What should a business compare in an energy contract?
When comparing business energy contracts, look beyond the advertised supply rate. Compare the total cost structure, which charges are fixed or may change, contract length, usage requirements, early termination terms, renewal provisions and billing arrangements. Make sure each quote covers the same costs and contract period so you can compare your options on equal terms.
The Price
How is the business energy price structured?
Most of what separates one offer from another sits in how the price is built. These four terms tell you what you are paying for, and which parts of it can move during the contract.
What is the electricity or natural gas supply rate?
The supply rate is the price you pay your supplier for the energy itself. Contracts may call it the generation price, supply price or energy charge. It is usually quoted per kilowatt-hour for electricity, or per therm for natural gas.
Are utility delivery charges included?
You pay delivery charges for getting energy to your site over your local utility's wires or pipes. They are set by the utility and its regulators, so they generally apply whichever supplier you choose.
Depending on your state, transmission costs may sit with delivery or be built into the supply price. Contracts often define distribution, transmission and generation charges separately.
Which parts of the energy price are fixed or variable?
A fixed component stays at the agreed rate for the whole term. A variable component can change, often month to month, in line with market prices or an index. Some plans are fully fixed, some fully variable, and some combine the two, such as a fixed energy price with capacity costs that adjust.
Which energy charges can be passed through?
Pass-through charges are cost components billed to you at actual cost, rather than built into your supply rate. Some plans bundle almost everything into one rate. Others pass certain items through separately, which can mean a lower advertised rate but a bill that varies more as those costs change.
Pays for the grid having enough generation available at the busiest times. Your share is often based on your usage during the grid's highest-demand hours.
The cost of moving power over high-voltage lines from generators to your local utility. Depending on your market, it may be billed by the utility, bundled into supply, or passed through.
Services the grid operator buys to keep supply and demand in balance and the system reliable, such as operating reserves and frequency regulation.
The cost of meeting state renewable energy standards, often met through Renewable Energy Certificates (RECs). If your plan includes renewables, the contract should say how they are documented.
Many contracts let costs created by new laws or regulations, or changes to existing ones, be passed on to you, up or down. Read how the clause is worded and what notice you get.
Your Usage
How can changes in business energy use affect the contract?
A fixed price is usually built around how much energy you are expected to use. If your business energy usage changes, the contract dictates what, if anything, happens to the price.
Does the contract include a usage band or swing provision?
A usage band, sometimes called a swing provision or bandwidth, sets how far your actual usage can move above or below the expected amount before different terms apply.
Some contracts set minimum or maximum usage requirements instead, especially for larger accounts or certain pricing structures.
The Term
What happens during and after the contract term?
Read these three terms in the order you will live through them: when the contract starts, what happens if you leave early and what happens when it ends.
When does the business energy contract start and end?
The term length is how long the agreement lasts, usually stated in months. It also sets when you will need to revisit pricing and renewal.
The start date is often tied to a meter read, so service may begin on your current or next read date rather than the day you sign.
What happens if the business ends the energy contract early?
These provisions explain what happens if you end the contract before the term is over, for example if you close or move a location, and whether a fee applies.
A fee might be a set amount or worked out from the usage left on the contract and current market prices. Terms can differ by timing and contract type.
What happens when the business energy contract expires?
Renewal terms describe what happens when the term ends and you take no action. Some contracts roll over into a new term, some move you to a month-to-month or variable rate, and some return you to utility service.
There is often a notice window for cancelling or renegotiating before the end date. Rules vary by provider and state.
Billing and the Quote
How will the business be billed, and what does the quote include?
The last two checks are practical ones: how the charges will reach you, and whether the quotes in front of you cover the same ground.
Will energy supply and utility delivery appear on one bill or two?
Billing terms explain how charges are presented and how you pay. Depending on your market and supplier, you may receive one of two setups: consolidated utility billing or separate supplier billing.
Also confirm:
- Billing frequency and payment due dates
- Late-payment charges and accepted payment methods
- Any deposit or credit requirements
- Whether several sites can be combined on one invoice
Questions to Ask a Business Energy Supplier
This short video walks through how to evaluate an energy offer for your business, with questions worth asking each supplier before you compare prices.
Business Energy Contract Checklist: 10 Questions Before You Sign
Run every offer through the same ten questions. If a quote cannot answer one of them, ask the supplier before you compare prices.
1. Supply rate: is it all-in, and is it per kWh or per therm?
2. Delivery charges: included in the quote, or billed by the utility?
3. Fixed and variable: which parts can change, and why?
4. Pass-through charges: which items are billed at cost?
5. Usage band: what usage is the price built on, and what happens outside it?
6. Contract term: the exact start and end dates.
7. Early termination: whether a fee applies and how it is calculated.
8. Renewal: what happens if you do nothing, and the notice deadline.
9. Billing: who bills you, how often, and on what payment terms.
10. Quote scope: what each quote includes and what it leaves out.
Frequently Asked Questions
No single term provides the full answer. Start with the supply rate, then confirm which costs are included, which can change and what happens if usage, location needs or renewal timing changes.
No. A fixed supply rate keeps the agreed price per unit stable, but the total bill can still change with energy use, utility delivery charges and any variable or pass-through components.
Often they are not. Delivery charges are set by the local utility and may appear separately on the utility bill. Confirm whether each quote covers supply only or includes other components.
A lower headline rate may exclude pass-through charges, delivery charges, taxes, regulatory fees or costs tied to usage outside an agreed band. Compare what each quote includes before comparing the rate.
Check what happens if no action is taken, which rate or term applies next and the deadline for cancelling or renegotiating.
The result depends on the contract. Usage bands, minimums, maximums or swing provisions may change the applicable rate or trigger a charge when usage falls outside the agreed range.
Ready to compare business energy options?
Gather a recent utility bill, the service address, expected usage changes and the current contract end date. Use the checklist above to ask each supplier the same questions and compare offers on equal terms.
Disclaimer: This material is for general informational and educational purposes only and does not constitute legal, tax or financial advice, an offer to supply energy, or a recommendation of any particular product or contract. Contract terms, product availability, pricing, charges, billing arrangements and customer protections vary by state, utility, supplier, customer classification and product, and may change. This material does not amend or replace any agreement or required disclosure; your executed agreement, applicable utility tariffs and applicable law govern your service. Before signing or renewing, review the complete agreement and disclosures, confirm all applicable charges and obligations with your supplier, and consult your legal, tax or financial advisers as appropriate.