Should I fix my business energy prices?

What fixing your business energy prices actually means

On a fixed-rate business energy contract, the price you pay per kWh and your daily standing charge stay the same for the whole term, usually one to five years. Your bill still goes up or down with how much energy you use, but the price per unit doesn't change.

Most UK business electricity and gas contracts are fixed. Unlike household energy, there's no price cap on business supply, so the rate you agree is the rate you pay until the contract ends.

Reasons businesses choose to fix

For most small and medium businesses, the main benefit is certainty. A fixed rate makes cash flow easier to plan and protects you if wholesale prices rise during your term.

• Budget certainty: you know your unit rate for the full term, which helps with pricing, forecasting and lender conversations.
• Protection from market rises: if wholesale prices climb, your rate stays put.
• Less admin: you don't need to watch the market every month.
• Lenders and landlords often prefer predictable overheads.

When a fixed contract might not suit you

Fixing also has trade-offs. If wholesale prices fall after you sign, you won't benefit until your contract ends. Leaving early usually means paying termination fees, and there's no cooling-off period once a business contract is agreed.

A variable or flexible arrangement may be worth discussing if your business is likely to move premises soon, your usage is very large and you can manage market exposure, or you expect to close or sell the site within the term.

How long should you fix for?

Common terms are 12, 24 and 36 months. Shorter terms let you go back to the market sooner. Longer terms give you certainty for longer, but you're committed if prices move in your favour.

Think about how long you plan to stay at the premises, when your lease ends and how important stable costs are over the next few years. Aligning electricity and gas end dates also makes future renewals simpler.

Timing: use your switching window

Most suppliers let you agree new rates up to six months before your current contract ends. Comparing early gives you time to review options without being rushed.

If you miss your renewal date, you may be moved onto rollover or out-of-contract rates, which are typically much higher than a negotiated fixed rate. For micro-businesses a rollover can't exceed 12 months, but it's still worth avoiding.

What to check before you fix

Before agreeing a fixed business energy contract, check the details as well as the headline unit rate.

• The standing charge, not just the unit rate. For low-usage sites it can make up a large share of the bill.
• The contract start and end dates, and the notice you need to give.
• Whether the price includes or excludes network charges ("pass-through" costs).
• Termination fees if you move or close.
• Whether the Climate Change Levy and VAT are shown separately.
• Your MPAN (electricity) and MPRN (gas) on the quote, so it matches your meters.

The bottom line

For many UK businesses, a fixed contract is a sensible way to control one of their biggest overheads. The key is to compare fixed rates across suppliers during your switching window, check the full terms, and pick a term that matches your plans for the premises.

Frequently asked questions