The Hidden Traps in Business Energy Contracts
Energy contracts aren’t written for clarity. They’re written to protect suppliers and to catch you out when you’re busy. Here’s what to watch for before small print becomes big cost.
If you’re managing energy contracts for your organisation, you already know how much is at stake. One missed renewal, one overlooked clause, and your business could be locked into inflated rates worth hundreds of thousands of pounds in unnecessary cost. Energy suppliers rely on the fact that most facilities managers, business owners, and office administrators are stretched too thin to read every line. This article lifts the lid on the most common traps hidden in contracts and how to avoid them.
Trap #1: Rollover clauses
Perhaps the single biggest cost leak in the industry. If you miss the short renewal window (sometimes just 30 days), your supplier can automatically roll you into a new contract. These “rollover” terms are rarely competitive often 20-60% above the live market rate.
For a £2M annual energy spend, even a modest 20% uplift means £400,000 lost in margin – money that could have gone into operations, staff, or growth.
Trap #2: Automatic renewals disguised as convenience
Suppliers often pitch automatic renewals as “set and forget” convenience. In reality, they’re designed to exploit busy administrators who can’t track multiple contract end dates across different sites. Once renewed, you’re stuck until the next cycle, with little flexibility to exit.
Trap #3: Pass-through cost surprises
Many contracts hide “pass-through” charges in the fine print: network costs, levies, and capacity charges that can swing dramatically year to year. On paper, your unit rate looks attractive. In reality, these extras add 10–30% to your bill. Unless you’ve benchmarked line by line, you won’t see the full picture.
Trap #4: Take-or-pay clauses
Some contracts include “take-or-pay” terms. These commit you to pay for a set amount of energy whether you use it or not. If your business reduces consumption, for example, by adopting efficiency measures or downsizing sites, you still pay for the higher volume. The supplier pockets the difference.
Trap #5: Early exit penalties
Suppliers protect themselves with heavy exit fees. Change circumstances mid-contract? Consolidate sites? Switch suppliers early? Expect fines so steep they erase the benefit of moving. That’s why timing is everything: you need to align contract terms across sites and plan renewals with precision.
Trap #6: “Fixed” doesn’t always mean fixed
Many businesses believe a fixed contract guarantees certainty. But buried in the terms are “change events” that allow suppliers to raise rates: shifts in regulation, changes to pass-through charges, even vague “market conditions.” Unless you’ve read carefully, or make get a detailed tarrif analysis, you’re never fully protected.
The supplier’s advantage: complexity + pressure
Energy suppliers know you’re under pressure. They know you’re managing multiple sites, juggling budgets, and working to tight deadlines. Contracts are deliberately long and confusing because the less clarity you have, the more profitable you are to them. The industry counts on inaction and assumption.
How to protect your organisation
- Track your dates: know exactly when contracts expire, and set reminders months in advance.
- Analyse every renewal: never accept a rollover rate without comparison to live market data.
- Unpack pass-throughs: ensure you understand how DUoS, TNUoS, and levies are applied.
- Align contracts across sites: avoid a scatter of mismatched terms that make negotiation harder.
- Ask the awkward questions: what triggers price changes? What exit options exist? What happens if your usage changes?
Future-proofing: why contracts will change under MHHS
The Market-wide Half-Hourly Settlement (MHHS) programme is reshaping how energy is measured and billed. Once implemented, your consumption data will be settled every 30 minutes. That means contracts will shift: suppliers will push for new structures, and the risk of hidden clauses will grow. The businesses that win will be those who understand these changes before suppliers weaponise them.
Next steps
The next logical step? Learn how to take back control of your energy bills.
Read our guide on How to Read Your Business Energy Bill Like a Pro
Get the full breakdown of Your Business’s Energy Tariffs
Related reading: Understanding Business Energy Tariffs