What happens to your energy contract when your business closes?

Closing a business involves a long checklist, and energy is easy to leave until last. It should not be, because an open energy account does not close itself, and an unresolved contract can keep generating bills and even exit fees after you have stopped trading.

Does closing your business end your energy contract?

No. Your contract carries on exactly as agreed until you actively end it, whatever is happening to the business behind it. Our guide on cancelling a business energy contract is direct about this: closing does not automatically end the contract, and you need to tell your supplier, give final meter readings and check your terms, because charges or an exit fee may still apply. Nobody at your supplier automatically knows or assumes your business has stopped trading.

What do you need to do to close the account properly?

1. Tell your supplier as soon as you know your closing date, in writing where possible, and keep a copy.
2. Give a final meter reading on your last day, or as close to it as you can manage. A photo with a visible date is good evidence if there is ever a dispute.
3. Provide a forwarding address, so your final bill and any refund reach you rather than the empty premises.
4. Ask what happens to any security deposit you paid, and when it will be returned (see below).
5. Check your contract’s notice and exit terms before assuming you can simply walk away, particularly if you are still within a fixed term.
6. Keep copies of your final bill, meter readings and any correspondence in case a dispute arises later, particularly if your business closure involves winding up its records generally.

Citizens Advice’s guidance on dealing with your energy supply when you move business premises sets out the same core steps: let your supplier know the date you are leaving as soon as you can, and take a photo of your meter readings on your last day, even with a smart meter. If you do not close the account properly, you risk being charged for energy used by whoever or whatever comes after you, and equally risk your own final bill being wrong.

Will you still owe an exit fee if you close mid-contract?

Possibly, and this catches out a lot of businesses that assume closing down is a clean break. If you are within a fixed term when you close, your contract’s normal exit fee terms still apply unless your specific circumstances (such as formal insolvency, covered below) change the picture. There is no general rule that stopping trading cancels a business energy contract for free. Read your principal terms, or ask your supplier directly, for the figure before you assume you can simply stop paying.

What if your business is going through formal insolvency?

This is where the law gives you something concrete, rather than leaving everything to your contract’s small print. If your company enters administration, a company voluntary arrangement, or liquidation, two provisions of the Insolvency Act 1986 apply specifically to essential supplies including gas and electricity.

Section 233 stops a supplier holding your supply to ransom over old debt. It says a supplier cannot make continuing to supply gas or electricity conditional on paying off charges that built up before the insolvency began. Where the insolvency office-holder, the administrator, liquidator or supervisor of the arrangement, asks for supply to continue, the supplier must keep supplying. What the supplier can still do is ask the office-holder to personally guarantee payment for the supply going forward from that point, which is a different thing from demanding the old debt be cleared first.

Section 233A goes further, addressing contract terms themselves. It says an “insolvency-related term” in a supply contract, one that would let the supplier terminate the contract, alter its terms, or demand extra payment simply because the company has entered administration or a voluntary arrangement, ceases to have effect. In plain terms, a supplier cannot use insolvency itself as grounds to cut you off or rewrite your contract. This protection has limits: it applies to administration and company voluntary arrangements specifically (not every insolvency procedure), and a supplier retains its normal rights over genuinely new non-payment, such as charges going unpaid for 28 days after the insolvency began, or the office-holder refusing to give the payment guarantee mentioned above.

Together, these provisions mean an insolvent business is not automatically disconnected the moment administrators or a liquidator are appointed. Supply is meant to continue while the office-holder deals with the company’s affairs, provided ongoing charges are met.

Who deals with the energy contract during insolvency?

The appointed office-holder, whether that is an administrator, a liquidator or the supervisor of a voluntary arrangement, takes over dealing with the company’s contracts, including its energy supply. As our guide on cancelling a business energy contract notes, if the company enters a formal insolvency procedure, the office-holder deals with the contract rather than the directors handling it personally. If you are a director going through this process, your insolvency practitioner is the right person to advise on the specific supply contract, not a general guide like this one.

What happens to your security deposit?

