Managing Business Energy Costs in 2026

Geopolitical instability, rising infrastructure costs and market shifts are reshaping the business energy landscape. 

While many organisations are currently shielded from immediate price increases by longer contract terms, significant legal and financial risks remain, particularly for businesses approaching renewal, operating on deemed rates or relying on third-party intermediaries.

Understanding how your energy costs are structured is no longer optional. It is a commercial and legal necessity.

What Makes Up a Business Energy Bill?

Your energy bill is not just one number, it is made up of several different costs.

Wholesale energy costs
The price of buying electricity or gas on the open market

Network costs
Charges for maintaining and upgrading the infrastructure that transports energy

Environmental and policy levies
Contributions to government decarbonisation and social programmes

As a general rule, wholesale costs account for roughly 40% of electricity bills and up to 60% of gas bills. The precise breakdown varies by supplier, contract type and market conditions.

Disputes frequently arise where businesses are not clearly told how these costs feed into their contract pricing, particularly at renewal, when suppliers and brokers have the greatest incentive to obscure the detail.

Network Costs Are Rising

From April 2026, network charges have increased to fund long-term upgrades to the UK's energy infrastructure. While the investment itself is necessary, the way these costs are passed through to businesses is not always transparent.

Common legal issues include:

• Insufficient disclosure of network cost uplifts at the point of contracting
• Standing charge increases introduced mid-term without clear contractual authority
• Disputes over whether suppliers were entitled to vary charges at all

Businesses should ensure their contracts explicitly state how network cost increases are handled and whether suppliers have any discretion to adjust charges during the contract period.

Wholesale Prices Remain Unstable

Ongoing instability in the Middle East is still affecting energy markets. Even without price rises, the uncertainty has real impacts:

• Higher risk premiums applied by suppliers at renewal
• Shorter contract offers with more restrictive terms
• Reduced negotiating leverage for businesses under time pressure

In our experience, suppliers frequently use market uncertainty to justify tighter terms or elevated margins, particularly where a business is relying on a broker to manage the process.

Most Businesses Are Not at Immediate Risk But Some Are

Current data suggests that most businesses are protected from near-term price shocks, largely because contract lengths have returned to three to five years. However, a meaningful proportion face material exposure right now:

• Fewer than 10% of businesses are recontracting this spring
• Around 10-12% are on deemed or rollover arrangements
• A further 10% are expected to recontract between May and July

Deemed contracts in particular carry substantially higher rates and far less transparency. If your business falls into any of these categories, the risk is real and immediate.

Recontracting Is Where Legal Problems Begin

When a fixed-price contract ends, businesses must renegotiate or default onto a deemed contract. This transition is where the majority of energy disputes originate.

Common issues we see include:

• Contracts agreed without a clear breakdown of pricing components
• Suppliers delegating the process to brokers without proper oversight
• Undisclosed commissions embedded in the tariff
• Failure to present alternative options before locking in terms

The Problem With Brokers

Third-party intermediaries (TPIs), energy brokers and energy consultants are the source of a significant proportion of energy mis-selling claims. 

Key issues include:

• Hidden or disproportionate commissions inflating the quoted price
• Selective comparisons that do not reflect the full market
• Misrepresentation of deals as "best available" when they are not
• Conflicts of interest between the broker's commercial relationships and your interests

It is important to understand that the use of a broker does not reduce a supplier's legal responsibilities. Where a contract was entered into without informed consent or on the basis of misleading information, legal remedies may be available regardless of how the deal was structured.

When Cost Management Becomes a Legal Matter

Energy cost management crosses into legal dispute when:

• Contract terms are unclear, inconsistent or applied incorrectly
• Pricing mechanisms are not followed as agreed
• Commissions are concealed from the business
• A company is locked into an overpriced or unsuitable contract

In these circumstances, it may be appropriate to challenge either the contract itself or the conduct of the supplier or intermediary involved.

How Energy Solicitors Can Help

In an uncertain market, proactive legal advice is a safeguard against long-term financial exposure. 

If your contract is approaching renewal or you have concerns about the terms you are currently on, we recommend taking independent legal advice before committing to anything.

Contact Energy Solicitors for specialist legal advice for businesses.