Is there a cooling-off period for business energy contracts?

What the rules say

Ofgem's guidance for microbusinesses states that, once agreed, a contract can't simply be cancelled within a set window, and this applies to phone agreements. Its 2022 microbusiness decision also records that a cooling-off period was not implemented. If you've seen advice that mentions a cooling-off period, it is probably about household energy, which has different rules.

Why this catches people out

Business energy is sold quickly: sales calls, renewals by email, a broker's e-signature link. A click can create a contract that runs for years. Ofgem notes contracts can run for several years and that leaving early may trigger a termination fee.

What you can do instead

Before you sign

• Get the Principal Terms: unit rates, standing charge, length, exit fees and any broker costs.
• Ask what is passed through; see pass-through vs fixed charges.
• Compare at least two quotes.
• Use the checklist in contract terms to check.

After you sign

• If you were misled, complain; see can I cancel a new contract.
• If the contract is fine but the price is higher than hoped, there may be little recourse; the cost of leaving is in the exit-fee clause.

An example of the risk

A pub signs a 3-year deal at 28p/kWh for 60,000 kWh a year. Annual cost: 60,000 × £0.28 = £16,800, or £50,400 over three years. If the market falls to 25p, a rival deal would cost 60,000 × £0.25 = £15,000 a year, £3,600 less over three years, and you couldn't walk away free. The prices are illustrative.

Why Ofgem has not added one

Ofgem's decision records that a cooling-off period was considered and not implemented. Instead, the 2022 reforms focused on transparency: Principal Terms, broker cost disclosure and access to dispute resolution. That puts the weight on you to check the terms before agreeing.

If you want a cheap safeguard, make it a rule that no one in your business agrees energy terms on a call. Everything goes by email, and a second person reads it first.

A short pre-signing checklist

• Is the supplier named, and is the broker (if any) identified?
• Are unit rate, standing charge and length written down?
• Do I know the exit fee?
• Is broker cost shown in pounds and pence?

If a seller promises a cancellation window

Some sellers may say you can change your mind. Treat that as meaningless unless it is written in the contract or terms you receive. Ask for the sentence in writing and keep it.

Next steps

1. Never agree on a first call; see phone agreements.
2. Ask for written terms and take a day to read them.
3. Know where to complain: the Energy Ombudsman covers microbusinesses and small businesses.