If You Fixed a 3-Year Contract in 2022, You’re About to Renew: Here’s the Market

In the autumn of 2022, energy brokers across the UK were handling a volume of renewals unlike anything in the market’s history. Businesses that had previously signed 3-year fixed contracts — a structure that looked sensibly conservative before the crisis — were locking in at rates that would have been unthinkable two years earlier. Some paid 35–40p/kWh for electricity. Some paid 200–300p/therm for gas. They fixed because the alternative — remaining out-of-contract or on pass-through in a market that had already spiked dramatically — was worse. Those contracts are now expiring. The businesses signing them in 2022 are back in the market in 2025 and 2026. And the market they’re returning to looks very different.

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What the renewal market looks like in January 2026

Current fixed contract rates for standard SME electricity profiles sit in the 18–22p/kWh range for all-inclusive fixed contracts, compared to the 35–40p/kWh that was common at the 2022 peak. Gas is in the 7–10p/kWh equivalent range, against the 15–20p/kWh that businesses were paying in 2022. The relief is real and substantial. A business that fixed electricity at 38p/kWh in late 2022 on a 3-year contract and is now renewing at 20p/kWh is looking at roughly a 47% reduction in its electricity unit rate — a significant improvement to its cost base that will flow through to margin from the new contract start date.

The forward curve for 2026 delivery is broadly flat to slightly backwardated — forward prices for Q2 and Q3 2026 are similar to or marginally below current spot levels. This does not mean prices will fall further. It means the market’s current expectation, priced into forward contracts, is for broad price stability through 2026. That expectation can and does change with geopolitical events, storage movements, and weather.

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The timing question: fix now or wait?

For businesses whose 2022 contracts are expiring in Q1 or Q2 2026, the decision to fix versus wait is the most consequential procurement choice they face. The case for fixing now is grounded in where the market currently sits. Prices are materially lower than where businesses have been paying for three years. The structural supply position — declining North Sea production, LNG dependency, geopolitical risk premium — creates meaningful asymmetric downside risk if a supply-side shock occurs during a waiting period. And the forward curve does not show a material price fall over the coming six months that would reward delay.

The case for waiting is based on the possibility of further price easing if European storage fills strongly through the 2026 injection season and global LNG supply continues to grow. This is a plausible scenario. It is also a scenario where the saving from waiting, if it materialises, might be 5–10% against a contract that is already 45% cheaper than the one expiring. The downside — being caught in a supply shock without a fixed contract — is materially larger than the upside from that marginal improvement.

This is not a universal prescription. A business with a 2022 contract at extreme crisis rates renewing now is locking in a substantial improvement regardless of what happens next. A business that fixed at mid-market rates in 2022 — not the worst timing — may find the relative improvement less dramatic and have more reason to consider a shorter-term contract to preserve optionality. The right answer depends on the specific rate being exited and the specific rate available for the new term.

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Contract length: 12, 24, or 36 months?

The 2022 experience has made many business owners reluctant to fix for three years again. That reluctance is understandable but needs to be evaluated against the actual risk profile, not the memory of the worst-case scenario. Three-year fixed contracts in 2022 were expensive not because they were 36 months, but because the price at which they were fixed was at the top of an unprecedented spike. A 36-month contract at 20p/kWh in 2026 that ends up renewing at 18p/kWh in 2029 would have cost 2p/kWh more than waiting — the kind of outcome that any well-managed business can absorb. The same contract at 20p/kWh, if a supply shock drives renewal rates to 35p/kWh in 2029, will have been an excellent decision.

The current market supports a genuine case for 24–36 month contracts for businesses with stable consumption profiles. The forward market premium for additional contract length is modest at current price levels. Locking in security against a geopolitically volatile supply environment at a price that is near the post-crisis low makes structural sense for most SMEs.

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The procurement connection

If your 3-year contract signed in 2022 is expiring in 2025 or 2026, this renewal is among the most commercially significant procurement decisions your business will make this year. The improvement in rates is not automatic — you still need a competitive tender process against the full supplier panel, and the cheapest initial quote still needs to be evaluated on total delivered cost rather than headline unit rate. Telnergy is managing a significant volume of 2022 contract renewals through 2025–26 and can benchmark any current contract against live market conditions within 24 hours of receiving your contract documents.

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FAQ

My 2022 contract expires in March 2026. I’m in the notice window now. What should I do first? Confirm the exact notice date and ensure you haven’t already triggered auto-renewal. Then request quotes from the full supplier panel — not just your incumbent — based on your actual half-hourly consumption data. The incumbent’s renewal quote will rarely reflect the competitive market, and the improvement available from a properly tendered contract compared to a negotiated renewal with the existing supplier is typically 10–20% of the unit rate. Move quickly — the window is open now and the current market is the best renewal environment since 2019.

Should I fix for 12 months in case prices fall further, or lock in for longer? The forward curve does not signal a significant price fall over the next 12 months. A 12-month contract that expires in early 2027 may renew at similar or higher rates, and you carry a second renewal risk event within a shorter timeframe. Unless you have specific operational reasons to want a short contract — a planned closure, a significant efficiency investment that will change your consumption profile — a 24–36 month contract at current rates is a more defensible position than a 12-month contract in anticipation of marginal further easing.

We fixed at 38p/kWh in 2022. Our supplier has offered us renewal at 21p/kWh. Is that competitive? 21p/kWh is within the current market range for a standard commercial profile, but it is almost certainly not the best available rate. Incumbent renewal offers are priced to retain the customer at an acceptable margin, not to reflect the full competitive market. A properly tendered process against eight to twelve suppliers would typically produce a best rate 8–15% below the incumbent’s initial offer. On a contract at 21p/kWh versus 18.5p/kWh, on 500,000 kWh per year, over a 3-year term, that difference is £37,500. Worth the four weeks a competitive tender takes.