161 – Excess Capacity Charges

If your business uses a Half Hourly (HH) meter for its energy supply, make sure you’re ready for DCP 161...

Read More
Scottish Power logo

Total Gas & Power

Total Gas & Power is a business energy supplier, wholly owned by Total SA. It has been a leading business ...

Read More
Excellent, 9.8 / 10

Nicole was very helpful & explained…

"Nicole was very helpful & explained everything clearly & followed up with the information as promised."

This review was posted by Sue Fraser on the 12th of June 2018

Very Professional

"Very Professional"

This review was posted by Jackie Horwood on the 19th of June 2018

Good polite service!

"Had a lovely chat with Pamwan Johnson, so helpful & helped me understand everything he was telling me! Totally recommend this guy to talk with when it comes to matter like this!"

This review was posted by Mr COE on the 15th of June 2018

I have just used Switch My Business…

"I have just used Switch My Business today to switch our gas supplier c/o Account Manager Mark Weeks - who offered an excellent service. I found the whole process very simple, quick and efficient, whilst also saving us money. Talking to an actual human person (Mark - who was concise, informative and had personality and humour!) on the end of the phone, and having all my questions answered was refreshing in this modern era of live chat and emails and mindless individuals!! I highly recommend you to switch your business now with Switch My Business."

This review was posted by gemma Cammidge on the 15th of June 2018

Renewal has never been so easy!

"Carl rang to discuss our renewal for the Electricity. This is the second time we have renewed via Switch My Business after they arranged the initial transfer. As ever the options were clearly stated and the best deal agreed upon with no pressure."

This review was posted by Steve M on the 14th of June 2018