Benefit periods and contract terms—how do they work?
When you’re comparing offers, sometimes it’s hard to tell the difference between an offer with a benefit period, and an offer with a contract term. Here’s how they work.
Ongoing contract with benefit period
As the name suggests, when an offer has a benefit period, it means that you get a particular “benefit” for a set period. Usually the benefit is a discount.
When the benefit period ends, often the contract keeps going at the same prices but you no longer get the discount. If this is the case, take the opportunity to look around to see what other retailers are offering and ask your current retailer if they’ve got a better offer.
Sometimes retailers automatically apply a new benefit period when your first benefit period ends, so you keep receiving a discount. If a new benefit period is applied, make sure you check the amount of the discount and tariffs as these may have changed. If you find you’ve been put on a new benefit period, check whether you will have to pay exit fees to leave. If you do, and you don’t want to be locked in, talk to your retailer. If the issue does not get resolved you can contact your local energy Ombudsman.
Contracts with a term
When an offer has a contract term—such as one, two, or three years—it means the contract ends when the term finishes.
Prices can change while you are on this kind of contract. However, some retailers do have offers where the prices are fixed during the contract term.
There may be an exit fee if you leave your contract during the contract term.
When the contract term ends, your retailer will usually put you onto their local standing offer. Standing offers have no discounts and no exit fees, and the rates are usually higher.
Offers with no contract term
These are offers without a contract term or benefit period, although you may still get a discount or other benefit.
These offers continue until you or the retailer decide to end it.
Usually, offers with no contract term don’t have fixed prices. Prices can change at any time, and your retailer must notify you no later than your next bill.