Out of Contract Energy UK: Your 4-Step Action Plan

Out of Contract Business Energy UK: Your 4-Step Action Plan

What Does “Out of Contract” Mean for Business Energy?

If your business energy contract has expired and you have not agreed a new one, you are now “out of contract.” Your supplier continues to supply your energy — but at a rate they have set unilaterally, without any competitive pressure. That rate is almost always far higher than what you would pay on a negotiated fixed-term deal. The faster you act, the more money you save.

Quick Answer: What Is an Out-of-Contract Energy Rate?

An out-of-contract energy rate is the tariff your supplier charges when your fixed-term deal has ended and no new agreement is in place. These rates can be 40–80% more expensive than negotiated fixed-rate contracts, according to businessenergyuk.com. Most businesses can return to competitive rates by going through a proper tendering process — Telnergy tenders 21+ suppliers and returns results within 24 hours, at zero cost to you.

The Uncomfortable Truth About Expired Business Energy Contracts

Let us start with what actually happens when your energy contract expires — because suppliers are not always forthcoming about it.

Your fixed-term contract ends. If you have not actively renewed or switched, your supplier does not call you to negotiate. They do not offer you their best rate as a thank-you for your loyalty. They move you onto their out-of-contract rate — a figure that exists primarily because they know a certain percentage of customers will simply not notice or not act.

According to Ofgem’s research on non-domestic energy, many small businesses remain on default or out-of-contract tariffs for extended periods, often without realising how much more they are paying compared to the contracted market. This is not an accident of the system. It is the system working as suppliers intended it to.

The good news is that the remedy is entirely within your control, and it does not cost you anything to pursue it.

What Out-of-Contract Rates Actually Look Like in Practice

Consider a medium-sized restaurant with an annual electricity spend of £18,000 on a contracted rate. If that contract expires and the business ends up on an out-of-contract rate at 50% above the contracted price, the annual bill becomes £27,000. That is £9,000 per year in avoidable cost — money that has no business leaving the till.

For a school spending £30,000 per year on gas and electricity, an 80% out-of-contract premium could mean an extra £24,000 annually. That is staff. That is equipment. That is the kind of budget pressure that forces difficult decisions.

These numbers are not theoretical. They reflect documented patterns in the UK SME energy market.

Are You Actually Out of Contract? How to Check

Before taking action, you need to confirm your current status. Here is how:

Check your bill. Your most recent energy bill should state your current tariff type. Look for references to “standard variable tariff,” “out of contract rate,” “deemed rate,” or similar language. If the tariff name is vague or absent, that is itself a warning sign.

Check your contract documentation. If you have your original contract, find the end date and the notice period. Has the end date passed? Did you give notice within the required window?

Call your supplier. Ask them directly: “Am I currently on a fixed-term contract or an out-of-contract/variable rate?” They are required to tell you. Also ask: “When did my last fixed-term contract end?” and “What is my current unit rate?”

Compare to market. If your unit rate is significantly higher than what energy comparison sites or brokers are showing for current fixed deals, you are almost certainly out of contract or on an uncompetitive rolling rate.

Understanding the Difference: Out of Contract vs. Rolling vs. Deemed

These three terms are often used interchangeably, but they have slightly different meanings:

Term	What It Means
Out of contract	Your fixed-term deal has expired; no new agreement is in place
Rolling contract	You are being billed on an ongoing basis with no fixed end date, typically after a contract has lapsed
Deemed contract	Imposed automatically when you move into new premises or there is a supplier switch failure — usually the most expensive tariff of all

If you are not sure which applies to you, it does not matter much in practice: the action plan below applies to all three situations. But if you suspect you may be on a deemed contract, read our separate deemed contract guide as there may be additional grounds for challenging retrospective charges.

For the rolling contract situation specifically, see our rolling contract guide.

Your 4-Step Action Plan for Out-of-Contract Business Energy

Step 1: Confirm Your Status and Gather Your Information

Before you can fix the problem, you need to understand its full scope. Collect the following:

Current tariff type (fixed, variable, out-of-contract, deemed)
Current unit rates — pence per kWh for electricity and gas
Current standing charges — pence per day
Annual consumption figures — from your bill or meter (kWh per year for electricity; cubic metres or kWh for gas)
MPAN (electricity) and MPRN (gas) — your supply point reference numbers, found on any bill
Contract end date (if still on a fixed term, or the date it lapsed)
Notice period from your contract (typically 30–90 days for fixed terms; typically 30 days for rolling/out-of-contract)

If you manage multiple sites, repeat this for every supply point. A structured approach here saves significant time later and ensures you do not miss any premises that might be quietly haemorrhaging money on poor rates.

Step 2: Tender the Market — Do Not Just Accept a Renewal Quote

Here is one of the most important rules in business energy: do not accept your current supplier’s renewal offer without going to market first.

Renewal quotes from existing suppliers are, almost without exception, higher than what you could achieve through competitive tendering. Your supplier knows that inertia is your enemy. They set renewal quotes accordingly.

