The bakery's electricity bill was around £640 a month for two years. In March it was £1,190, with no change in what the ovens were doing. Nobody had moved supplier, nobody had signed anything, and nobody could immediately say why.
The fixed contract ended in February. The renewal letter went to the registered office, which is the accountant's address, and nobody opened it. From 1 March the supply rolled onto out-of-contract rates, which the supplier is entitled to charge and which are not related in any useful way to what you were paying before.
Deemed rates are what you pay for not deciding
There are three positions your supply can be in. Inside a fixed-term contract, on out-of-contract or rollover rates because a fixed term ended, or on deemed rates because you are taking supply with no contract at all, which is what happens when you move into a unit and start using electricity without arranging anything.
Deemed and out-of-contract rates are the expensive ones, often by a wide margin, and they are lawful. The supplier is carrying the risk of a customer who might leave tomorrow, and prices accordingly. Ofgem requires suppliers to publish their deemed rates and to tell customers how to get off them, and requires that microbusiness deemed rates are not unduly onerous, but the protection is thin compared with the domestic market.
Two practical consequences. When you take on a unit, contact the supplier on day one, tell them you are the new occupier, and negotiate a contract rather than drifting. And take a meter reading on the day you take possession and on the day you leave, photographed, because the alternative is arguing about somebody else's consumption.
There is a limit on how far back a supplier can bill you for energy it failed to charge for at the time. Back-billing protections apply to microbusinesses as well as households, so a bill arriving out of nowhere for three years of undercharging is worth challenging rather than paying.
The renewal window is shorter than you think
Business energy contracts have a renewal window, typically opening a few months before the end date and closing somewhere before it. Outside that window the supplier does not have to quote you a renewal price, and many will not.
For microbusinesses, Ofgem rules restrict automatic rollovers: a supplier cannot roll a microbusiness onto a new fixed term of more than twelve months, and must give the customer a route out. A microbusiness is defined by consumption and size, broadly fewer than ten employees with turnover or balance sheet total not exceeding €2m, or consumption below roughly 100,000 kWh of electricity or 293,000 kWh of gas a year. If you are over those thresholds, you are not a microbusiness and those protections do not apply to you at all.
Terminating requires a written notice in the form and window the contract specifies. Get it wrong and the supplier can object to the transfer, which stops your new contract dead and leaves you where you were. So put two dates in the diary the day you sign: the date the renewal window opens, and the last date to serve notice. Then serve the notice whether or not you have decided where you are going, because it costs nothing to be free to move.
Also be aware that suppliers will run a credit check and may ask for a security deposit from a young company or one with a poor filing history at Companies House. That is a cash cost you should know about before you switch.
The broker is paid out of your unit rate
Most small business energy is bought through a third-party intermediary. Their service is genuinely useful, because they hold live prices from a dozen suppliers and you do not. Their fee, in the traditional model, is an uplift added to the unit rate you pay, collected by the supplier and passed to the broker.
That means a broker quoting you 24.1p a kilowatt hour may be quoting 22.6p of supplier price and 1.5p of their own commission, over the whole term, on every unit you use. On a bakery using 60,000 kWh a year across three years, that is a meaningful sum that never appears as a fee on anything.
Ask the direct question: what is your commission, in pence per kilowatt hour, and what is the total over the term. Ask for it in writing. A broker who will not answer is telling you what you needed to know. Some will work on a transparent fixed fee instead, which is usually cheaper and always clearer.
Transparency here has been tightening. From December 2024 Ofgem extended access to the Energy Ombudsman to businesses of up to fifty employees and required suppliers to deal only with brokers that belong to a qualifying alternative dispute resolution scheme, which gives smaller firms a complaints route that did not exist before. Check the current position before you assume you have no redress, and check the broker is in a scheme before you use them.
Business supply is not consumer supply
There is no cooling-off period on most business energy contracts. Agree verbally on a recorded call and you are generally bound, which is why so much of this market is sold by telephone. There is no price cap. There is no automatic switch to a default tariff at a regulated price.
The bill itself is also built differently. Alongside the unit rate there is a standing charge per meter per day, which you pay whether or not you consume anything, and which on a half-hourly metered supply can be substantial. There are non-commodity costs, network charges and levies which move independently of wholesale prices, and the Climate Change Levy, which businesses pay and households do not.
VAT on business energy is 20% rather than the domestic 5%, with two exceptions worth knowing: supplies below the de minimis level, broadly under 33 kWh of electricity or 145 kWh of gas a day, are charged at 5%, and premises where at least 60% of the use is domestic or charitable qualify for the reduced rate on the whole supply. A small shop with a flat above it, or a village hall, may be paying 20% when it should not be. Reclaiming an overpayment means a certificate to the supplier and it can usually be backdated.
Where this shows up in the game
Business Baron treats utilities as a fixed cost with a date attached rather than a background number. Contracts end, rates move with the era you are playing in, and a renewal you did not notice arrives as a larger bill in a month that had other plans. It is one of the quiet ways a business that is trading perfectly well loses several thousand pounds a year to inattention.