What is a business energy rollover contract?

A rollover contract is what happens when nobody does anything. Your fixed-term deal reaches its end date, you have not agreed a new contract or given notice, and your supplier carries on supplying you under a new fixed term set on its terms rather than negotiated on yours. It is legal, it is common, and it is nearly always more expensive than switching or renegotiating.

What actually happens when a contract “rolls over”?

Your supplier extends your existing agreement into a new fixed term, using a rollover clause already built into your contract. Ofgem’s supply licence conditions define this as a “Roll-Over Clause”: a term allowing the contract to continue, automatically or at the supplier’s option, beyond the end of the fixed term if you have not terminated it or agreed to something else. The period that follows is the “Roll-Over Period”.

This is different from simply being left on old rates. A rollover puts you into a new contract, with its own end date and, usually, its own (higher) pricing, rather than leaving you unattached.

How does a supplier tell you this is coming?

Under Ofgem’s rules, a supplier must send you a Statement of Renewal Terms and the terms that would apply if you do nothing, on or about 30 days before what the licence calls the “Relevant Date”, which is itself 30 days before your fixed term ends. In practice this means a renewal letter or notice arriving roughly 60 days before your contract expires, setting out:

• the date your fixed term ends
• what happens if you do nothing (the rollover terms)
• how to give notice if you do not want to renew (where notice still applies)
• your current charges and annual consumption

If you miss this letter, or it arrives at an address nobody checks, the rollover can happen with no further warning.

What if your contract has no rollover clause at all?

Not every fixed-term contract contains a Roll-Over Clause. Where one is not present and no new contract has been agreed, Ofgem’s rules mean you simply carry on being supplied under an out-of-contract arrangement rather than being moved into a new fixed term. The practical difference matters: an out-of-contract rate has no end date of its own, whereas a rollover puts you into a fresh fixed term (albeit one you can leave freely). Both avoid a gap in supply, and neither should leave you paying a termination fee, but only a genuine rollover clause locks in a new contract period. Whether your contract contains a rollover clause, and what it says will happen if you take no action, should be set out in the principal terms you were given when you signed up. If you are not sure which applies to you, ask your supplier directly, or check the renewal letter it sends around the 60-day mark, since Ofgem requires this to spell out what happens if you do nothing.

Is there a limit on how long a rollover can run?

Yes, for microbusinesses: 12 months. Ofgem’s supply licence conditions say a supplier may only extend a microbusiness contract into a further fixed term if that new term is 12 months or less. A supplier cannot roll you onto an 18-month or two-year contract without you actively agreeing to it.

Do you have to give notice to avoid being rolled over?

This is where the rules changed materially in 2022. Ofgem’s Microbusiness Strategic Review, decided on 28 March 2022, banned suppliers from requiring a microbusiness to give notice of its intent to switch, with one exception for evergreen contracts. The change took effect on and from 1 October 2022. The resulting licence condition says a microbusiness is not required to give any form of notice to terminate its contract or to switch supplier from the end of its fixed term, or earlier if the contract allows it.

Before this change, many suppliers required 30, 60 or even 90 days’ written notice before the end date, and missing that window meant an automatic rollover with no way out until the new term ended. That trap is now closed for microbusinesses on fixed-term contracts.

Can you leave once you are on a rollover, and does it cost anything?

Yes, at any time, and it should not cost you anything. Ofgem’s licence conditions say that during the roll-over period, a microbusiness must not be charged a termination fee to leave, and the supplier must not increase the standing charge, unit rate or any other charge because you are leaving. You are also not required to give any form of notice to terminate the rollover contract or to switch supplier while you are in that period.

In practical terms, if you discover you have been rolled over, you lose nothing by acting immediately. There is no penalty for having missed the original renewal window, beyond having paid the rollover rate for whatever time you were on it.

Rollover, evergreen and out-of-contract: what is the difference?

These three terms get used loosely, but Ofgem’s licence conditions treat them as distinct, with different rules attached.