Competitive tendering means sending your consumption data and supply details to multiple suppliers simultaneously and asking them to compete for your business. The difference between a tendered rate and an untendered renewal quote is where the savings live.

How Telnergy handles this for you:

Telnergy has been tendering UK business energy for 22 years. Our process is straightforward:

You provide your consumption details (or we obtain them with your authorisation)
We approach our panel of 21+ UK gas and electricity suppliers
Suppliers compete for your business
We present you with a clear, like-for-like comparison of the best available offers
You choose the deal that works best for you

This entire process typically takes less than 24 hours from instruction to results. Our fee is agreed upfront and disclosed in writing before you sign. It may be paid directly or collected via the supplier as a transparent p/kWh uplift, typically 1–2p per kWh on electricity and approximately 0.5p–1p per kWh on gas. On larger consumption and multi-site contracts, we agree a lower rate or a capped fee — a p/kWh uplift that makes sense at 50,000 kWh would be indefensible at a million, and we price accordingly.

We are TPI Code compliant and a Dispute Resolution Ombudsman member, which means you have access to independent dispute resolution if you are ever unhappy with our service.

Step 3: Review Offers and Select the Right Contract

When comparing offers, do not focus solely on unit rate. Here is what to consider:

Unit rate (pence per kWh) — The main cost driver. Even a 0.5p/kWh difference can mean hundreds of pounds per year for a medium-sized business.

Standing charge (pence per day) — Fixed daily cost regardless of consumption. This matters more for businesses with lower consumption.

Contract length — Longer contracts (3–5 years) can offer greater price certainty, but tie you in. Shorter contracts (1–2 years) offer more flexibility. In a rising market, longer fixed terms protect you. In a falling market, shorter terms allow you to benefit from lower rates sooner.

Pass-through vs. fully fixed — Some contracts pass through network cost changes during the contract term. Fully fixed contracts do not. Ask explicitly which type you are being offered.

Exit clauses — Can you leave early if your business circumstances change? What are the penalties?

Supplier stability and service — A slightly higher rate from a well-regarded supplier with good billing accuracy is often better value than the cheapest quote from one with poor customer service. Billing errors waste time and resources.

Telnergy will walk you through these considerations as part of our service. We are independent — we do not favour any particular supplier — so our guidance is based purely on what works best for your business.

Step 4: Switch and Save — Then Set a Calendar Reminder

Once you have selected a supplier and signed a contract, the switch is handled through the national energy network infrastructure. You do not need to arrange anything with your old supplier — the new supplier manages the transfer.

What happens during the switch:

Your new supplier issues a transfer request to the network operator
Your old supplier is notified and has a limited period to raise any legitimate objections (for example, if there is a genuine debt on the account)
A switch date is agreed
Your smart meter (if you have one) is re-registered; otherwise, you provide a meter reading on the switch date
You receive your final bill from the old supplier and your first bill from the new one

Expect the process to take 4–6 weeks from contract signature to live supply date. During this period you will continue to be billed by your old supplier at the out-of-contract rate, so earlier action always means less exposure.

Set your calendar reminder now. Immediately after switching, put a reminder in your diary for 3 months before your new contract end date. That is when you should start the tendering process again. Do not let the clock run out a second time.

Use Case Scenarios

The Independent Hotel

A 45-room independent hotel came to Telnergy having been on an out-of-contract rate with its electricity supplier for 14 months. The operations manager had been focused on post-pandemic recovery and energy procurement had slipped off the agenda.

When we tendered the market, the best available rate represented a £6,435 annual saving against what the hotel was paying on its out-of-contract tariff. Over the 2-year fixed term the hotel selected, that is more than £12,800 returned to the business.

The tendering process took less than 24 hours. The paperwork took 20 minutes.

The Multi-Site Restaurant Group

A restaurant group with 14 sites had a mixture of in-contract and out-of-contract supply points across its estate. Some sites had never been tendered properly — they had simply accepted supplier renewal quotes year after year.

Telnergy conducted a full audit of all 14 supply points, identified those on the worst rates, and ran a coordinated tender exercise across the entire estate. The total saving was £14,000 per year — a figure that meaningfully improved the group’s margins in a sector where every percentage point counts.

The group now uses Telnergy’s multi-site energy management service to keep all sites on competitive rates going forward. No site will slip onto an out-of-contract rate again without Telnergy flagging it in advance.

The Secondary School

A 900-pupil secondary school had not reviewed its energy contracts in three years. The business manager who had originally set up the contracts had left, and no handover notes mentioned the renewal dates.

By the time the school contacted Telnergy, it had been on out-of-contract rates for both gas and electricity for 11 months.

After tendering, the school secured new fixed-term contracts saving £8,200 per year — funds that went directly back into the school’s operational budget. The school now operates on a managed contract calendar, with Telnergy providing advance notice of all renewal windows.

