What do business energy contract terms mean?

Business energy terms describe how your unit price is set, which extra charges apply, how long the agreement lasts and what you must do to leave or switch.

Prices and charges

kWh: A kilowatt-hour is a unit of energy: one kilowatt used for one hour. Your bill and quote use kWh to measure consumption, and the unit rate multiplies that usage to calculate part of the cost.
Unit rate: The price charged for each kilowatt-hour (kWh) you use. Check whether the quoted rate is in pence or pounds, whether it includes VAT and Climate Change Levy (CCL), and whether different rates apply at different times. A low unit rate does not by itself make a contract cheap.
Standing charge: A fixed daily supply charge, usually payable even when the premises uses little or no energy. Multiply it by the days in your billing period and compare it alongside the unit rate; a higher standing charge can outweigh a lower p/kWh rate.
Capacity charge: A charge connected with the electrical capacity reserved for a site, typically shown as a daily or monthly amount linked to its agreed capacity in kVA. Reducing capacity can need technical work and must be agreed with the network or supplier; do not assume a contract's capacity line can simply be removed.
TPI, broker and broker uplift: A third-party intermediary (TPI) is a broker or other business that helps arrange a supply contract. A broker may be paid by you directly, by the supplier, or through an uplift included in the unit rate. Ask for the amount, method and recipient of all commission in writing, and whether it continues over the contract term.

Compare the total expected cost at your actual usage, including standing, capacity and other charges, on the same VAT basis. A headline rate is not a complete quote.

How a contract's price works

Fixed contract or fixed price: A fixed-term supply contract runs for an agreed period. "Fixed" needs careful reading: the unit rate may be fixed while standing charges, taxes or specified pass-through costs can still change. Check the signed terms for what is fixed, when prices can change and the end date.
Evergreen contract: An ongoing contract with no fixed end date. Ofgem's current guidance says the 30-day maximum termination-notice protection applies to eligible microbusiness evergreen contracts only. It is different from leaving at the end of a fixed term, or paying to exit a fixed term early.
Flexible or pass-through pricing: A flexible contract may link some or all of the energy cost to wholesale markets. A pass-through contract separately passes through specified costs, such as network or policy charges, which may change. Suppliers use these labels differently; ask for every variable, how it is calculated and who controls it. Compare the whole charging formula, not just the headline unit rate.
Fully fixed: A supplier may describe a deal as fully fixed when more elements are included in a single fixed price, but the label alone is not a guarantee. Read the exclusions and change-of-law, tax, metering, capacity and network-charge clauses to find out what could still alter your bill.
Deemed rate: A deemed contract commonly applies when a business takes a supply without agreeing a new contract with the supplier, for example after moving into premises or when a previous occupier leaves. It is not a negotiated tariff. Ask the supplier for its deemed rates and terms and arrange a suitable agreement if needed.
Out-of-contract rate: A supplier's rate that applies after a fixed contract expires if no replacement deal takes effect. It can differ from the expired contract and may be more expensive. It is not necessarily the same contract or rate as a deemed tariff: check the supplier's terms and the dates that trigger each.
Rollover or auto-renewal: A contract term that moves your supply onto a further agreement when the current fixed term ends. A rollover may be for another fixed term; an evergreen contract instead has no fixed end date. For an eligible microbusiness, current Ofgem rules generally do not require notice simply to end or switch at the end of the initial fixed term. Check the written renewal information and contract so you know what takes effect next.

