The main types of business energy contract are fixed-rate, variable-rate, deemed, out-of-contract, rollover or evergreen, and flexible contracts. The type of agreement determines how prices can change and when the business is able to switch.
A fixed-rate contract keeps the agreed unit rates and standing charges fixed for a defined period. Variable contracts allow prices to rise or fall. A deemed contract can arise automatically when a business moves into premises and starts using energy without first agreeing a contract. Out-of-contract rates may apply when an existing fixed agreement ends without a replacement being arranged. Both deemed and out-of-contract rates are generally more expensive than a negotiated contract.
Rollover or evergreen arrangements continue or renew the supply under specified terms, while flexible or structured purchasing contracts allow larger energy users to buy energy in stages rather than fixing the whole requirement at one point.
The most appropriate contract therefore depends on the organisation’s consumption, purchasing strategy, budget requirements and tolerance for changing energy prices.
