Business Energy Contract Renewals in 2026: Prices, Timing and What Is Pushing Bills Up

Renewal season for business energy contracts has become the most expensive part of the year for many UK SMEs. Through 2026 the story has not been the wholesale price of gas and electricity, which has moved less than the headlines suggest, but the network and policy costs that sit inside every unit rate and standing charge. If your contract ends in the next six months, the quote you receive will reflect that shift, and it is worth understanding why before you sign it.

What business energy costs in 2026

The most reliable way to read the market is through published panel averages rather than any single supplier's letter. As at October 2026, average fixed business electricity rates across a supplier panel were:

• Micro businesses (5,000 to 15,000 kWh a year): around 28.4p per kWh, with a standing charge near 58p per day.
• Small businesses (15,001 to 25,000 kWh): around 27.2p per kWh, with a standing charge near 119p per day.
• Medium businesses (25,001 to 55,000 kWh): around 27.7p per kWh, with a standing charge near 90p per day.
• Larger sites (more than 55,000 kWh): around 26.1p per kWh, with a standing charge near 173p per day.

Average fixed business gas rates for the same period sat between roughly 8.5p and 8.8p per kWh, with standing charges from about 45p to 67p per day depending on usage band.

These are averages drawn from suppliers' quoted rates over a short window, and they include the introducer commission built into panel quotes. Your own price will depend on your region, meter type, consumption profile, credit position and the length of contract you ask for. Treat them as a benchmark for spotting an uncompetitive offer, not as a quotation.

Why the renewal quote looks higher even when usage has not changed

Network costs have done the damage in 2026. Transmission charges (TNUoS), which fund the high-voltage grid that carries power from generators to your region, rose from roughly £16 per MWh to about £31 per MWh from April 2026, an increase of more than 60%. The transmission element of standing charges rose by around 65% in the second quarter of the year. Ofgem's current network price control period, RIIO-3, began in April 2026 and sets the amount network operators can recover through those charges.

The effect is that non-commodity costs, meaning everything on your bill that is not the energy itself, now make up roughly 60% to 64% of a typical business electricity bill. That is why a business can sign at what looks like a similar unit rate to last time and still pay more: the fixed daily charge has moved, and the network component inside the unit rate has moved with it.

Wholesale prices have added to it, and sharply in recent weeks. UK wholesale gas stood at around 229p per therm on 4 November 2026, roughly 25% higher than a month earlier and about 175% above the same point a year before, close to a four-year high. Gas still sets the marginal cost of most UK electricity generation, so a rising gas market feeds straight into power prices and into the offers suppliers are willing to put forward.

What happens if you let the contract lapse

This is the most expensive mistake available, and it is entirely avoidable. Out-of-contract rates in October 2026 averaged 40.0p per kWh with a standing charge of 254p per day for electricity, and 12.0p per kWh with 338p per day for gas. Against fixed rates of roughly 26p to 28p per kWh, that is an increase of around half on the energy element alone.

Most business contracts also roll over. If the renewal date passes without an agreement in place, the supplier can renew you automatically for a further term, usually twelve months, at its own rate. A contract that lapses quietly in the last fortnight of its term is the single most common reason a business ends up paying more than its neighbour for identical consumption.

The price cap, and what Ofgem has confirmed for January

Ofgem's cap for 1 October to 31 December 2026 is £1,723 a year for a typical household paying by direct debit, a rise of 4% on the previous quarter. The average unit rates under it are 26.32p per kWh for electricity with a 54.83p daily standing charge, and 7.97p per kWh for gas with a 29.68p daily standing charge.

The level for 1 January to 31 March 2027 has not been published yet. Ofgem has committed to announcing it by 25 November 2026. Analyst forecasts circulating in late October and early November point to a rise in the region of 27% to 29%, which would take a typical household bill to somewhere around £2,190 to £2,220. That is a forecast and not a decision; the figure will be whatever Ofgem publishes on the day.

Two policy changes sit alongside it. The government removed VAT from domestic electricity bills between 1 October 2026 and 31 March 2027, and Ofgem notes that the change also applies to some small businesses: whether it applies to your supply depends on your meter and tariff, so confirm it with your supplier rather than assuming a 5% reduction. Separately, the Autumn Budget 2026 announced that the domestic gas standing charge will be removed at some point in 2027.

None of this caps a business contract. No commercial rate is covered by the cap, and your protection comes from the terms you sign, the supplier's obligation to notify you of a contract end, and your own diary. What the cap does tell you is where the market is heading, and a forecast rise of that size for households is a reasonable signal that commercial renewal offers will not be getting cheaper in the first quarter.

When to start the renewal

Start three to six months before the end date. That window is long enough for suppliers to price you properly and for a second round of negotiation if the first round is uncompetitive, and short enough that wholesale movement is unlikely to leave you exposed.

Before you ask for prices, confirm four things:

• The exact end date of the current contract, and the notice period for terminating it.
• Whether the contract rolls over automatically, and how much notice is needed to stop that.
• Your MPAN or MPRN for each supply, so quotes are priced against the right meter.
• Twelve months of consumption history, or as much of it as exists if you have moved in recently.

If a broker manages the account, confirm who holds the letter of authority before anyone approaches suppliers on your behalf.

What a proper comparison includes

A headline unit rate is only part of the answer. Compare on the total annual cost, calculated from your own consumption, and check each of the following on every offer:

• The standing charge, and whether it is fixed for the whole term or can vary.
• Contract length and the price of exiting early.
• Whether the rate is fully fixed, or partly pass-through, meaning certain network or policy costs can be recovered during the term.
• Payment terms, since direct debit, invoice and variable direct debit usually carry different prices.
• Any security deposit or credit requirement.
• The commission being paid to whoever arranged the contract. Ask for it in writing.

If your supplier has written to you about an increase

Suppliers have been repricing through 2026 as network charges have landed, and the sharp move in wholesale gas since late summer has accelerated that. Letters announcing increases have been common, and more are likely before January. British Gas, which supplies both households and businesses, publishes its deemed rates separately from its agreed business plans and is explicit that deemed rates are usually higher: they apply where a site has no contract in place, such as shortly after a move-in.

When a letter arrives, check four things before reacting. First, whether the change applies to a fixed rate during your term, which should not happen unless the contract contains a pass-through clause, or to a variable rate or standing charge, which can move. Second, the date the change takes effect, and whether it gives you a window to leave without an exit fee. Third, whether it covers the supply itself or a separate service bundled with it. Fourth, whether your own contract has already fixed the rate for the period in question, in which case a mid-term increase should be queried in writing.

If the increase is not permitted by your contract, raise it with the supplier in writing and keep the correspondence. If it is permitted, the practical question becomes whether the new price is still competitive against the panel, which is usually answerable in a couple of days.

The short version

Renew early, compare on the total annual cost rather than the unit rate, confirm the contract does not roll over before you have decided, and assume the standing charge matters as much as the energy rate in 2026. Do those four things and the renewal stops being a deadline you endure and becomes a decision you control.

If your contract ends in the next six months, get in touch and we will take the requirement to the supplier panel, compare the offers on total cost, and tell you what commission is included before you sign anything.