Fixed vs flexible business energy
Two ways to buy your business energy. A fixed contract locks your unit rate for the term, a flexible one moves with the wholesale market. Which fits comes down to your size, your appetite for risk and how closely you want it managed.
- You want one rate you can budget around for the whole term
- You would rather not have to watch the energy market
- Your usage is fairly steady and not especially large
- You use a lot of energy and want to buy it in tranches
- You can carry some risk in return for tracking the market
- You have the time, or an adviser, to manage the buying
Fixed and flexible are the two main ways a business buys its gas and electricity. A fixed contract sets your unit rate for the whole term, so you know what you are paying from day one. A flexible contract leaves your price to move with the wholesale market, which can work in your favour or against it. One is about certainty and the other about control, and the right answer depends far more on your business than on which is fashionable at the time.
Quick snapshot
- A fixed contract locks your unit rate for the term, while a flexible contract lets it move with the wholesale market.
- Fixed is simpler to budget around and suits most smaller businesses, while flexible can suit larger or high-usage sites that can manage the risk.
- Neither is automatically cheaper, since a fixed price usually carries a premium for the certainty it gives you.
- Flexible contracts need more management, whether you do it yourself or through an adviser.
What a fixed contract is
A fixed-rate contract sets your unit rate and standing charge for the length of the term, usually somewhere between one and five years. Whatever happens to wholesale prices after you sign, your rate stays where it is.
That makes budgeting straightforward, because the only variable left is how much energy you use. The trade-off is that the supplier prices in the risk it is carrying on your behalf, so a fixed rate usually sits a little above the market on the day you sign. You are paying for certainty, which for most smaller businesses is worth having.
What a flexible contract is
A flexible contract does not lock a single price. Instead you buy your energy in chunks across the term, often through a pass-through arrangement where the wholesale cost is passed on as it moves and the non-energy charges are billed separately.
It can work out well if the market falls or you time your buying carefully, and it gives larger users more control over how and when they purchase. The flip side is exposure. If wholesale prices rise, your costs tend to rise with them, and the contract takes more attention to manage.
Which one is easier to budget around
If predictable bills matter to you, fixed is the easier option by a distance. You agree a rate, and barring a change in how much you use, your unit cost does not move for the term. That makes forecasting simple and removes the job of watching the market.
A flexible contract asks more of you. Because the price moves, your budget has to allow for that movement, and someone needs to keep an eye on when to buy. For a finance team that wants one number to plan around, fixed usually wins.
Which one tends to cost less
Neither is automatically the cheaper choice, and anyone who tells you otherwise is guessing at the market. A fixed rate carries a premium because the supplier is taking on the price risk for you, so on a falling market a well-managed flexible contract can come out ahead.
On a rising market, the fixed rate you locked in can look like the better deal. The honest position is that the outcome depends on where the market goes and how actively a flexible contract is managed, neither of which is known in advance.
How much management each one needs
A fixed contract is close to set and forget. Once it is signed, the main thing left to do is line up the next one before it ends.
A flexible contract is the opposite. It needs ongoing attention to decide when to buy, how much to buy and when to sit tight, which is why larger users often run them with a procurement adviser rather than alone. If nobody in the business has the time or the appetite for that, fixed is the more realistic choice.
Who each one suits
As a rough guide, a fixed contract suits smaller and medium businesses with fairly steady usage that value certainty and simple budgeting. Flexible tends to make sense for larger or high-usage sites, the kind that spend enough for active buying to be worth the effort and can absorb some movement in price along the way.
Plenty of businesses sit between the two, and that is where a conversation with a broker helps, since the right structure depends on your usage profile rather than a rule of thumb. You can always compare business energy prices to see where you stand.
Fixed vs flexible at a glance
| Fixed contract | Flexible contract | |
|---|---|---|
| How the price works | Locked for the whole term | Moves with the wholesale market |
| Budgeting | Predictable, one rate to plan around | Variable, needs allowance for movement |
| Management | Largely set and forget | Needs active management or an adviser |
| Cost risk | A premium for certainty | Exposure to the market, down and up |
| Best suited to | Smaller and medium businesses with steady usage | Larger or high-usage sites that can manage risk |
| Typical term | One to five years | Often longer, bought in tranches |
Working out which one you need
For most smaller businesses, a fixed contract is the sensible default. It gives you a price you can plan around, it takes no managing, and the premium you pay for that certainty is usually money well spent against the stress of watching the market.
