What Are Variable Business Rates (VBR)?

Variable Business Rates — or VBR — are what most businesses end up on when their fixed energy contract expires and nobody has arranged a new one. They're not a special tariff. They're not a deal. They're simply what your supplier charges when there's no agreed contract in place.

And they're almost always significantly more expensive than a contracted rate.

If you're currently on Variable Business Rates, you're not alone. A large number of UK businesses are in the same position, often without realising it. The good news is that getting off them is usually straightforward once you know what you're dealing with.

When you sign a business energy contract, you agree a fixed unit rate and standing charge for a set period — typically one, two or three years. During that time, your costs are predictable and usually competitive.

When that contract ends, your supplier doesn't cut off your supply. They keep the energy flowing, but they switch you onto their Variable Business Rates. These are rates set entirely by the supplier, and they can change at any time with relatively short notice.

The key difference from a fixed contract is that there's no price certainty. Your unit rate can go up next month, and there's very little you can do about it while you're on VBR. You're essentially paying whatever the supplier decides to charge.

The most common reason is simply that the contract expired and nobody noticed — or nobody acted in time.

Energy contracts usually require you to give notice before the end date if you want to switch supplier or renegotiate. That notice period is often 30 to 90 days, sometimes longer. If you miss it, many suppliers will automatically roll you onto Variable Business Rates — or in some cases, onto a new fixed-term contract at rates that weren't competitively tendered.

Other common reasons include:

Moving into new premises. When you take on a new building, you inherit whatever supply arrangement was already in place. Until you arrange your own contract, you'll be on the supplier's default rates — which are effectively Variable Business Rates.

A change of tenancy. If you've recently moved into a unit, office or farm building, the same applies. The energy is on, but there's no contract in your name.

Assuming someone else sorted it. In businesses with multiple people involved in administration, energy contracts can fall through the cracks. Everyone assumes someone else renewed it.

Not realising the contract had ended. Some businesses receive renewal letters but don't act on them, or the letters go to an old address.

The moment your fixed contract ends without a new one in place, you move onto your supplier's out-of-contract rates. These are sometimes called deemed rates, Variable Business Rates, or simply out-of-contract rates — the terminology varies between suppliers, but the effect is the same.

Your bills will typically increase, sometimes significantly. The supplier is under no obligation to offer you competitive rates at this point. They're simply providing energy under their standard terms until you arrange something different.

The longer you stay on VBR, the more you pay. There's no automatic review, no loyalty discount, and no incentive for the supplier to move you onto a better rate unless you ask.

There are a few reasons your bills tend to go up when you move onto Variable Business Rates.

The most obvious is that the unit rate itself is higher. Suppliers set their VBR rates above what they'd offer on a competitively tendered fixed contract. The difference varies, but it's not unusual to see unit rates 30–60% higher than what you'd pay on a new fixed deal.

On top of that, wholesale energy prices fluctuate. When you're on a fixed contract, you're insulated from those movements. On VBR, you're exposed to them. If wholesale prices rise, your supplier can pass that increase on to you.

There's also the standing charge to consider. This can increase on VBR too, and it applies every day regardless of how much energy you use.

Your bill won't usually say "Variable Business Rates" in large letters. You need to know what to look for.

Check the tariff name. Look for terms like "out of contract," "deemed," "variable," "standard variable," or "rollover." Any of these suggest you're not on a competitively agreed fixed rate.

Compare your current unit rate to what you were paying before. If your unit rate has increased noticeably since your last contract, that's a strong indicator.

Check your contract end date. If it's in the past and you haven't signed anything new, you're almost certainly on VBR.

Look at your direct debit. If your supplier has increased your direct debit without any obvious change in your consumption, it may be because your unit rate has gone up.

If you're not sure, the simplest thing to do is call your supplier and ask them directly: "What tariff am I currently on, and when did my last fixed contract end?" They're obliged to tell you.

"My supplier will let me know when I need to renew."

They might send a letter, but it's easy to miss — and the responsibility for managing your contract is yours, not theirs. Don't rely on your supplier to prompt you.

"I'm a loyal customer so I'll get a good rate."

Loyalty doesn't typically translate into better rates in the business energy market. Suppliers don't usually reward long-standing customers with competitive pricing unless those customers actively negotiate.

"Variable rates must be better because they can go down as well as up."

In theory, yes. In practice, most businesses on VBR pay more than they would on a fixed contract. The flexibility works in the supplier's favour, not yours.

"Switching is complicated and takes ages."

Switching business energy supplier is usually straightforward and can often be completed within a few weeks. The process is much simpler than most people expect.

"I'm locked in until I give notice."

On Variable Business Rates, you're generally not locked in at all. One of the few advantages of VBR is that you can usually switch or agree a new contract without paying an exit fee.

Waiting until the bill gets really bad before acting. By the time most businesses contact us about VBR, they've already been overpaying for months. The sooner you act, the sooner you stop the bleed.

Accepting the renewal offer from the existing supplier without comparing it. Your current supplier's renewal offer is rarely their best price. It's worth getting at least one independent comparison before signing anything.

Not reading the notice period clause. Some contracts roll over automatically into a new fixed term if you don't give notice by a specific date. Miss that date and you could be locked in for another year at an uncompetitive rate.

Assuming the cheapest quote is always the best deal. Unit rate matters, but so does the standing charge, contract length, exit clauses and the supplier's track record on billing accuracy. A slightly higher unit rate with a reliable supplier can work out better than the cheapest quote from one with poor customer service.

How long does it take to switch off VBR?

Once you've agreed a new contract, the switch typically takes two to six weeks depending on the supplier and your meter type. During that time you'll still be on VBR, so it's worth acting quickly.

Can I switch mid-contract if I'm on VBR?

Yes. Because VBR is not a fixed-term contract, you can usually switch at any time without paying an exit fee. Check with your supplier to confirm, but in most cases there's nothing stopping you from moving immediately.

Will switching affect my energy supply?

No. Your energy supply is not interrupted during a switch. The physical supply to your premises stays exactly the same — only the billing changes.

What if I'm in debt to my current supplier?

Outstanding debt can sometimes prevent a switch. If you owe money to your current supplier, it's worth resolving that before initiating a switch, or at least discussing it with us so we can advise on the best approach.

Can you help me even if I don't know what tariff I'm on?

Yes. Send us a copy of your most recent bill and we'll tell you exactly what you're on, what it's costing you, and what the alternatives look like.

Before you sign anything — whether it's a renewal with your existing supplier or a new contract with someone else — it's worth checking a few things:

Your current unit rate and standing charge. Know what you're paying now so you can compare it properly with any offer you receive.

Your contract end date and notice period. If you're still in a fixed contract, find out when it ends and what notice you need to give.

Your annual consumption. This is usually shown on your bill as kWh per year. It's the most important number when comparing quotes, because a lower unit rate on a higher consumption estimate can actually cost more.

Whether you have a half-hourly meter. If you do, your pricing structure will be different and you'll need a broker who understands half-hourly contracts.

Any exit fees. If you're in a fixed contract that hasn't ended yet, check whether there are exit fees for leaving early.

If you're not sure whether you're on Variable Business Rates, or you just want to know whether you're paying a fair price, send us a copy of your bill. We'll check the meter reading, the unit rate, the standing charge, the contract dates and anything else that looks worth querying.

We don't charge for this. It's what we do.

You can upload your bill directly on our website or call us on 01256 844048. We'll come back to you with a straight answer.

Related guides: What Are Deemed Rates? · What Happens When My Business Energy Contract Expires? · Business Energy Dictionary