Is there a cooling-off period for business energy contracts?

No. Unlike domestic energy contracts which have a 14-day cooling-off period, business energy contracts have zero cooling-off period. Once you sign - or a broker with a Level 2 LOA signs on your behalf - you are legally bound for the full contract term. Even a recorded verbal agreement over the phone is legally binding.

How much are business energy exit fees?

Business energy exit fees can be astronomical. Most suppliers use 'Mark to Market' calculations: (Your Contract Price - Current Wholesale Price) x Remaining Usage. If wholesale prices have dropped since you signed, this fee increases. A business paying £2,000/month with 18 months remaining could face fees up to £36,000 - potentially 100% of the remaining contract value.

Can I cancel if I'm moving business premises?

Yes. Change of Tenancy (CoT) is the standard process for ending your energy contract when you move premises. When you vacate your business premises, the supplier transfers responsibility to the new occupant. Submit a Change of Tenancy form 30 days before moving with proof such as a solicitor's letter or lease surrender. Most suppliers will not charge early termination fees for legitimate moves.

What is a Level 2 Letter of Authority?

A Level 2 LOA gives a broker power to sign energy contracts on your behalf without showing you the final terms first. This is dangerous because you could be locked into unfavourable terms without knowing. Always ensure you're only signing a Level 1 LOA (data access only) unless you fully trust the broker and have seen the terms.

Are microbusinesses protected from exit fees?

Microbusinesses (fewer than 10 employees) have some protections. Suppliers can no longer require termination notice at the end of fixed terms - meaning you won't be charged fees for 'forgetting to email them'. However, mid-contract exit fees still apply. Small businesses (under 50 employees) now also receive clearer renewal notices.

Why do brokers say I must sign 'today'?

This is usually a pressure tactic. For most small businesses using standard 03/04 meters, suppliers use 'Price Books' that update monthly or quarterly, not daily. While larger half-hourly metered clients may get daily pricing, small businesses typically have weeks to decide. If a broker says you must sign 'right now', they're likely trying to lock you in before you compare elsewhere.

Can I Cancel My Business Energy Contract?

TL;DR: Key Takeaways

The Shock: Business energy contracts have NO cooling-off period. Once signed, you’re locked in - even verbal agreements over the phone are legally binding.

The Cost: Exit fees use “Mark to Market” calculations. A business paying £2,000/month with 18 months left could face fees up to £36,000.

The Exit Route: Moving premises triggers the standard Change of Tenancy process. Most suppliers won’t charge exit fees for legitimate moves.

The Trap: Level 2 LOAs let brokers sign contracts without showing you the terms. Only sign Level 1 LOAs.

The Defence: Before signing anything, check for Mark to Market clauses in the termination section. Meet George scans contracts for these hidden traps.

The “Cooling-Off” Myth - Read This First

This is the most common shock for business owners.

At Home: You have a legal 14-day “cooling-off period” to cancel any energy contract for any reason.

At Work: You have zero days.

In the UK, B2B energy contracts are considered commercial agreements. The consumer protections you’re used to simply do not apply.

The Letter of Authority Danger

Many business owners confuse the Letter of Authority (LOA) with the contract itself. There are two types:

Level 1 LOA: Allows a broker to talk to suppliers and access your data, but NOT sign contracts for you.

Level 2 LOA: Gives the broker power to sign contracts on your behalf. If you sign this, the broker can switch you without showing you the final contract first. This is how digital renewal traps work - brokers use Level 2 authority to auto-renew you onto expensive contracts years after your original sign-up.

⚠️ Warning

Once a contract is signed - whether by you or by a broker with a Level 2 LOA - you are locked in for the full duration. Even a “Recorded Verbal Agreement” over the phone is legally binding. If you said “Yes” to the terms on a call, you cannot simply change your mind tomorrow.

Learn more about the dangers of Level 2 LOAs

Moving Premises? Understanding Change of Tenancy

When you move out of your business premises, the standard process for transferring responsibility is called Change of Tenancy (CoT).

Split illustration showing an office building with Sold and To Let signs alongside a breaking chain symbolising freedom from contract, with green checkmarks

What Change of Tenancy Actually Does

A Change of Tenancy is the standard contractual mechanism used when a business moves in or out of premises. When you move out (an “outgoing CoT”):

You notify the supplier of your move date
You provide final meter readings
You submit evidence of the move (lease surrender, solicitor’s letter)
Your account is closed and a final bill raised for the period you occupied the site

Most suppliers will not charge early termination fees when the contract ends because you have legitimately moved out. However, you must check your own contract terms, as conditions can vary between suppliers.

