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Last updated October 2026.
What is a business gas contract?
A business gas contract is an agreement between a non-domestic customer and a licensed gas supplier that sets how the gas for a specific meter (identified by its MPRN) is priced and billed for a fixed period. There is no price cap for business gas, no cooling-off period once agreed, and the price is built for your meter rather than taken from a published tariff. The supplier prices from the wholesale gas market on the day, your annual quantity (AQ), your local distribution zone, your meter type and your credit profile, and offers a unit rate per kWh and a daily standing charge for one to five years.
Gas is sold by the kWh but metered in cubic metres or cubic feet, so the bill converts volume using the calorific value and a correction factor. How gas is converted to kWh shows the sum, and it matters because a contract priced on the wrong AQ can be re-priced.
What types of business gas contract are there?
| Contract type | How the price works | Who it suits |
|---|---|---|
| Fixed | Unit rate and standing charge held for the term, one to five years. | Most small and medium businesses that want a known cost |
| Fixed with pass-through | Energy fixed; transportation and policy charges passed through at cost. | Larger sites that can handle a variable line |
| Variable | Rate can move with the market, usually on 30 days’ notice; no fixed term. | Businesses between contracts or waiting to fix |
| Flexible procurement | Gas bought in tranches against the forward curve under a framework. | Daily-metered and large multi-site users |
| Deemed | Applies when gas is used with no agreement, for example after moving in. Published rates; leave at any time, no notice, no fee. | The default to move off |
| Out-of-contract | Applies when a fixed term ends with nothing agreed. Published rates well above contracted prices. | The reason the renewal window matters |
Fixed-rate gas contracts and flexible gas contracts go into each in more depth.
Want this priced for your meters?
Send us a recent bill and we will compare the suppliers on our panel on the same start date and term, and show you the annual cost of each option. No obligation.
What do the terms in a business gas contract mean?
- Unit rate. Price per kWh of gas consumed.
- Standing charge. A daily fixed charge covering transportation and metering costs; it varies widely between suppliers and bands.
- Annual quantity (AQ). The consumption the price assumes, set by Xoserve on a rolling basis from actual reads. Big differences between AQ and real use can trigger re-pricing or volume tolerance charges.
- Term and end date. The fixed period and the date it finishes.
- Termination window. When written notice must be given. Microbusinesses cannot be asked for more than 30 days and many contracts need none; larger users can be asked for 30 to 180 days.
- Meter type. Non-daily metered (most businesses), daily metered (large users), or an AMR/smart meter that sends reads automatically.
- Credit terms and deposit. Payment method and period, and any security deposit. Deposits and supplier failure covers what can be negotiated.
- Early termination. Business gas contracts cannot normally be ended early without a fee based on remaining volume.
How long should a business gas contract be?
Gas prices are more seasonal and more volatile than electricity, which makes the length question sharper. A one-year fix taken in autumn is priced on the coming winter; a two or three-year fix is priced across several seasons. Neither is reliably cheaper; the choice is about how much certainty the business wants. The forward curve on the day you sign shapes the price of each term, and it moves daily. Whatever the term, ask the supplier to start the new contract the day the old one ends, which can be agreed up to a year ahead.
When to renew a business gas contract works through the timing question with the market in mind.
What rules protect businesses on gas contracts?
The Ofgem rules are the same as for electricity. Microbusinesses (fewer than ten employees and turnover under €2 million, or no more than 293,000 kWh of gas a year) must see the end date and notice period on bills, cannot be asked for more than 30 days’ notice, must receive a renewal letter around 60 days before the end date, cannot be rolled over for more than twelve months, and must have any broker commission disclosed in the contract. Deemed contracts cannot carry termination fees. Since December 2024 small businesses (fewer than 50 employees, or up to 500,000 kWh of gas a year) have access to the Energy Ombudsman. Ofgem’s guide has the detail.
How do you sign a business gas contract?
- Find the MPRN, AQ and end date on a recent bill. Decoding your gas bill shows where.
- Get like-for-like quotes on the same start date and term with the annual cost shown. We do this across the suppliers on our panel.
- Check the standing charge, notice period, AQ tolerance and deposit, not just the unit rate.
- Agree the contract by signature or recorded verbal agreement; a letter of authority lets a broker act for you. There is no cooling-off period.
- Serve notice on the old contract if its terms require it.
- Diary the new end date.
What happens when a business gas contract ends?
A new contract starts the next day with no interruption and no change at the meter. If nothing is agreed, you move to the supplier’s out-of-contract rate until you sign something, and you can leave that arrangement at any time without a fee. What to do when your gas contract is ending walks through the timeline and out-of-contract gas rates explains how to get off them.
Business gas contract questions
How do business gas contracts work?
A supplier prices your specific gas meter for a fixed term based on your annual quantity, meter type, distribution zone, credit profile and the wholesale market on the day. You pay a unit rate per kWh and a daily standing charge, with the Climate Change Levy and VAT on top. At the end of the term you agree a new contract or move to the supplier’s out-of-contract rate.
What is the difference between business gas and domestic gas?
Business gas has no price cap, no cooling-off period, fixed terms with termination windows, VAT at 20 percent for most customers and the Climate Change Levy. Prices are built per meter. Microbusinesses do have Ofgem protections on notice periods, renewal letters and commission disclosure.
Fixed or flexible business gas: which is better?
For most small and medium businesses a fixed contract is the practical choice because it gives a known cost. Flexible procurement suits large daily-metered or multi-site users who can buy in tranches against the forward market and absorb variation. Neither is cheaper as a rule; it depends on the market and on the business.
Can I sign a business gas contract online?
Yes. With your MPRN, consumption and company details a supplier or broker can agree a contract by e-signature, with a letter of authority if a broker is acting for you. Read the terms first, because there is no cooling-off period on business contracts.
What are the terms I should check in a business gas contract?
The unit rate and standing charge, the term and end date, the termination window, the annual quantity the price assumes and any tolerance clause, the deposit and payment terms, and the early termination clause.
How long is a typical business gas contract?
One to three years are most common; up to five are offered. Because gas is seasonal, a one-year fix taken in autumn carries a full winter in its price, which is why the term length changes the blended price a supplier can offer.
Why would a business use a gas contract instead of deemed rates?
Deemed and out-of-contract rates are published by the supplier at levels well above contracted prices and can change with 30 days’ notice. A contract gives a fixed, lower price and a known cost for the term.
Want this priced for your meters?
Send us a recent bill and we will compare the suppliers on our panel on the same start date and term, and show you the annual cost of each option. No obligation.