In short
Business energy tariffs are the price terms a supplier offers for business gas or electricity. The main types are fixed-rate, variable-rate, flexible (structured) and pass-through contracts, plus the rollover, deemed and out-of-contract rates that apply when no new contract is in place. Multi-rate tariffs such as Economy 7 charge different rates at different times.
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What a business energy tariff is
A tariff is the set of prices and terms that a licensed energy supplier charges for your gas or electricity. On a business bill it usually comes down to two charges, a unit rate for each kWh you use and a standing charge for each day you are supplied, plus taxes such as VAT and the Climate Change Levy. Our guide to business energy standing charges explains what each one covers.
Business tariffs work differently from home energy. Ofgem says the terms, pricing and regulations differ from standard home energy contracts. Prices are agreed in a contract rather than set against the household price cap, the contract runs for an agreed term, and there is no cooling-off period once you have agreed it, so it pays to understand the tariff type before you commit. If you run your business from home you are probably on a domestic contract, and Ofgem suggests checking with your supplier.
Ofgem also notes that suppliers may not offer every tariff type. Which ones you are offered usually depends on the size of your business and how much energy you use, which is covered further down this page.
Every business tariff type at a glance
The table brings together the contract types Ofgem describes for businesses, plus the pass-through and multi-rate structures you will see on quotes and bills.
| Tariff type | How the price works | Who it tends to suit | What happens at the end |
|---|---|---|---|
| Fixed-rate | Unit rates and standing charges are fixed for the length of the contract, whatever happens to wholesale prices | Businesses that want budget certainty | Renew, switch in the switching window, or move to rollover or out-of-contract rates |
| Variable-rate | The price can go up or down during the contract, for example when wholesale prices change | Businesses that want flexibility to leave | Can usually switch at any time |
| Flexible (structured) | Energy is bought in portions over time instead of at one fixed price | Large businesses that use a lot of energy | Set by the contract and its trading rules |
| Pass-through | Some or all non-energy costs are passed on as they change, rather than fixed in the price | Larger and half-hourly metered sites | Set by the contract terms |
| Rollover or evergreen | Automatic renewal when a fixed term ends without a new arrangement, usually for 12 months, and may be at a higher rate | Nobody chooses it deliberately; it is the default with some suppliers | Check the notice terms; microbusinesses on evergreen contracts get a notice period of no more than 30 days |
| Out-of-contract | Rates some suppliers apply when a fixed term ends without a new deal; usually more expensive than fixed-term contracts | A stopgap only | Can usually switch at any time |
| Deemed | Rates applied when you move into premises without arranging a contract, or if your supplier goes out of business; usually higher than negotiated rates | A stopgap only | Can usually switch at any time |
| Multi-rate, such as Economy 7 | One rate in a set off-peak period and a more expensive rate at other times | Sites that use a lot of electricity overnight | Depends on whether the multi-rate tariff is fixed or variable |
Pass-through and multi-rate are not separate contract types in Ofgem's list: a fixed or flexible contract can be fully fixed or have pass-through elements, and a multi-rate tariff can be fixed or variable. Check which combination a quote is for.
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Fixed, variable and flexible tariffs
Fixed-rate tariffs suit businesses that want budget certainty. Ofgem describes them as fixing the unit rates and standing charges for the length of the contract, so the cost per kWh stays the same no matter what happens to wholesale prices. Your bill still moves with how much energy you use, and some fixed contracts pass certain non-energy costs through, so it is worth checking whether a quote is fully fixed. Our fixed rate business energy guide covers contract length, the switching window and exit fees.
Variable-rate tariffs can go up or down during the contract. Ofgem notes this may be because prices change with wholesale market prices. They give you freedom to leave, but less certainty about what you will pay.
Flexible contracts, which Ofgem says are sometimes called structured contracts, suit large businesses that use a lot of energy. Rather than locking into one price, energy is bought in smaller portions over time. That brings market risk as well as opportunity, which is why they come with a written trading strategy. See flexible energy contracts for how they work.
Pass-through and multi-rate tariffs
A business electricity price is made up of the energy itself plus non-commodity costs: network charges, balancing costs, government policy schemes and metering. On a fully fixed contract the supplier prices those into your rates. On a pass-through contract some or all of them are passed on to you as they change. Ofgem's guidance for microbusinesses notes that some factors in energy bills may be presented on a pass-through basis, added to the energy price when the charges are known by the supplier. Our pass-through energy contracts page explains the trade-off.
A multi-rate tariff charges different unit rates at different times. Ofgem gives Economy 7 as the example: one rate during a specified off-peak period and another, more expensive rate at peak times. It needs a meter that can record the two periods separately. See Economy 7 for business for who it suits.
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Rollover, deemed and out-of-contract rates
These are the rates you can end up on when no new contract is in place. They are worth knowing about mainly so you can avoid them.
- Rollover or evergreen contracts: some contracts renew automatically at the end of a fixed term if you have not made a new arrangement or switched. Ofgem says the new arrangement is usually a fixed term of 12 months and may be on a higher rate.
- Out-of-contract rates: some suppliers move you onto these if your fixed term ends without you agreeing a new deal. Ofgem says they are usually more expensive than fixed-term contracts.
- Deemed rates: you are put on a deemed contract automatically when you move into premises without arranging a formal contract, for example when moving business premises, or if your supplier goes out of business. Ofgem adds that you are responsible for energy used before a new contract starts, and using it can put you on a deemed rate. Ofgem says deemed rates are usually higher than negotiated contract rates.
Ofgem's switching guidance groups rolling or evergreen contracts, out-of-contract rates and deemed contracts with variable-rate contracts, which you can switch away from at any time. If your contract has renewed for a new fixed term, check its notice terms first. Your existing supplier may object to a switch, for example if you owe it money. If you are on one of these rates now and want to compare business energy offers, our sister site covers getting out of them and switching.
