Evergreen contract

What it means

Most business energy deals run for a fixed term, such as one, two or three years. An evergreen contract is different. It has no set finish date, so it keeps going month after month until someone gives notice. The rates are often variable, which means the supplier can change them as costs move.

Where you will see it

Look in the contract's Principal Terms and the supplier's terms and conditions for wording such as "continues until terminated". A fixed term that renews for a further set period is a rollover contract, not an evergreen one.

Why it matters

The rules give microbusinesses a particular protection here. Ofgem's decision says suppliers cannot make a microbusiness give notice to leave a contract, except for evergreen contracts, where notice of up to 30 days can be required. Evergreen is the one type where a notice period is still allowed, but it is capped.

Evergreen deals also leave you exposed to price changes with no end date to plan around, so check your rates at least once or twice a year.

Example

A garage is on an evergreen electricity contract at 31p/kWh. It uses 18,000 kWh a year, so the bill for units is 18,000 × £0.31 = £5,580. If the supplier moves the rate to 34p, the same use costs 18,000 × £0.34 = £6,120, an extra £540 a year. The garage can serve notice of up to 30 days and move to a fixed deal.

Thirty days is the maximum a supplier can require from a microbusiness; your contract may ask for less. Read the exact wording before you serve notice, and keep a copy of what you send.

Related terms

See deemed contract, out-of-contract rate, and our guide to business energy contracts. If a fixed term is about to roll over, read how to stop your contract rolling over.