How business energy works

Commercial electricity and gas: the basics

Business energy is the gas and electricity supplied to non-domestic premises, including offices, factories, shops, warehouses, care homes and multi-site portfolios. Unlike household energy, commercial contracts are negotiated individually, prices reflect your consumption and contract terms, and there is no default price cap protecting you once a fixed deal ends.

The physical supply of energy is the same regardless of who you contract with: the same wires and pipes deliver it, and only the billing and commercial relationship change when you switch. Your supplier buys energy on the wholesale market, adds network, policy and metering costs, applies their margin, and bills you according to your agreed contract.

Domestic vs business energy

The key differences are commercial, not physical:

• Contracts are negotiated: prices and terms are agreed per business, not set on a standard tariff.
• No price cap: out-of-contract rates can be significantly higher than arranged pricing.
• Longer fixed terms: typically 12, 24 or 36 months.
• Different VAT treatment: most businesses pay 20% VAT; some low-use businesses may qualify for the reduced rate.
• Climate Change Levy (CCL): an environmental tax applied to most business energy bills.

Contract types

Most businesses sit on one of a few contract structures. Each has different implications for budget certainty and exposure to market movement. See our full business energy contract types guide for detail, but in summary:

• Fixed-price contracts: unit rate and standing charge are fixed for the term, giving budget certainty.
• Variable contracts: rates move with the market, offering flexibility but less certainty.
• Deemed / out-of-contract rates: applied when no contract is in place; typically a supplier's most expensive tariff.
• Flexible procurement: for larger users, buying energy in tranches over time rather than fixing all at once.

Renewal windows and contract end dates

Every fixed business energy contract has a contract end date (CED) and a renewal window, the period typically 30–120 days before the CED, during which you can notify your supplier of your intention to switch or renew without penalty. Miss the window and you may be rolled onto out-of-contract rates until a new contract is agreed.

This is the single most common, and most avoidable, way businesses lose control of energy costs. Tracking your CED and acting early is essential. Our Track My Renewal service lets you register your end date so we monitor the market and contact you when it's time to review.

What happens when a contract expires

If your contract ends without a new one in place, your supplier moves you onto deemed (out-of-contract) rates. These are not a penalty; they're a supplier's default tariff for uncontracted supply, but they are typically far higher than arranged pricing. The fix is simple: agree your next contract before the current one ends.

How procurement works

Procurement is the process of securing your next energy contract. For a broker like Vantage, that means understanding your consumption and contract position, engaging suitable suppliers, comparing offers on a like-for-like basis, and recommending an option that fits your requirements, then managing the switch.

The information suppliers require is straightforward: your business details, meter numbers (MPAN for electricity, MPRN for gas), recent consumption (usually from a bill or Letter of Authority), and your contract end date. See our glossary for what each of these means.

How brokers work

An energy broker (or TPI — Third Party Intermediary) acts between your business and energy suppliers. A good broker researches the market, engages suppliers on your behalf, compares contracts, handles administration, tracks renewals and supports your account over time. How brokers are paid varies. See how Vantage gets paid for a transparent explanation.

How commissions can work

Intermediary remuneration is typically either supplier-paid (a commission built into the rate you pay) or customer-paid (a fee agreed directly with you). Either way, it should be disclosed. We believe businesses should understand how the intermediary providing their service is paid.

The switching process

Switching is an administrative change, not a physical one; your supply continues uninterrupted. A typical switch involves:

• Reviewing your current contract and end date.
• Engaging suppliers and comparing quotes.
• Signing a Letter of Authority (LOA) so your broker can speak to your supplier.
• Agreeing the new contract and transfer date.
• The new supplier taking over billing from the transfer date.

Multi-site and large-user procurement

Businesses with multiple sites or high consumption face additional complexity: different meters, contract end dates and suppliers across the estate. Coordinated procurement aligns these into a managed strategy. For larger or half-hourly metered users, procurement can be more consultative, involving flexible purchasing, tranche buying and portfolio analysis. See our multi-site page for more.

What to do next

If you'd like help understanding your position, request an energy review or speak to our team. For more detail on any topic above, explore our contract types, bill guide and FAQs.