If your usage is large, your appetite for risk is higher, and you have the time or an adviser to manage the buying, a flexible or pass-through contract can give you more control and, in the right conditions, a better result. If you are not sure which camp you fall into, it is worth talking it through before you commit, and reading how to choose a business energy broker can help you find someone who will be straight with you about the trade-offs.
Frequently asked questions
Is fixed or flexible cheaper for business energy?
Neither is automatically cheaper. A fixed rate carries a premium for the certainty it gives, so a well-managed flexible contract can win on a falling market, while a fixed rate can win on a rising one. The outcome depends on where wholesale prices go and how actively a flexible contract is managed.
What is the difference between fixed and flexible business energy?
A fixed contract locks your unit rate and standing charge for the term, so your price does not change. A flexible contract lets the price move with the wholesale market, usually buying energy in tranches across the term. Fixed is about certainty, flexible is about control.
Is flexible energy procurement only for large businesses?
It is most common among larger and high-usage businesses, because active buying is more worthwhile at scale and they can carry the risk. Smaller businesses can use flexible or pass-through contracts too, but the management it takes often outweighs the benefit unless usage is significant.
Can I switch from a flexible contract to a fixed one?
Usually at renewal, yes. Many businesses move between the two as their usage, budget and view of the market change. The point to plan around is your contract end date, so you can line up the next arrangement before the current one rolls over.
Does a fixed contract protect me if prices rise?
Yes, for the length of the term. Once your rate is locked, a rise in wholesale prices does not change what you pay. The trade-off is that you would not benefit if prices fall during the term either.
What is a pass-through contract?
A pass-through contract is a form of flexible deal where the wholesale energy cost is passed on as it moves and the non-energy charges are billed separately rather than wrapped into one fixed rate. You can read more in our glossary entry on pass-through contracts.
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Your questions on this, answered in order
The questions businesses actually ask about this topic, in the order they tend to ask them. Each answer leads to the next; where we can help, there is a link.
What’s the difference between fixed, flexible and pass-through business electricity contracts?
A fixed contract locks in your unit and standing charges for the term. A pass-through contract fixes the energy part but passes changes in non-commodity costs, such as network charges, through to you. A flexible contract buys wholesale energy in stages over time. Each balances price certainty against potential cost, so the right choice depends on usage and risk appetite.
What is a pass-through electricity contract?
On a pass-through contract, the wholesale energy price is fixed, but non-commodity costs such as TNUoS, DUoS, balancing and policy charges are passed through at actual cost. Prices can look lower at the start because the supplier isn’t adding a risk premium, but your bills can rise if those third-party charges increase during the term.
Are network charges going up in 2026?
Yes. Industry analysis reported that TNUoS residual charges for many business sites rose sharply from April 2026, with some quoting around a 60% increase. These charges usually appear in standing charges on fixed contracts or as line items on pass-through contracts. The impact depends on your connection type and charging band.
How can I check what network charges I’m paying?
On fixed contracts, network costs are often bundled into the standing charge, so they aren’t easy to see. On pass-through contracts, they’re itemised. For half-hourly sites, you can compare the charges against your charging band and DUoS time bands. A bill review can confirm whether the band and capacity used on your bill match your supply.
Can someone check my business electricity bill for errors?
Clearsight Energy offers bill validation, which compares your invoices against your contract rates, meter reads, standing and capacity charges, VAT and CCL treatment. Common findings include estimated reads, wrong VAT rates and charges carried over after a move. Send us recent bills and the contract and we’ll explain what we find and what can be raised with the supplier. Get in touch →
What can a network charges review find?
Common findings include the wrong network charging band, a capacity higher than the site needs, incorrect line loss factors, or charges billed for the wrong period. On pass-through contracts these flow straight into your bill. Some corrections need the network operator rather than the supplier, which can take longer.
Can someone raise network charge errors with my supplier?
Clearsight Energy can prepare the evidence of network charge errors and raise them with your supplier, with your authority. We’ll explain what we’ve found, what’s realistic to recover and our fee basis before we start. Send recent bills and your contract to begin. Get in touch →
Who should consider a flexible business electricity contract?
