Contract Renewal

The renewal process for existing business electricity 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)

Customers often start shopping as their electricity contract nears expiration, with small commercial businesses typically not exploring options until within 6 months of the end date. However, the best time to renew isn’t necessarily close to expiration—it’s when market rates are lower. Because of this we are often looking for future start procurement solutions for large commercial and industrial clients even years ahead.

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 a common time to start looking at current rates and getting custom pricing from energy providers that will go into affect at the end of your agreement; ensuring a smooth transition. While your contract end date should appear on your bill as you get closer to expiration, it’s important to review the exact wording and even pull up your original agreement. Sometimes the end date is actually the meter read after a specified date, not that date itself.
• 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 that helps in situations where you might switch a few days early, but it’s best viewed as a safety net, not a replacement for planning ahead. Ideally, you switch right on time.

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 (including your bill) 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.

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 month to month, variable or evergreen).

This should be avoided at all costs.

Rollover Plans and Contracts

Rollover contracts come with variable rates that can change daily or hourly based on real-time market conditions transferring the risk from the energy provider to you as the business owner. 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. The relationship between pricing and different term lengths is based on a weighted average of the energy costs for the months that you choose – taking into account forward electricity curves and the natural gas strip as well as expected cost to serve components such as billing and credit. Fixed prices are truly fixed because the provider goes out and buys (hedges) the power you contract for for the duration of the agreement.

• Short-Term (6-12 months): These contracts offer flexibility. They are often used to align with a lease or business plans where uncertainty is a concern.
• 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 with the ability to shop again in a few years when things are hopefully operating at a lower price.
• Long-Term (48-60 Months): Choosing a longer term length limits your risk from rising prices as a consumer for a longer term. Current market conditions have shown some backwardation (prices getting higher for longer terms), where electricity futures are more costly. This is driven by forecasts of increased demand from economic development and data centers (mainly AI and cloud storage). While natural gas is plentiful, there’s a shortage of new generation coming online over the next few years. Because of this, many customers are choosing longer terms to hedge against the risk of increasing prices, providing greater protection against future volatility.

Comparing Apples to Apples

It is incredibly important to make sure that you are comparing similar pricing with different providers. Make sure the components are the same. You are shopping for the energy commodity portion of the bill (Delivery charges are regulated according to your utility’s tariff) and this is a good time to make sure that if you are sales tax exempt that you are not paying sales tax. If you are a non profit, manufacturing company or most of your power is used to move natural resources (We have even seen golf courses be sales tax exempt – it is definitely worth checking).

Fixed Price Components: You will want the fixed price to include ancillaries and line losses. Under 50kw customers must also have congestion (nodal/basis adjustment to the load zone) charges. For Texas businesses outside of Centerpoint and ONCOR service territory, you should consider having congestion included in your rate. Additional charges that you will likely see on your bill for larger customers especially are ECRS and market securitization/uplift. These are minor charges currently but details matter.

How to Negotiate with Your Current Provider

The single most effective negotiation tactic you have is getting 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 for custom pricing.

Ready to Renew?