How long can a business energy contract last?
Ofgem says business contracts can run for several years, and the length is set in your own contract; we found no fixed legal maximum for a new one. For microbusinesses, automatic rollovers are capped at 12 months; out-of-contract periods have no set end.
What is and isn't capped
Ofgem's guidance simply says business contracts can run for several years and many are fixed term, so you need to ask how long you'd be tied in and whether there's an early termination fee. We could not find a statutory limit on the length of a new contract, so the answer for your deal is written in your Principal Terms.
What is capped is a rollover. For microbusinesses, Ofgem rules say a supplier can only roll you over for 12 months or less; see what is a rollover contract.
The main contract types by length
| Type | Length |
|---|---|
| Fixed term | Set in your contract |
| Rollover | 12 months or less (microbusinesses) |
| Evergreen | No fixed end; up to 30 days' notice can be required |
| Out-of-contract or deemed | No fixed term; no termination fee |
See evergreen contract and deemed contract.
Longer isn't automatically better
A long term locks in a price, which is useful if prices rise and costly if they fall. It also affects broker costs: since October 2022 for microbusinesses (and October 2024 for all business customers) the total broker cost for the whole contract term has to be shown in the Principal Terms, so a longer term can mean a larger total.
Example for a shop using 15,000 kWh a year at 27p/kWh: 15,000 × £0.27 = £4,050 a year, so £12,150 over three years. If prices later drop to 24p, you would have paid 15,000 × £0.03 × 3 = £1,350 more than the lower price. If prices rise instead, you'd be ahead. Nobody can promise which. Our article on the business energy price forecast explains the uncertainty.
How to choose a length
- Do you plan to move or close within the term? Check whether the contract can be transferred; see taking a contract to new premises.
- Can you afford a price shock if you're on a flexible deal?
- Compare fixed and flexible options in fixed vs flexible contracts.
Questions to ask about term
- What is the exact start and end date, per fuel?
- What is the exit fee if I leave early, and how is it calculated?
- What happens at the end: automatic renewal, or a move to a higher rate?
- Does the broker cost cover the whole term?
If your answer to the last question is unclear, ask for the Principal Terms and look for the total in pounds and pence.
When a shorter term makes sense
If you expect to move, sell the business or install solar or batteries, a shorter or flexible deal keeps your options open, even if the price is a little higher. If your premises and usage are stable and you value a predictable budget, a longer fixed term may suit better. Either way, write down the end date the day you sign.
Next steps
Read the term and exit-fee clauses in contract terms to check before you sign anything.
Sources
General information only. Energy prices, rules and supplier terms change; check the latest position with your supplier, Ofgem or the Energy Ombudsman before you act.