Flexible contracts tend to suit larger and multi-site users with consistent consumption, internal budget processes and the capacity to monitor the market or delegate purchasing. Energy is bought in tranches, so you can spread risk over time. Smaller businesses often prefer fixed prices because the administration and budget variability of flexible buying can outweigh the benefits.
What is a basket or blended energy purchase?
A basket contract pools the purchasing for many customers or sites and buys wholesale energy in several tranches over a period. Your final price reflects the average of those purchases rather than one moment in the market. It reduces timing risk, but the exact price isn’t known until purchasing completes, so you’ll need to be comfortable with that uncertainty.
Can someone talk me through flexible versus fixed for my sites?
Clearsight Energy can review your usage, sites and contract dates, then explain how fixed, pass-through and flexible options would work for you. We’ll set out the risks plainly and show the broker fee on each option, so you can make an informed decision. Multi-site customers often find that aligning end dates is a useful first step. Get in touch →
How long should a business electricity contract be?
Contracts typically run from one to five years. Shorter terms give flexibility to re-price sooner, while longer terms give budget certainty for longer. Longer contracts can lock you in if prices fall or your circumstances change, such as moving premises. Consider how settled your premises and usage are before committing to a longer term.
What happens to my electricity contract if I sell or close the business?
If you vacate the premises, tell your supplier with a dated final meter reading and evidence such as the lease end. Many contracts end when you leave the premises, though some include exit terms. If the business is sold as a going concern, the contract may transfer to the buyer. Check your terms, as the treatment differs between suppliers.
Can someone run a business electricity quote for me?
Yes. Clearsight Energy can compare suitable contracts across the suppliers on our panel for you. A recent bill helps, though your MPAN, address, current supplier, contract end date and an idea of annual usage are usually enough to start. We’ll set out the options, the term, the rates and the broker fee so you can decide in your own time. Get in touch →
Can my supplier put my business electricity price up during a fixed contract?
On a fully fixed contract the energy price generally shouldn’t change, but many fixed contracts allow certain costs to be passed through. These usually include network and policy charges, changes in law, and tax changes such as VAT or the Climate Change Levy. Check your terms for words like pass-through, third-party costs or change in law before assuming it’s an error.
What is a pass-through or change in law clause?
It’s a contract term that lets the supplier adjust your price when specified costs outside its control change. Third-party or pass-through clauses typically cover network, balancing and government scheme charges. Change in law clauses cover new levies or regulations introduced after you signed. The wording matters, so it’s worth reading exactly which charges are fixed and which can move.
Which costs can be passed through during a business electricity contract?
Commonly the transmission and distribution network charges, balancing costs, and policy costs such as the Renewables Obligation, Feed-in Tariffs, Contracts for Difference, the Capacity Market and the newer nuclear funding levy. Taxes like VAT and CCL also follow government changes. A fully fixed contract absorbs most of these for the term, while fixed-energy contracts may not.
How much have network charges gone up for 2026/27?
Transmission charges rose sharply from April 2026. Industry analysis puts total TNUoS revenue for 2026/27 at around £6.4bn, roughly 61% more than the year before, driven by grid investment and interconnector costs. How much that adds to your bill depends on your site and contract, and whether your supplier fixed these costs or passes them through.
How can I tell if my next contract is fully fixed?
Ask directly whether the quote is fully fixed or fixed energy only, and get the answer in writing. Read the principal terms for any list of pass-through charges and check whether change in law is excluded. Quotes that look similar on unit rate can behave very differently over a contract if one carries network and policy risk and the other doesn’t.
Is a fully fixed business electricity contract worth paying more for?
It depends on how much budget certainty matters to you. A fully fixed price includes a premium for the supplier carrying the risk of charges rising. Pass-through can work out lower if those costs stay flat, but leaves you exposed if they rise, as transmission costs did in 2026. Many smaller businesses prefer certainty, while some larger users accept the risk.
Can someone compare fully fixed and pass-through quotes for me?
Yes. Clearsight Energy can price both contract types on your usage and show which charges are fixed and which could move, in plain terms. Your MPAN, end date, current bill and usage are enough to start. We’ll explain the trade-offs and our fee so you can choose the level of certainty that suits your budget. Get in touch →
Can my supplier change my rates if my usage changes?
On some contracts, yes. Larger supply agreements often include a volume tolerance, so using much more or much less than the agreed volume can lead to adjusted rates or charges. Smaller business contracts rarely have this, but it’s worth checking. If your operations are about to change significantly, tell your supplier early and look at the terms before renewing.