Ending a contract, metering and taxes

Termination and notice window: Termination means ending the contract. The notice rules depend on the type of contract: for an eligible microbusiness, Ofgem caps termination notice at 30 days for an evergreen contract; the cap does not apply to fixed-term contracts. Current rules generally let an eligible microbusiness end or switch at the end of the initial fixed term without giving termination notice. Check the end date and renewal terms; see your business energy rights.
Early exit: Leaving a fixed-term contract before its agreed end is not the same as ending it at its scheduled end or giving notice on an evergreen contract. Do not assume the evergreen 30-day notice cap or fixed-term end protections let you exit early for free. Check any applicable cancellation right and the signed early-termination terms, and ask for a written calculation of any fee before agreeing to switch.
MPAN: The Meter Point Administration Number identifies an electricity supply point. It appears on electricity bills and helps the supplier match a quote or switch to the right meter. It identifies the connection, not your business or a person.
MPRN: The Meter Point Reference Number identifies a gas supply point. Your gas bill or supplier can provide it. Share the correct number when requesting a quote so it applies to the right premises.
AMR: Automatic Meter Reading is equipment or a service that sends meter data to a supplier, often daily or monthly. It does not always mean readings are in half-hourly settlement intervals; confirm the meter type and data arrangements in the contract.
Half-hourly metering: A half-hourly (HH) meter records electricity consumption in 30-minute intervals. Time-specific consumption can affect which tariff and network charges apply. Check whether your quote includes the correct meter, data service, industry charges and contract requirements.
Climate Change Levy (CCL): A UK business energy tax on specified supplies of electricity, gas and other taxable commodities, subject to exemptions and reliefs. It may appear separately or be reflected in a quoted rate. Check the bill and contract to see whether CCL is included. HMRC rules and rates can change.
VAT and the 5% de minimis rule: Business energy is commonly standard-rated for VAT, but qualifying supplies may be reduced-rated. Under HMRC's de minimis rule, supplies at or below specific small-quantity limits are treated as domestic use for VAT, even at business premises; this is a quantity test, not a 5% discount or 5% of your bill. HMRC publishes the fuel-specific limits. VAT rules can vary by use and jurisdiction and are subject to temporary changes, so check the invoice and current HMRC guidance.
Energy Ombudsman: An independent dispute-resolution service for eligible complaints about energy suppliers. It can consider an unresolved complaint once the supplier has had the required opportunity to respond. Its acceptance criteria apply: check them before applying. It is separate from the broker complaint schemes used for eligible TPI disputes.
Ofgem microbusiness: Ofgem's energy rules define a microbusiness by employee/financial-size tests or by annual energy use. The current published definition includes a business with fewer than 10 employees or full-time equivalents and annual turnover or balance-sheet total of no more than £2 million, or a business using no more than 100,000 kWh of electricity or 293,000 kWh of gas a year. Some protections depend on the exact rule and your circumstances; check eligibility instead of assuming every small company qualifies.

Put the terms in context

Use your latest bill to note annual kWh, meter identifiers, unit rate, standing charge, taxes, capacity and contract dates. Ask the supplier or broker to explain any variable charge in writing. Use the free cost estimator as a starting point, then compare current offers using the same consumption and contract assumptions.

Frequently asked questions

Is a fixed business energy contract completely fixed?

Not always. The unit rate may be fixed while particular taxes, network charges, capacity costs or other items can change if the contract allows it. Read the contract for the exact included and excluded costs.

What is the difference between a deemed rate and an out-of-contract rate?

A deemed contract commonly applies when a business takes supply without agreeing a contract. An out-of-contract rate commonly applies after an agreed fixed term expires. Suppliers and agreements may use the terms differently, so check the applicable terms and dates.

Does the 5% de minimis mean a five per cent discount?

No. The phrase describes HMRC small-quantity thresholds under which a supply is treated as domestic use for VAT. It does not mean five per cent off a bill, and current VAT rates can be subject to temporary changes.

How do I find my MPAN or MPRN?

Look on your electricity bill for the MPAN and gas bill for the MPRN. If the identifier is not shown, ask the current supplier to confirm the supply-point number.

Do microbusinesses have to give 30 days’ notice to leave?

Not in every case. The current 30-day maximum applies to microbusiness evergreen contracts only. Current Ofgem rules generally do not require termination notice simply to end a microbusiness fixed-term contract at its initial end date; early exit is different.

Are all energy brokers paid by commission?

No single payment model applies to every broker. Payment may be a direct fee, supplier commission, or an uplift built into the price. Ask for the arrangement and total amount in writing before you agree.