What Happens When You Don’t Renew Your Energy Contract

Frustrated business man

Unlike the monthly gym membership that continues to bill at the same rate until what feels like the end of time, most energy suppliers will not continue to honor your commercial energy contract at the agreed-upon rate and terms once your contract expires. Unless you’re proactive in your energy contract renewal, you will likely be facing premium supply rates and budget uncertainty.

As a business, you have three options at the time of your energy contract renewal period; recontract with your existing supplier, contract with a new supplier, or return to your local utility for supply. Should you do nothing, your existing supplier will put your company on what is often called ‘rollover’ or ‘holdover’.

WHAT HAPPENS IF YOU DON’T RENEW?

1. You pay a premium rate.

Rollover rates are used as an assurance for the energy supplier. Without a contract, the company charges you a premium to cover your usage. With this rate fluctuation, your business could then accrue higher energy bills regardless of usage patterns.

2. You no longer have budget stability.

Because of this volatility, the rate your company is charged the first month, a number not revealed until after the billing cycle has closed, may be different the following month, making it difficult for you to accurately budget and allocate funds towards energy expenses.

3. The terms from your energy contract may have changed

Once you have passed your energy contract renewal date, not only can your electricity or natural gas rate change, the terms of payment, swing provisions and other terms you enjoyed during your contract may change. You’ll have to wait for your next meter-read date before enrolling with a new energy supplier. Without protection of contract terms, whether negotiated or not, you could be subject to unanticipated energy costs.

DON’T BE A PRICE TAKER: THE TIME TO ACT IS NOW

Rollover rates and budget uncertainty can be avoided with proper planning and action. Instead of waiting until a month or two before your energy contract renewal date, take a strategic approach to your energy procurement by monitoring the market throughout the term of your energy contract. By doing so, you position your company to take advantage of market buying opportunities as they arise, rather than accepting a price just because you need to process your energy contract renewal.

Working with Usource energy advisors enables you to keep a pulse on the energy market and identify the best energy procurement opportunities among competing suppliers. Even if you’re currently in a contract, your energy advisor will continuously monitor the market and alert you of any price fluctuations—positive or negative—that could affect your energy strategy.


About the Author

Tanya Anderson is an Energy Consultant at Usource. She is responsible for providing energy supply analysis to clients while facilitating supply contracts, and serves as the key point of contact for all client service matters.

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