Is the current electricity contract for your business about to expire?
The renewal process for existing business electricity agreements is simple — you can either stick with your current provider and sign a new agreement/term with them, or switch to one of the many retail energy providers (REPs) out there.
While some think of contract renewal like a hassle or chore, approach it as an opportunity, especially if you’re in a deregulated energy market like Texas where retail energy providers will compete to earn your business.
Timeline for Renewing (or Switching)
Don’t wait until the last minute — give yourself enough time to get the best renewal offer from your current provider. Also, shop around to see what other electric providers out there can offer you.
- 2-3 months from contract expiration: This is the best time to start looking at current rates and getting custom pricing from energy providers. Keep in mind, if you find a rate you like you can lock it in with a future start date for when your existing contract ends. This ensures a smooth transition when your existing contract expires.
- 1-2 months away from expiration: Your current provider will send a formal notice about your contract’s expiration — use this as motivation to compare their best offer against the open market and to make a final decision.
- 14-day grace period: By law (in Texas), you have the right to switch providers within 14 days of your contract’s end date without paying an Early Termination Fee (ETF). This is a good consumer protection but it’s best viewed as a safety net, not a tool or replacement for planning ahead.
Required Notifications from Your Provider
Your electricity provider is obligated to keep you informed as your contract approaches its end:
-
Multiple Written Notices: For fixed-rate plans, expect at least three written notifications during the final third of your contract term, alerting you to its expiration.
-
Clear Identification: These notices should be easy to spot, labeled as “Contract Expiration Notice” on the envelope or in the email subject line.
-
Detailed Final Notice: The last notice is critical, including the Electricity Facts Label (EFL) for the default month-to-month plan. This document outlines the new terms and pricing, so you know what to expect.
Protection Against Missing Notices
If your provider neglects to send the required expiration notices for a fixed-rate plan, they can’t switch you to a default, rollover plan. Instead, they must continue your current plan at the original fixed rate until the proper notifications are provided.
What Happens When Your Contract Expires?
If your business energy agreement ends without you selecting a new plan, your service won’t be cut off. Instead, your provider will transition you to a default plan called a “rollover” plan (also known as a rollover contract).
This should be avoided at all costs.
Rollover Plans and Contracts
As we mentioned, your current provider will notify you prior to your contract expiration. If you fail to act and choose a new plan prior to your contract expiration date, you will be transitioned to a default, month-to-month, variable-rate plan.
This is called a “rollover” contract.
Rollover contracts come with variable rates that can change daily or hourly based on real-time market conditions. This leaves your business exposed to market fluctuations. As an extreme example, the rate you pay for electricity with rollover contracts one hour or one day can double or triple (or worse) the next, namely during extreme weather or volatile market conditions.
Best Contract Renewal Terms
The right contract renewal term can be just as important as the new rate you agree to sign. There is no one-size-fits-all answer, so consider the unique needs of your business.
- Short-Term (6-12 months): These contracts offer flexibility. They are often used strategically to “reset” a business’ contract expiration date to a more favorable season (e.g., renewing in the fall to avoid a summer expiration)
- 12-36 month contracts: These are the most widely chosen contract terms and are a great balance of rate stability and flexibility. They are also typically where you can find the most competitive pricing. A 24-month or 36-month contract offers peace of mind and locks in a great kWh rate for years to come.
- Long-Term (48-60 Months): The longer the contract term, the lower the electric rate and the more aggressive the offer from providers, particularly for larger commercial and industrial businesses.
How to Negotiate with Your Current Provider
The single most effective negotiation tactic you have is a better offer. Show your current provider the lower rates you found on our platform (or elsewhere). They will sometimes lower their price to match or beat it, saving you the hassle of switching.
Keep in mind, custom pricing and quotes are available for most businesses. The rates you see on our platform (or any platform) are typically higher than what you’d receive if you reached out to us for custom pricing. We’ll reach out to individual providers on your behalf and have them compete for your business.
FAQ
Your power will not be shut off. However, your provider will automatically switch your account to a “rollover” contract. This is typically a month-to-month plan with a variable rate, which is often significantly higher than your previous fixed rate and can fluctuate monthly, creating budget uncertainty for your business.
The primary risk is financial. Rollover plans have variable rates that can spike unexpectedly due to market conditions, such as extreme weather or changes in fuel costs. This unpredictability makes it difficult to budget for energy expenses. While some providers might offer automatic renewals, these often shift from a stable fixed-rate to a volatile variable-rate, which can lead to surprisingly high bills.
Yes. Because rollover plans are month-to-month, you can switch to a new plan or provider at any time without incurring an Early Termination Fee (ETF). This gives you the flexibility to move to a more competitive fixed-rate plan as soon as you find one.
The ideal time to begin researching new rates is 2-3 months before your current contract is set to expire. This gives you ample time to evaluate market conditions, compare offers from different providers, and negotiate terms. You can lock in a new rate with a future start date to avoid last-minute decisions and market volatility.
Providers are required to send you a formal written notice of your contract’s expiration. You can typically expect to receive this notice 1-2 months before your contract end date, giving you a clear reminder to start shopping for your next plan.
Leveraging competition is your best strategy. Use a comparison platform like ElectricChoice.com to gather competitive quotes from other providers. Presenting a better offer to your current provider is the most effective way to negotiate; they will often match or beat the rate to retain your business.
The best contract length depends on your business’s goals and market conditions.
- Short-Term (6-12 months): Offers flexibility and can be used to align your next renewal with a season that typically has lower rates, like fall or spring.
- Medium-Term (12-36 months): The most common choice, providing a great balance of rate stability and competitive pricing.
- Long-Term (48-60 months): Often come with the lowest rates, offering maximum budget certainty for businesses that can commit to a longer term.
No. Your power will not be shut off. The transition between providers is a seamless, administrative process handled behind the scenes. Your local utility continues to manage the physical infrastructure (the poles and wires) and deliver the electricity, so your service will be uninterrupted.
An Early Termination Fee (ETF) is a charge for canceling your contract before its end date. The best way to avoid it is to wait until your contract is within its penalty-free cancellation window before switching. In Texas, for example, you can switch providers without a fee up to 14 days before your contract’s official end date.
Your business’s credit history is a major factor for providers when determining your rate. A strong credit score will help you secure the most competitive rates and may allow you to waive a security deposit. A weaker credit history may result in slightly higher rates or a required deposit.
A fixed rate locks in your price per kilowatt-hour (kWh) for the entire contract term, providing predictable bills and budget certainty. A variable rate fluctuates with the energy market. While it can sometimes be lower than a fixed rate, it also carries the risk of significant price spikes, making it a less stable option for most businesses.