What Happens If You Don’t Complete CoT Properly?

If you don’t tell your supplier you’ve left, or don’t complete the CoT process correctly, they may:

Continue to hold you liable for the energy supply
Bill you on expensive “deemed” or out-of-contract rates
Only release you when they are formally notified by the new occupant

What To Do When Moving

Start the CoT process around 30 days before moving - suppliers need time to process the change
Provide proof of the change in occupancy (lease surrender, solicitor’s letter, or new lease agreement)
Submit final meter readings on your move-out date
Confirm the exact requirements with your supplier, as these can differ between providers
Do not let them auto-transfer your rates to your new building without checking the market first

External Resources:

How Much is an Exit Fee? The “Mark to Market” Trap

If you aren’t moving and you just want to leave because you found a cheaper price, the cost is usually astronomical.

We have analysed the Terms & Conditions of prominent UK suppliers. They don’t just charge a small admin fee - they charge for “Mark to Market Loss.”

What Does Mark to Market Mean?

The supplier calculates the profit they would have made from you, and charges you for it.

The Formula:

(Your Contract Price - Current Wholesale Price) x Your Total Remaining Usage

The Risk: If wholesale prices have dropped since you signed, the fee INCREASES.

Example Calculation

Factor	Value
Your Monthly Spend	£2,000
Time Remaining	18 months
Potential Exit Fee	Up to £36,000

That’s potentially 100% of the remaining contract value.

💡 Reality Check

In almost every case, it is cheaper to stay in the contract than to pay the exit fee.

Infographic showing the business energy exit fee formula: Your Contract Price minus Wholesale Price multiplied by Remaining Usage equals potential loss, with warning symbols and pound sign

The “Market Closing” Sales Tactic

If exit fees are so high, why do people sign bad contracts? Often, it’s because a salesperson told them:

“The market is closing! You must sign today to lock in this price!”

This is likely false. For most small businesses using standard 03/04 meters, suppliers use “Price Books.”

How Price Books Actually Work

These are massive spreadsheets of tariff rates for every region in the UK
Suppliers typically update these monthly or quarterly
They rarely change daily unless the market is in extreme volatility

While larger “00” (half-hourly metered) clients might get bespoke daily pricing via API or tenders, small businesses usually have weeks, not hours, to decide.

The Lesson: If a broker says you have to sign “right now,” they are likely trying to lock you in before you check a comparison site.

Illustration of a sceptical businessman on the phone receiving a sales call with speech bubble saying Sign Now Market Closing stamped with MYTH and surrounded by warning symbols and a Fact Check badge

When Are Exit Fees Banned? Micro & Small Business Rules

Ofgem has tightened the rules to protect smaller companies.

Microbusiness Protections (Fewer than 10 employees)

Suppliers can no longer require you to give “termination notice” at the end of your fixed term
If your contract ends and you switch, they cannot charge you a fee just because you “forgot to email them”

Small Business Protections (Updated December 2024)

New protections now extend to “Small Businesses” (fewer than 50 employees or turnover under £6.5m):

While suppliers can still charge exit fees for leaving mid-contract, they must now provide clearer renewal notices
If a supplier rolls you onto expensive deemed rates after your contract ends, you can typically leave that variable rate with 30 days’ notice and no exit fees

External Resource:

Gov.uk: Support for small business energy disputes (opens in new tab)

Can I Leave if “Terms Change”? Material Detriment

Rarely, a supplier might change their terms in a way that disadvantages you - for example, changing payment terms from 30 days to 7 days.

If this causes you “Material Detriment,” you may have a legal right to exit without penalty.

However: This is legally complex and suppliers will likely fight it. You would usually need to:

Raise a formal complaint with your supplier
Escalate to the Energy Ombudsman (opens in new tab) if unresolved

Summary: How to Avoid the Exit Fee Trap

The only way to win against exit fees is to avoid them before you sign.

Before Signing Any Contract

Never sign on the first call. The “urgent deadline” is usually a tactic
Check the “Termination Clause.” Does it allow you to leave if your business closes? What’s the Mark to Market formula?
Only sign Level 1 LOAs. Never give a broker power to sign contracts without your approval
Use Meet George. Before you sign anything, upload the contract PDF to our platform. We scan the fine print for Mark to Market clauses and hidden exit fees so you know exactly what you’re signing

If You’re Already Locked In

Check if you’re moving premises - this is your free exit route
Wait for your renewal window - typically 1-6 months before contract end
Calculate the exit fee - compare against staying in the contract

Ready to avoid the exit fee trap on your next contract? Learn how to switch business energy suppliers properly with full transparency and no nasty surprises.