Business energy security deposits: why they are asked for and how to get them back

What is a business energy security deposit?

A security deposit is a sum a supplier holds as protection in case you do not pay. Ofgem's best-practice guide for non-domestic customers says a supplier can ask for one when its assessment finds a credit risk, and that a deposit can help a customer still receive an offer of supply that might otherwise be refused. It is not a fee, and it is not extra spending: it should be returned or offset against your final bill when the account ends and everything is paid.

The Ofgem guide is voluntary, but Ofgem expects suppliers to follow it as closely as possible and says it will monitor compliance.

Why you might be asked for one

• The supplier's credit check flags a risk, for example a new company with little history or past late payments.
• You are taking on a large supply or a new site.
• You want to be reconnected after a disconnection for debt. Ofgem's guidance says a reconnection deposit should not unfairly stop you reconnecting.
• Your billing is infrequent. Ofgem notes that a quarterly-billed customer would usually face a higher deposit than a monthly-billed one.

How the amount is worked out

There is no fixed formula. Ofgem says the deposit should match the assessed risk and that suppliers should be clear about their method. It also notes that some suppliers base deposits on about three months of estimated consumption, reflecting how long disconnection can take. We have not found any published figure for typical deposits beyond that example, so treat three months as a reference point, not a rule.

Worked example

A café expects to use 24,000 kWh of electricity a year. Using the DESNZ Q2 2026 non-domestic average of 24.51p/kWh (including CCL) as a rough price:

• Annual cost: 24,000 × £0.2451 = £5,882
• One month: £5,882 ÷ 12 = £490
• Three months: £490 × 3 = £1,470

Real figures depend on your contract rates, standing charge and VAT, so use this to sense-check a request, not to predict it. Our business energy cost calculator helps you estimate your own.

Alternatives to paying a deposit

Ofgem's guide mentions other ways suppliers may manage risk instead of a cash deposit, such as credit insurance, bank guarantees, upfront payments or a change in billing frequency. Whether a particular supplier accepts any of these is up to that supplier, so ask which it will consider. The guide says suppliers should tell you what alternatives exist and how to ask.

If the deposit is large, try asking whether monthly billing, or a smaller deposit with a payment record review after six months, would be acceptable. Any extra terms should be put in writing.

What the supplier should tell you

According to Ofgem's guide, a supplier should explain in writing:

• why a deposit is being requested,
• how the amount was calculated,
• when it will be repaid, and
• what alternatives are available.

If your offer letter does not say these things, ask. The wording of your contract matters, so check the Principal Terms and use contract terms to check.

Getting your deposit back

Ofgem's guide says that if your creditworthiness materially improves during the contract, you can ask for a partial or full refund. The supplier should set out how to ask and what evidence it needs, respond promptly and say how long a review takes. A review can also lead to a higher deposit, and suppliers need not repeat reviews in response to frequent requests, so wait until you have a clear improvement, such as a year of on-time payments.

When a meter point leaves supply and all charges are paid, the deposit is no longer needed. Where possible it should be offset against your final bill, otherwise repaid promptly once the account closes. Provide a final meter reading when you move, and see closing a business energy account and whether deposits are refundable.

If you disagree with the request

1. Ask for the written reasons and calculation.
2. Offer an alternative or a smaller sum with evidence of your payment record.
3. Compare another supplier, as risk appetites differ. Note you may not be able to switch if you owe money; see switching when you owe money.
4. Make a formal complaint, then escalate to the Energy Ombudsman after eight weeks or a deadlock letter. See energy disputes.

Never pay a deposit to a person who contacts you out of the blue. Use the contact details on your contract or the supplier's official website, and confirm the bank details before sending money.

Deposits when you move premises or close

A deposit is tied to the account, not to you personally forever. If you leave a site, the deposit relating to that meter point should be dealt with in the final billing. Send a closing meter reading, give the forwarding address and ask in writing how the deposit will be treated. If you are taking on a new site, a new supplier or the same one may ask for another deposit, as the assessment is repeated. See telling your supplier when you move and taking a contract to new premises.

Deposits compared with other costs

A deposit is not a charge, but it ties up cash. For a small business that matters as much as the unit rate. When comparing quotes, include any deposit in your cash-flow plan, and compare with other up-front items such as the standing charge. See business energy standing charges. A cheaper unit price with a large deposit may still suit you if you can afford it, but a smaller deal with no deposit could be better for a business with tight cash.

Questions to ask the supplier

• How was the amount worked out, and could a different billing frequency reduce it?
• Is interest paid on the deposit? (We have not verified whether suppliers pay interest, so ask.)
• When will you first review it, and what evidence do you need?
• What happens to it if the supplier changes or fails? Our guide to a supplier going bust explains the risk to money held by a failed supplier.

Next steps

• Get the deposit request and its calculation in writing.
• Ask what alternatives are accepted.
• Diarise a date to request a review, and keep proof of on-time payments.