Commercial Energy Contracts UK: Guide for Landlords
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If you own or manage commercial property in the UK, the energy contract sitting behind your building is rarely a simple bill. It shapes your running costs, affects your sustainability reporting, and carries obligations that can catch owners out when they come to sell, refinance, or change supplier.
The market has moved quickly in recent years, and the difference between a well-chosen tariff and a poorly timed one can run into thousands of pounds a year on a single site. This guide walks through the main contract types, the duties that fall on property owners rather than suppliers, and the practical points worth thinking about before you sign.
It is written for owners and managers who want to understand what they are agreeing to, not for energy brokers. Specific figures such as fees and caps change regularly, so always check current sources before relying on a number.
What this document is
A commercial energy contract is the supply agreement between a business customer and a licensed gas or electricity supplier. Unlike domestic supply, commercial contracts are not covered by the same consumer protections, and the terms are generally treated as business-to-business.
That means the contract you sign is broadly the contract you are held to, with far less room to argue that clauses were unfair after the fact. The contract typically sets out the unit price, standing charge, contract length, renewal mechanism, metering arrangements, and what happens if you want to leave early.
It will also reference your obligations as the site occupier or owner, including providing meter access and paying within agreed terms. For landlords, there is an added layer: if the property is vacant or let with energy included, you may hold the contract personally and be directly liable for the charges. Getting the commercial basics right before signing is usually far easier than unpicking a bad contract later.
How to use this document
- Work out who the contracting party should be. Decide whether the contract sits with the property owner, a management company, or the tenant. For let buildings, check the lease: some leases require the tenant to take supply directly, others make the landlord responsible for common parts or the whole building. Getting this wrong creates billing and liability headaches later.
- Gather your usage data before approaching suppliers. Pull together at least twelve months of consumption figures, half-hourly data where available, and your current unit rates and standing charges. Suppliers quote more accurately when they can see real usage, and you will spot unusual patterns, such as out-of-hours consumption, that might point to inefficiency or metering errors worth resolving first.
- Compare fixed and variable structures against your risk appetite. A fixed contract gives you price certainty for the term, which helps with budgeting but locks you in if wholesale prices fall. A variable or flexible contract tracks the market, which can reward active management but exposes you to spikes. Think about how much volatility your business can absorb before choosing.
- Read the termination and renewal clauses carefully. Pay close attention to the notice window for ending the contract, any rollover provisions, and how exit fees are calculated. Some contracts renew automatically on less favourable terms if notice is missed. Diarise the key dates as soon as you sign, because missing the notice window is one of the most common and expensive mistakes commercial customers make.
- Keep records and meet your ongoing obligations. Once signed, make sure meters are accessible, readings are submitted on time, and any changes of occupancy or use at the property are notified to the supplier. Keep the signed contract, welcome pack, and correspondence together so that if a dispute arises or you sell the property, the paperwork is ready to hand over or rely on.
Common questions
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Common questions
Q Are commercial energy contracts covered by the same rules as domestic ones?
No. Business energy contracts are regulated by Ofgem but sit outside most of the consumer protection rules that apply to households. Cooling-off rights, price caps, and certain standards of conduct are different or do not apply in the same way. Micro-businesses get some additional protections, but mid-sized and larger commercial customers are generally expected to negotiate on commercial terms and read the contract carefully before signing.
Q What is a deemed contract and why does it matter to property owners?
A deemed contract is the supply arrangement that kicks in automatically when someone takes over a property without agreeing a new contract with the existing supplier. The rates are usually higher than negotiated tariffs. If you buy or take possession of a commercial property, contact the supplier quickly to either agree a proper contract or switch, otherwise you could be paying deemed rates for months.
Q Can I leave my commercial energy contract early?
Sometimes, but it usually costs money. Most fixed-term commercial contracts include exit fees or require you to buy out the remaining term. The amount varies by supplier and by how much of the term is left. If you are selling the property or closing the site, check the contract wording on change of tenancy or cessation of supply, as some suppliers allow assignment or termination in those specific circumstances.
Q Do I have to offer a green energy tariff?
There is no general legal duty on commercial property owners to choose a renewable tariff. However, green contracts can support ESG reporting, EPC improvements, and tenant expectations, particularly for office and retail space. Check what a supplier means by green: some tariffs are backed by renewable generation certificates, while others source directly from named generators. The backing evidence affects how credibly you can claim the energy as renewable.
Q Who is liable for the energy bill in a let commercial property?
It depends on the lease and on whose name the supply contract is in. If the tenant holds the contract directly, they are liable to the supplier. If the landlord holds the contract and recharges the tenant, the landlord is the supplier's customer regardless of what the lease says. Always align the lease wording and the actual supply arrangements so there is no gap in responsibility.
Q What happens if I miss the renewal notice window?
Many commercial contracts roll over onto new terms if you do not give notice within a set window, often one to three months before the end date. The rollover rates are frequently higher than you could negotiate on the open market. If this happens, contact the supplier straight away to see what options exist, and put a calendar reminder in place well before the next renewal date to avoid repeating the problem.
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £149.
Sources
This guide is based on primary UK law and official guidance.
- Guidance · UK GovOfgem: information for business energy customersofgem.gov.uk
- Guidance · UK Govgov.uk: energy and sustainability for businessesgov.uk
Legal helpline
Unsure what your energy contract really commits you to?
Commercial energy terms, exit fees, and renewal windows can bind your property for years and cost far more than the headline unit rate suggests. An experienced legal adviser can help you think through the key clauses and your position as owner or landlord based on what you describe on the call.
- Plain-English answers to your specific questions about the contract
- Practical perspective on exit fees and renewal terms based on what you describe
- What to watch out for as a commercial property owner in your circumstances
- Clarity on how the supply arrangement sits alongside your lease or occupancy
Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.