How to Read a Commercial Energy Contract Before Signing
Before signing a commercial electricity or gas supply contract, check five things: whether the rate is fixed or variable, the contract length, the early termination fee, whether it auto-renews and how much notice you need to give to avoid that, and whether the quoted rate is truly all-in or if separate riders and pass-through charges get added later. Then compare the total against your utility's current default supply rate — sometimes called the Price to Compare — before you commit.
Rate type: fixed, variable, or index
The single biggest driver of how your energy costs behave over the contract is whether you're signing a fixed or variable (sometimes called index) rate. A fixed rate locks in the same price per kWh or therm for the full term, which makes budgeting predictable but means you don't benefit if wholesale prices fall. A variable or index rate moves with the market, which can save money in falling-price periods but exposes you to real upside risk during demand spikes. See our full breakdown of fixed vs. variable energy rates for how each works — the same tradeoffs apply to commercial accounts, though commercial contracts sometimes use more complex index formulas than residential ones.
Contract length and the early termination fee
Commercial energy contracts commonly run anywhere from one to several years, and longer terms usually come with a more favorable locked rate in exchange for less flexibility. Before signing, confirm exactly how long you're committing to and what it costs to get out early. Suppliers charge an early termination fee to recover the cost of unwinding the wholesale position they took on your behalf — for commercial accounts this is often a formula tied to your remaining expected usage and how far current market prices have moved from your locked rate, rather than a flat dollar amount. Ask for the specific fee or formula in writing rather than assuming it's minor.
Auto-renewal and evergreen clauses
Many commercial contracts include an evergreen or auto-renewal clause: if you don't actively cancel within a specific notice window before your term ends, the contract renews automatically — often onto a materially higher variable or month-to-month rate rather than a fresh competitive offer. That notice window can be surprisingly narrow, sometimes 30 to 90 days before the contract's end date, and missing it can mean paying an unfavorable rate for months before you're eligible to switch again. Mark the renewal deadline on a calendar as soon as you sign, and treat it as seriously as the signing date itself.
Is the rate really all-in?
A quoted rate that looks attractive can still leave out charges that show up separately on your bill. Ask specifically whether the quoted price includes all supply-related charges, or whether certain riders, capacity charges, or renewable compliance costs will be billed separately on top of it. Some suppliers quote an aggressive base rate specifically because ancillary charges are handled elsewhere in the contract — the only way to know the real cost is to ask for a full breakdown of everything that will appear on your monthly bill, not just the headline rate.
Compare against the utility's default rate before signing
In deregulated markets, utilities publish a default supply rate — often called the Price to Compare — that reflects what you'd pay if you never chose a competitive supplier at all. This number exists specifically so customers have a baseline to judge competitive offers against. Before signing any commercial supply contract, it's worth confirming that the offer is actually better than your utility's current default rate, not just lower than what you're paying today under an old contract. A supplier's offer only makes sense if it beats the realistic alternative, not just your own history.
Frequently asked questions
What is an evergreen clause in a commercial energy contract?
An evergreen (or auto-renewal) clause automatically renews your contract, often at a much higher variable or month-to-month rate, unless you cancel in writing during a specific notice window before your term ends — sometimes as narrow as 30 to 90 days out. Missing that window can lock you into an unfavorable rate for months.
What's the difference between a fixed rate and a variable rate in a commercial contract?
A fixed rate locks in the same price per unit of energy for the full contract term, while a variable or index rate moves with wholesale market prices, meaning your cost can rise or fall from month to month. Reviewing which type you're signing — and how the supplier can adjust a variable rate — is one of the most important parts of reading a commercial contract.
How do I know if a commercial energy rate is actually competitive?
Compare the quoted all-in rate, including any separate riders or pass-through charges, against your utility's current default supply rate (sometimes called the Price to Compare) and against at least one other competitive quote. A rate that looks low before fees are added in can end up costing more than the utility default once everything is included.
See this on your own bill
Upload your commercial electric or gas bill and Certo reads it for you — a free bill health score, a plain-English breakdown, and whether your rate is competitive.
Comparing offers across multiple accounts?
Certo for Business tracks bill history and rate changes across locations, so you can spot a bad auto-renewal or an uncompetitive rate before it costs you months of overpayment.