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Difference Between Fixed Rate vs Pass-Through Commercial Energy

Two different ways a business energy contract can be priced - and why the 'cheaper' one depends on where the market is heading, not which one sounds simpler.

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Source: National Grid ESO Carbon Intensity API

How Each Contract Type Is Actually Priced

The difference is not just "fixed vs flexible" marketing language - it is about where the risk of non-commodity costs changing during your contract sits. A fully fixed contract moves that risk onto the supplier (reflected in the rate they quote you); a pass-through contract keeps that risk with you, in exchange for not paying a premium for certainty.

Fully fixed

One all-in rate for the whole term (typically 1-3 years). Protected from price spikes, but no benefit if wholesale prices fall, and less visibility into the underlying cost breakdown.

Pass-through

A fixed wholesale element plus variable network, balancing, environmental and metering charges. More transparent, but bills move month to month and are harder to budget precisely.

Who tends to pick fully fixed

Businesses that want budget certainty, have tight margins, or run public-facing services where an unpredictable bill is a real operational problem.

Who tends to pick pass-through

Larger, often half-hourly metered sites that can monitor markets, shift consumption, and tolerate monthly bill variation in exchange for potential savings.

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What Information We Need

To give you the most useful review, it helps if you can provide:

  • Your business name and postcode
  • A contact name, phone number and business email
  • Whether you need electricity, gas, or both
  • Your current supplier and contract end date, if known
  • An approximate idea of your energy spend or usage

Don't have everything to hand? That's fine - fill in what you can and a specialist can help with the rest.

Fixed vs Pass-Through Contracts - Frequently Asked Questions

A single per-kWh rate is agreed for the whole contract term (usually 1-3 years), covering wholesale energy, third-party network costs, supplier admin and standing charges together. Once fixed, that unit rate does not change even if non-commodity costs rise during the term.

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