What is a volume tolerance or bandwidth clause?
It’s a range around your forecast annual usage, often expressed as a percentage either side, within which your contracted price applies. Outside that range the supplier may reprice the difference or apply a charge, because it bought energy for you based on the forecast. Getting the usage forecast right before you sign is the simplest way to avoid surprises.
Can someone review my contract terms before I renew?
Clearsight Energy can talk you through the key terms on your current contract and any new offers, including pass-through charges, volume tolerances, notice periods and renewal clauses. That way you can compare quotes on what they’ll actually cost. Share your current contract and recent bills, and we’ll explain the options and our fee clearly. Get in touch →
How do I challenge a business electricity price rise I didn’t agree to?
Ask the supplier which contract clause allows the change and how it was calculated. Compare that with your signed terms. If the clause doesn’t support it, raise a formal complaint and ask for corrected bills. Small businesses can take a complaint unresolved after eight weeks, or a deadlock letter, to the Energy Ombudsman.
Can someone check my business electricity bill for errors?
Clearsight Energy’s bill validation checks the rates you’re being charged against your contract, including any pass-through adjustments, along with reads, VAT and CCL. It’s a quick way to see whether a rise is supported by the terms. Send the contract and recent bills, and we’ll set out what we find. Get in touch →
Is now a good time to fix my business electricity price?
Nobody can reliably predict wholesale prices, so timing the market exactly isn’t realistic. What you can control is starting early enough to have choices, knowing your budget and risk tolerance, and comparing suitable contracts before your end date. Many businesses fix within their renewal window, while larger users may buy in stages to spread timing risk.
How do wholesale electricity prices affect my business quote?
Suppliers price fixed contracts from the forward wholesale market on the day they quote, then add network, policy and their own costs. When forward prices move, quotes move with them, sometimes daily. That’s why two quotes a week apart can differ, and why comparing quotes from the same day gives a fairer picture.
Why do business electricity quotes expire so quickly?
Because the supplier is pricing from a wholesale market that moves constantly. Holding a price for long would mean carrying that risk, so many business quotes are valid for a short period, sometimes only the same day. Having your details and decision-maker ready means you can act on a quote you’re happy with before it lapses.
What should I have ready so I can accept a quote on the day?
Have the MPAN, site address, company name and number, the authorised signatory, bank details for direct debit, and your current contract end date. A recent bill and usage figures help suppliers price accurately. If you use a broker, a signed letter of authority lets them gather data and quotes in advance so there’s no delay on the day.
What is a letter of authority for business energy?
It’s a signed document that lets a broker or consultant speak to your supplier and request information such as usage, contract end date and meter details. It doesn’t commit you to a contract by itself. Read what it allows and how long it lasts, and check whether it permits the broker to agree contracts or just gather information.
Can someone get me a set of quotes I can act on quickly?
Yes. With your details and a letter of authority in place, Clearsight Energy can gather information and compare suitable contracts so you can make a decision while quotes are valid. Your MPAN, end date and usage are enough to start. We’ll explain the terms and our fee alongside each option. Get in touch →
Does the October price cap change affect business electricity?
No. The Ofgem price cap only applies to domestic customers on standard variable tariffs. Ofgem announced a 4% rise for households from October 2026, but business contracts aren’t covered and are priced individually. The cap’s movement can still hint at wholesale trends, but your business price depends on your own contract and the market when you buy.
Can someone run a business electricity quote for me?
Yes. Clearsight Energy can compare suitable contracts on today’s market for your site. Your MPAN, address, current supplier, end date and usage are usually enough to start. We’ll set out the options, the term, the rates and our fee clearly before you decide anything. Get in touch →
Should I stagger contract lengths to spread market risk?
It can help multi-site businesses or larger users. Staggering end dates or mixing shorter and longer fixes means you aren’t buying everything at one point in the market. The trade-off is more admin and several renewals to manage. For a single small site, choosing a term that fits your budget plans is usually simpler.
Can someone talk me through a buying strategy for my sites?
Clearsight Energy can look at your sites, end dates and usage and explain the contract options, including fixed, staggered and flexible approaches. We’ll be clear about the risks and admin each involves. Share a site list with MPANs and end dates, and we’ll set out suitable options and our fee. Get in touch →