If you paid a security deposit when you set up your contract, Ofgem’s best practice guide is clear about what should happen to it when you close your account: the need for the deposit ends once your meter point moves off supply and all charges and payments are cleared. A supplier following best practice should either offset the deposit against your final bill and flag this clearly, or repay it promptly once your final bill is settled and any debt cleared. If you have not heard anything about your deposit after closing your account, ask for it directly, since Ofgem’s guidance says you should not have to chase it indefinitely.

What happens to the premises after you leave?

Once you have gone, someone is still responsible for whatever energy the empty unit uses, even if that is only enough to keep an alarm or a frost thermostat running. Provided you have moved out, told the supplier and ended your own contract properly, responsibility for the premises generally passes to the property owner under a deemed contract, not to you. Our guide on change of tenancy covers exactly how this handover works, including what evidence a new occupier or the owner needs to provide, and how deemed rates apply until a proper contract is agreed for the site’s next chapter.

Sole trader, partnership or limited company: who actually owes the money?

This is genuinely a legal and financial question specific to your circumstances, not something a guide like this can answer generically, and it sits outside what this site can advise on. As general background only: a limited company is a separate legal entity, so its debts, including energy debts, are normally the company’s own rather than the personal responsibility of its directors, subject to exceptions such as personal guarantees or wrongful trading findings. A sole trader or an ordinary partnership does not have that separation, so business debts are typically personal debts too. If your business owes money on closure, speak to an insolvency practitioner, accountant, or a service such as Business Debtline before assuming either outcome applies to you. Our guide to business energy debt and arrears covers what happens if the account itself falls behind before you get to this point.

What if you dispute the final bill?

A final bill built on an estimated reading, rather than one you gave yourself, is one of the most common sources of dispute when a business closes. If the figure looks wrong, query it in writing straight away rather than paying it to make the problem go away, and supply your own dated reading as evidence if you have one. If you cannot resolve it directly with your supplier, our guide to business energy complaints explains when and how to escalate a dispute to the Energy Ombudsman. Do not assume a closed account means a dispute cannot be pursued; it usually still can be, as long as you raise it within a reasonable time.

What if the supplier itself fails while you are closing down?

It is an unhelpful coincidence, but not an impossible one, for your supplier to fail while you are in the process of closing your own business. If that happens, Ofgem’s Supplier of Last Resort process moves your account to a new supplier automatically so your final arrangements are not left in limbo, though as our guide on what happens if your energy supplier goes bust explains, a business credit balance is not guaranteed to be protected in the way a domestic one is. Keep your own records of meter readings and payments in this situation more carefully than ever, since you may need to pursue any balance owed through the failed supplier’s administrator rather than get it back automatically.

Do not forget the physical meter and installation

Closing your account with the supplier settles the billing relationship, but it does not, by itself, deal with the physical meter or any gas appliances left on site. Removing or capping a meter, or isolating a gas supply safely, is generally a job for your network operator or a Gas Safe registered engineer rather than your energy supplier, and is a separate step from the account closure covered in this guide. If your premises had any gas appliances or fittings, our guide to gas safety for business premises explains the safety obligations that apply even as you are winding things down, including at properties left temporarily unoccupied before a change of use.

A closing-down checklist

• Confirm your exact closing date and diarise it against your contract’s notice and exit terms.
• Notify your supplier in writing and provide a forwarding address.
• Take a dated final meter reading, or arrange for the supplier to take one.
• Ask about any exit fee due and get the figure in writing before you agree to anything.
• Ask what will happen to any security deposit and when you can expect it back.
• If you are insolvent, let your appointed office-holder deal directly with the supplier rather than trying to manage it yourself.
• Keep every document: final bill, meter readings, closure confirmation and deposit refund.

If your business is continuing under new ownership rather than closing entirely, our guide to energy contracts when buying or selling a business covers how the existing contract is typically handled instead. And if you are simply relocating rather than shutting down, change of tenancy is the guide you need instead of this one.

If you are setting up energy at a new venture once this one is wound up, you can compare business energy quotes with us when you are ready.

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