Basics of Business Energy Contracts

Energy contracts may look complicated, but at their heart they’re just agreements between you and your supplier. The contract sets out what you’ll pay, how long you’ll pay it for, and the conditions of your supply. Understanding these basics can save you from surprises and give you more control over your bills.

The Key Parts of a Contract

Unit rate: This is the price you pay for each kilowatt-hour (kWh) of gas or electricity you use. Even a small change here makes a big difference to your yearly cost.
Standing charge: This is a fixed daily fee you pay just to have supply, even if you use no energy. It can add hundreds of pounds to your yearly bill.
Contract length: Most contracts last between one and three years. Shorter contracts offer flexibility; longer ones give price certainty.
Payment terms: Some suppliers require direct debit; others allow invoices. Late payments can result in extra charges.
Other fees: Look for extras such as environmental levies or charges for smart meters. These may be small individually but add up.

Why It’s Important to Understand

If you don’t know your contract details, you could be paying more than you need to. Some suppliers count on small businesses not checking. They make money when customers miss renewal dates or stay on expensive rates. By learning the basics, you protect yourself and your business.

Common Pitfalls

Ignoring the standing charge: Owners often focus only on the unit rate. But a high standing charge can make a cheap-looking deal expensive.
Not knowing the contract end date: Missing this date can mean being rolled onto higher “out of contract” rates.
Choosing based on price alone: The cheapest deal isn’t always best if the terms are poor or the supplier has bad service.

How Business Energy Solutions Helps

We review your contracts for you. We explain the unit rate, standing charge, and terms in plain English. We also compare deals from trusted suppliers, so you can see clearly which ones are fair and which ones to avoid. Our goal is to save you money while making sure you understand what you’re signing.

Learn More

This page is part of our Understanding Contracts series. You can also read about Renewal dates and avoiding rollovers, which explains how to avoid getting stuck on expensive rates. For other helpful guides, visit our Energy Saving Tips section.

If you’d like us to check your own contract, we offer a free review. Click here: Check Your Contracts.