The short version
General information, not advice
- Out-of-contract rates are significantly higher energy prices applied when a business contract expires without renewal, making it crucial to secure a new deal promptly to avoid substantial, unnecessary costs.
See it step by step
Walk past the end of a contract
Step 1 of 6
A contract with an end date
A fixed-term business energy contract holds your price until a set end date. Drawn month by month, that is a flat line.
The line stops at the end date. What happens next depends on whether you have agreed a new deal or switched supplier before that day.
The bill of £500 a month is an example, not a quote.
Figures from the Switch4Good guide, Out-of-Contract Rates Explained, checked 4 October 2026. Example figures are illustrative: the £500 monthly bill and the new-contract price are invented round numbers, not a quote. The 20–50% range and the 28–30 days' notice are the guide's own statements, not independently checked. Not to scale.
When a business energy contract runs out and nothing new is in place, the supplier rolls you onto out-of-contract rates, which are expensive by design. This guide covers what those rates are, how businesses end up on them, and how to keep clear of them.
What out-of-contract rates are
Out-of-contract rates, sometimes called rollover or default rates, are the much higher prices you pay for gas or electricity once a fixed-term contract ends and you have neither signed a new deal nor switched supplier. The existing supplier moves you onto them automatically so that supply continues, but they are rarely competitive.
How businesses end up on them
Usually it comes down to timing. A business misses the window to renew or switch before its current deal ends, or simply does not realise the contract is expiring or what it means to let it lapse. In a busy period, a renewal that should have been handled months earlier slips through.
What it costs
The point of these rates is to sting. They often run 20-50% higher than a new negotiated fixed-term contract, and sometimes more, which turns into a large and entirely avoidable cost for the business.
How to stay clear
The defence is to plan around the end date. Keep track of when your contract finishes and set a reminder well ahead, say six months out. Start comparing business energy deals and negotiating a new contract several months before the current one expires, and don't simply accept the renewal your supplier offers; check what others will do through a comparison service. If you have already fallen onto out-of-contract rates, you are usually free to switch without penalty on around 28-30 days' notice, so move quickly to cut your losses.
Your business energy contract checklist
Things to look at on the contract and the renewal notices you already have.
- Find the date your fixed-term contract ends, on the contract or the latest renewal notice.
- Check whether the contract renews automatically, and what notice you have to give to stop that.
- Check whether your supplier has sent renewal information, and the date it was sent.
- Check the rate that applies once the contract ends, and where the contract says so.
- Check whether an early termination charge applies if you leave before the end date.
- Check the meter point numbers (MPAN for electricity, MPRN for gas) and the usage on the contract are for your premises.
- Compare the supplier's renewal offer with quotes from other suppliers for the same meters and usage.
- Check the notice you need to give to switch away, and the date you would have to start by.
- Check whether any outstanding debt on the account could hold up a switch.
- Check the end date is in your diary well before it, with the date to start comparing.
Key takeaways
- Out-of-contract rates are significantly higher energy prices applied when a business contract expires.
- They are a default rate charged by your existing supplier if you don't renew or switch.
- These rates are designed to be punitive, encouraging businesses to sign new contracts.
- Businesses on out-of-contract rates can switch suppliers without penalty.
- Always plan ahead for your contract end date to avoid these expensive rates.
Common questions
What is an out-of-contract rate?
An out-of-contract rate applies when a business's fixed-term energy contract ends and no renewal agreement is in place. The supplier continues to supply energy but at a significantly higher default rate.
Why are out-of-contract rates more expensive?
These rates are higher because the supplier has not secured a forward contract for the customer's usage. The pricing reflects increased wholesale and risk exposure.
How can I avoid being placed on out-of-contract rates?
Businesses should review renewal notices and agree a new contract before the current term ends. Monitoring contract end dates is essential to avoid automatic rollover onto higher rates.
Can I switch supplier while on out-of-contract rates?
Yes. Businesses can usually switch supplier at any time once out of contract, provided there are no outstanding debts preventing the transfer.
Do suppliers have to notify businesses before contracts end?
Suppliers are generally required to provide renewal information before a contract expires. However, it remains the customer's responsibility to take action before the end date.
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