Type	What it is	Notice to leave	Exit fee
Rollover contract	A new fixed term your supplier puts you on automatically if you take no action at the end of your old fixed term	None required for a microbusiness	None allowed for a microbusiness
Evergreen (open-ended) contract	A contract with no fixed end date at all	Up to 30 days, the one exception Ofgem kept	None allowed for a microbusiness
Out-of-contract rate	Your old contract has ended and no new one has started; you are simply still being supplied	None required	None allowed

Evergreen contracts are the deliberate exception. Ofgem decided to keep the option for suppliers to ask for up to 30 days’ notice on these because, in its view, this lets suppliers offer a better ongoing price than a Deemed or out-of-contract rate would give, since the supplier has some certainty about when you might leave. Rollover and out-of-contract situations get no such notice requirement.

Why do rollover contracts still exist at all?

Ofgem has looked at banning automatic rollover outright and decided against it, twice. In its 2014 decision on rollover contracts, Ofgem recorded that six of the eighteen respondents to its consultation wanted auto-renewal banned, or termination fees removed from any automatically renewed contract. Ofgem did not go that far. It judged rollovers could be “problematic for some consumers if prices are significantly higher than an equivalent negotiated contract”, but chose to tighten the process around them instead, cutting the maximum notice period microbusinesses could be asked to give from 90 days to 30 days, and requiring renewal letters at around 60 days before the end date to carry current prices and consumption figures. Those changes took effect on 30 April 2015 and are the direct ancestor of the rules in place today. Ofgem noted at the time that seven suppliers had already chosen to drop auto-renewal with termination fees voluntarily, ahead of any rule change.

The 2022 Microbusiness Strategic Review went further again, removing the notice requirement altogether for most microbusiness contracts rather than just shortening it. What has stayed constant across a decade of reform is Ofgem’s underlying position: rollover contracts are not banned, because a non-fixed option still needs to exist for customers who have not chosen a new deal, but the terms around leaving one have been steadily loosened in the customer’s favour.

Does this protection apply to every business?

No. Everything above describes the licence conditions Ofgem applies specifically to microbusinesses. As set out in our guide to microbusiness energy, that generally means a business using no more than 100,000 kWh of electricity or 293,000 kWh of gas a year, or one meeting a separate small-company test based on staff numbers and turnover.

If your business is larger than this, your rollover position depends entirely on what your own contract says. Many suppliers do apply notice periods and exit fees to larger business customers who roll over, and these can run to 30 days or considerably more. Check your contract’s notice and termination terms directly, since there is no blanket rule protecting you the way there is for microbusinesses.

Why is a rollover rate usually more expensive?

A rollover rate is not one you negotiated. It is a default set by the supplier, typically pitched well above what you would get by comparing offers or renegotiating directly. Suppliers price rollover and out-of-contract rates on the basis that these customers have not actively engaged with the market, rather than on the competitive terms offered to a customer who is shopping around. There is no rule capping how high a rollover rate can be for a microbusiness, only rules capping the term length and banning exit fees.

This is the reason acting before the rollover happens is worth more than acting after. Once you are rolled over, you can leave freely and without a fee, but you will have paid the rollover rate for however long it takes you to notice and switch.

How to avoid being rolled over

1. Diarise your contract end date as soon as you sign a new deal, not just the renewal letter’s arrival.
2. Open supplier post and emails around the 60-day mark, since this is when the Statement of Renewal Terms typically arrives.
3. Compare your options before the end date, not after. Our quote comparison calculator can help you weigh a renewal offer against the wider market.
4. Tell your supplier in writing if you do not want to renew, even though microbusinesses are no longer required to, since it avoids any ambiguity about your intentions.
5. Check current business electricity prices and business gas prices before accepting any renewal or rollover offer, so you know whether it is competitive.

What to do if you have already been rolled over

1. Confirm you are on a rollover rather than evergreen or out-of-contract, since the rollover has its own fixed end date rather than continuing indefinitely.
2. Check your current rate against the market, since a rollover rate can sit well above what is available elsewhere.
3. Switch whenever you are ready. You do not need to wait for the new fixed term to end, and you should not be charged a fee to leave. See our guide on how to switch business energy supplier for the process.
4. Read the terms before agreeing to anything new, since there is no cooling-off period for business energy contracts, and you want to avoid ending up back in a fixed term you did not properly compare.

Our guide to business energy contract renewal covers the wider renewal process, including what to check before agreeing to stay with your existing supplier.

Ready to compare your options? You can compare business energy quotes with us.

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