Basket Contract

What is a basket contract?

You’ve got a dozen sites, a renewal coming up, and someone has mentioned that fixing everything on one Tuesday feels like a coin toss. You’re right to hesitate. A basket contract pools your energy volume with other businesses so the combined group buys flexibly, in tranches across the year, at a scale none of the members could reach alone. You get the risk spreading of a flexible contract without needing the consumption, or the trading desk, to run one yourself.

Baskets sit between fixed contracts and standalone flexible purchasing, and they exist because the gap between those two is wide. This entry covers how they work, who they suit, what they cost and what to check before joining one.

What a basket contract actually is

A basket contract is a group purchasing arrangement. Several businesses put their energy volume into one shared pot, a manager buys energy for the whole pot in tranches across the year, and each member pays its share of the blended result. The supplier sees one large, professionally traded account. You see a contract that behaves mostly like a normal supply agreement, with your own bills for your own sites.

The point of the structure is scale. Suppliers generally won’t offer a standalone flexible contract below a certain annual consumption, often somewhere in the low gigawatt-hours. Plenty of businesses sit under that line while still spending six figures a year on energy. A basket lets them buy the way much larger organisations buy, without meeting the threshold alone.

How a basket works in practice

The basket manager, usually a consultancy or broker running the arrangement with a partner supplier, decides when to buy. Rather than fixing the group’s whole requirement in one go, they purchase it in slices through the year. Some buy on a schedule, monthly or quarterly. Others buy tactically when the market dips. Each purchase locks a portion of the group’s volume at that day’s price, and the final rate members pay reflects the blend of every purchase made.

Your sites are still your sites. Meters keep their own supply numbers, bills arrive per site or per account, and consumption is still measured through your own half-hourly or standard meters. What changes is the buying. One strategy, executed once, on behalf of everyone in the group.

A worked example helps. A 14-site retailer using 3.2 GWh a year sits below most standalone flexible thresholds, so on its own it would choose between fixed and pass-through. Inside a basket buying 150 GWh for its membership, those same 14 sites get tranche purchasing across the year, and the group’s scale earns terms an individual 3.2 GWh account wouldn’t see. Illustrative example. Thresholds and terms vary by supplier and basket.

Who baskets suit

The typical basket member is a multi-site business that’s outgrown single-site fixed deals but has nobody whose job is energy. Think a retail chain with fifteen shops, a care group with eight homes, a manufacturer with three units and a head office. Big enough that one bad renewal date hurts. Not big enough to justify an energy manager watching the market.

Baskets also suit organisations that want smoother budgeting over several years. Because purchases are spread, no single market spike lands on the whole volume at once, and members avoid the cliff edge of renewing everything in a bad week. Schools and academy trusts have bought this way for years for exactly that reason.

Basket vs standalone flexible

Both spread purchases across the year. The difference is control and threshold. With a standalone flexible contract you set the strategy, approve the trades and carry the decisions, and you need the volume to qualify. In a basket the manager decides, everyone in the group gets the same blended outcome, and the entry threshold is far lower because the group qualifies together.

If your business has the consumption and wants its own strategy, standalone flexible gives you more say. If it doesn’t, the basket is usually the only realistic route into tranche buying. Our guide to business energy procurement covers where each structure fits.

Basket vs fixed

A fixed contract gives you one rate, locked on one day, for the whole term. Simple, predictable, and entirely dependent on how the market looked that day. A basket trades some of that certainty for smoothing. The final rate isn’t known at the start, but it’s built from many purchases rather than one, so it can’t be set by your single worst day.

Neither is automatically better. In a falling market, late tranche purchases pull the blend down and baskets tend to look clever. In a sharply rising market, an early full fix would have beaten them. The honest comparison is about risk shape, not guaranteed outcome, and our fixed vs flexible guide goes through it properly.

Joining, leaving and windows

Baskets run to a calendar. New members usually join ahead of a purchasing period, sites are added from their existing contract end dates, and leaving generally means giving notice ahead of a defined exit window rather than walking away mid-term. The group’s purchasing has been done partly on your volume, so mid-term exits are either restricted or come with unwind costs.

This is the part to read carefully before signing. Check the notice period, check when your sites’ volume starts being bought, and check what happens to sites you sell or close during the term. A well-run basket has clear answers to all three. Watch for renewal terms too, because sites left unattended at the end of a basket term can drift onto out-of-contract rates like any other supply.

What it costs

Basket members pay the blended energy rate the group achieves, plus the supplier’s usual charges, plus a management fee for the trading and administration. The fee is usually built into the unit rate as a margin, sometimes charged separately. Either way you’re entitled to know what it is, and a manager who won’t say is telling you something.

Against that cost sits what you’d otherwise pay. A missed renewal on one site can cost more than a year of basket fees. So can a whole-portfolio fix landed on a bad day. The value case isn’t that baskets are always cheaper, it’s that they make the expensive mistakes harder to have.

What to ask before joining

Six questions sort the good baskets from the rest. How is the purchasing decided, schedule or tactical, and who decides? What was the basket’s blended outcome over the last two or three years against the market? What’s the management fee and where does it sit? What are the joining and exit windows, and the notice period? What happens to sold or closed sites? And who supplies the energy, since the basket sits with one supplier and your billing experience depends on them.

If the answers come back clear and in writing, you’re probably looking at a well-run arrangement. Vague answers on fees or exit terms are the warning sign. For help weighing a basket against the alternatives across your sites, our multi-site management team does this comparison for a living.

Frequently asked questions