How business size changes your options and protections
Ofgem groups businesses into three sizes. Suppliers may use your business size or your annual consumption to decide which contracts and protections apply.
| Size | Ofgem's description | Or annual consumption up to |
|---|---|---|
| Microbusiness | Fewer than 10 employees and an annual turnover or balance sheet total of no more than 2 million pounds | 100,000 kWh electricity or 293,000 kWh gas |
| Small business | 11 to 50 employees and an annual turnover of up to 6.5 million pounds or a balance sheet total of no more than 5 million pounds | 200,000 kWh electricity or 500,000 kWh gas |
| Large business | 50 or more employees and a turnover of more than 6.5 million pounds or a balance sheet total of more than 5 million pounds | Above 200,000 kWh electricity or 500,000 kWh gas |
Microbusinesses get extra protections. Their supplier must provide clear information about the contract, limit termination notice periods to 30 days and acknowledge requests to end a contract within 5 working days (both for evergreen contracts only), and give renewal price information before the contract ends. Ofgem says micro and small businesses can get support from Citizens Advice and take unresolved supplier complaints to the Energy Ombudsman. Ofgem also extended its Standards of Conduct to businesses of all sizes from 1 July 2024, and broker fees must be shown in the principal terms of all non-domestic contracts signed from 1 October 2024.
Ofgem describes flexible contracts as suited to large businesses that use a lot of energy, so smaller businesses tend to be offered fixed or variable tariffs, while flexible and pass-through structures are more common for large users with half-hourly meters.
What to check before you agree a tariff
Ofgem lists what you should know before agreeing any business energy contract. Use it as a checklist when you read a quote:
- What type of contract it is: fixed, variable, flexible, and whether any elements are passed through
- How long the term is and when the switching window opens before the end date
- Any fees, including exit fees and charges agreed in special clauses
- What protections you have, which depend on your business size
- Whether broker fees or commissions are included in the price, and how much they are
- What happens at the end: whether it renews automatically, or moves to out-of-contract or deemed rates
Ofgem's guidance for microbusinesses is clear that a verbal agreement is binding, so do not agree to a contract over the phone until you are sure, and remember there is no cooling-off period. To get an accurate quote you will need a recent bill, your MPAN for electricity or MPRN for gas, and your annual consumption.
How we can help
Forever Communications acts as an agent introducing businesses to Fidelity Energy, an independent energy consultancy and broker that is not an energy supplier. We help you gather your bills, supply numbers and meter details, and we can explain the tariff types in plain English before you look at any prices. Fidelity Energy then gets quotes from its network of suppliers, explains the options, arranges the contract you choose and supports you through to renewal. Your supply contract is with the energy supplier, and you decide whether to go ahead.
Fidelity Energy is normally paid by commission from the supplier, added to the unit rate and/or standing charge, with the estimated amount set out in your contract documents (its terms also let you opt at the start to be invoiced directly instead). We are paid by Fidelity Energy from that commission. If a complaint about Fidelity Energy is not resolved within 8 weeks, its complaints process lets you take it to Ombudsman Services: Energy free of charge. Read how we work with Fidelity Energy for the detail.
Pricing depends on your consumption, meters and timing, so ask us for a quote. Want to know which tariff types are open to your business? Contact us.
Explore Tariffs
How Forever Communications helps with business gas and electricity
Forever Communications is part of Forever Group, which looks after phone systems, business mobiles and connectivity for UK organisations. For business electricity and gas, we work as an agent of Fidelity Energy, an independent business energy broker that prices your requirements with the suppliers on its panel. We are not an energy supplier, and neither is Fidelity Energy.
- Make sense of your bills: we can help you read unit rates, standing charges, meter details and the other costs on your invoices
- Like-for-like quotes: we help you gather your meter numbers, consumption and contract end dates so suppliers quote on the same basis
- The right tariff type: we can talk you through fixed, flexible and pass-through contracts, green electricity and green gas options before you decide
- Better timing: we help you plan a renewal ahead of your contract end date, or move off deemed and out-of-contract rates when you move premises
- Your choice: you decide which quote, if any, to accept; prices and terms are set by the suppliers and confirmed at quote, including the broker commission
We work with offices, shops, hospitality, landlords, manufacturers and multi-site organisations. Send us a recent bill and we can take it from there.
Frequently asked questions
What are the different types of business energy tariffs?
Ofgem describes fixed-rate, variable-rate, flexible (structured), rollover or evergreen, deemed and out-of-contract arrangements for businesses. Quotes may also be fully fixed or include pass-through costs, and electricity can be on a multi-rate tariff such as Economy 7. Suppliers may not offer every type.
What is the difference between a fixed and a variable business energy tariff?
A fixed-rate tariff fixes the unit rates and standing charges for the length of the contract, so the price per kWh does not move with wholesale prices. A variable-rate tariff can go up or down during the contract. Variable tariffs are usually easier to leave; fixed tariffs give more budget certainty.
Is there a price cap on business energy?
No. The energy price cap protects households on standard variable tariffs. Business prices are agreed in contracts with the supplier, which is why the tariff type, the term and the end-of-contract terms matter so much.
What happens when a business energy contract ends?
It depends on the contract. Some renew automatically for a further fixed term, usually 12 months and possibly at a higher rate; others move you onto out-of-contract rates, which Ofgem says are usually more expensive. Fixed contracts have a switching window before the end date when you can renew or arrange a new contract.
Which business energy tariff is best for a small business?
There is no single answer. A fixed-rate tariff gives budget certainty, while a variable tariff gives more freedom to leave. Flexible and pass-through contracts are aimed mainly at large users. The right choice depends on your consumption, meter type, contract dates and appetite for price risk.
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