Your Rights as a Small Business Energy Customer

If your energy contract has expired and you believe you have been overcharged, you have legal rights.

Ofgem’s non-domestic supply licence conditions require suppliers to:

– Provide clear information about contract terms and end dates

– Notify customers before rolling them onto default tariffs

– Process switch requests within a reasonable timeframe

– Respond to billing complaints within a set period

The Dispute Resolution Ombudsman provides free, independent dispute resolution for small business energy customers. Crucially, the Ombudsman’s jurisdiction was extended in December 2024 to cover businesses with fewer than 50 employees — meaning a significantly larger proportion of UK SMEs now have access to this protection. Previously, the threshold was 10 employees.

If you have a dispute with your supplier about out-of-contract charges, billing errors, or a blocked switch, you can escalate to the Ombudsman after going through your supplier’s internal complaints process.

For more complex disputes, particularly where a supplier is refusing to acknowledge that you should have been notified of a contract end date, Telnergy’s energy mediation service can act on your behalf. We have successfully challenged retrospective out-of-contract charges for clients in both the commercial and education sectors.

What Happens If You Do Nothing?

This is worth addressing directly, because some business owners assume that staying put is the safe option.

It is not.

If you take no action after your contract expires:

– You continue to pay out-of-contract rates that can be 40–80% above the market rate

– Each passing month increases the total overpayment

– Your exposure to volatile wholesale pricing increases (out-of-contract rates often track market movements, unlike fixed deals)

– You miss the opportunity to lock in a favourable rate during any period of lower wholesale prices

There is no benefit to delay. The market comparison is free, the tendering process takes 24 hours, and you are under no obligation to switch as a result of receiving quotes. The only downside to acting quickly is that you might find out how much you have been overpaying — and that, while uncomfortable, is useful information.

Frequently Asked Questions

What is an out-of-contract energy rate and how much more does it cost?

An out-of-contract energy rate is the tariff a supplier charges when your fixed-term contract has expired and no new agreement is in place. According to businessenergyuk.com, these rates can be 40–80% more expensive than negotiated fixed-rate contracts. For a typical SME spending £15,000 per year on energy, that is between £6,000 and £12,000 in avoidable overpayment annually.

What should I do if my business energy contract has expired?

Act immediately. Check your current tariff status, gather your consumption data and supply reference numbers, and contact an independent energy broker to tender the market. Telnergy will send your requirements to 21+ suppliers and return competitive quotes within 24 hours — free to quote, no obligation to switch. The faster you act, the less you pay on out-of-contract rates.

Can my supplier charge exit fees if I am out of contract?

Generally, no. Once you are on an out-of-contract or rolling rate, you should be free to switch supplier with appropriate notice (typically 30 days) and without exit penalties. However, always confirm by checking your original contract terms or calling your supplier. If your supplier attempts to charge exit fees that were not clearly disclosed, this may be grounds for a complaint to the Dispute Resolution Ombudsman (formerly the Energy Ombudsman).

How long does it take to switch business energy supplier?

Once you have signed a new contract, the switch typically completes within 4–6 weeks. During this period your old supplier continues to bill you at the out-of-contract rate. The sooner you sign a new contract, the sooner you stop paying over the odds.

Is the Dispute Resolution Ombudsman available to my business?

If your business has fewer than 50 employees (following the December 2024 extension of the Ombudsman’s jurisdiction), you can access the Dispute Resolution Ombudsman’s free dispute resolution service. This covers disputes about billing, contract terms, switching barriers, and supplier complaints handling. You must first exhaust your supplier’s internal complaints process before escalating.

Does using an energy broker cost me anything?

When you use Telnergy, quotes are free and there is no obligation to switch. Our fee is agreed upfront and disclosed in writing before you sign. It may be paid directly or collected via the supplier as a transparent p/kWh uplift. Our incentive is to find you the best available deal — you only switch if you are happy with the outcome.

Ready to Stop Overpaying?

Every day on an out-of-contract rate is a day your supplier is charging you more than they need to. The solution takes less time than you think, costs you nothing, and the savings are real.

Contact Telnergy today — tell us your current situation and we will have competitive market quotes in front of you within 24 hours.

Sources and References

Ofgem — Non-domestic energy market and licence conditions for suppliers: ofgem.gov.uk
businessenergyuk.com — Out-of-contract and rolling rate cost analysis: rates can be 40–80% above contracted tariffs
Energy Ombudsman — Extended jurisdiction to businesses with fewer than 50 employees, December 2024: energyombudsman.org
Ofgem — Energy advice for businesses, including rules for Third Party Intermediaries: ofgem.gov.uk
Citizens Advice — Energy supply help, including business energy contracts and switching rights: citizensadvice.org.uk
GOV.UK — Business support, regulation and licensing: gov.uk/browse/business

Telnergy Limited is an independent commercial energy consultancy established in 2002, based in Christchurch, Dorset. Ofgem registered TPI · ADR Ref E3561 · CRN 04576876.