Commercial energy renewal: notice and timing

The deadline decides the price, not the rate

Renewal offers arrive in the middle of everything else, which is why most businesses read them as a price to accept or refuse. The document that matters is quieter than the rate: the notice date. That single date decides whether you negotiate as a customer with options or accept whatever the agreement says happens when nobody acts. In most commercial agreements the end date and the notice deadline are two different dates, and the notice deadline comes first — often printed on the agreement, sometimes on the renewal notice itself, and not always on the bill. Nobody is obliged to telephone you because a deadline is approaching.

• The end date and the notice deadline are different dates, and the notice deadline comes first.
• The notice deadline is often printed on the agreement, and sometimes on the renewal notice itself — not always on the bill.
• No rule requires anyone to ring you because a deadline is approaching; the calendar is yours to keep.

What Texas requires a supplier to tell you

Texas is one of the few states with a written answer to the question of when someone should have told you. Under 16 TAC §25.475(e)(1)(A) a retail electric provider must give at least three written notices of the date a fixed-rate product will expire, spread through the last third of the contract term; on a term of twelve months or longer the first may arrive as much as three months before the end. The final notice has its own floor: at least thirty days before expiration for a term longer than four months, at least fifteen days for four months or less, and at least fourteen days for a small commercial customer. The content is prescribed too — the expiration date in boldfaced and underlined text, a statement set in bold lettering no smaller than twelve-point type, and a bold line noting that establishing service with another REP can take up to seven business days. Those notices are a floor, not a courtesy: if the end date is near and nothing has reached you, raise it with the supplier in writing before you sign anything.

• At least three written expiration notices, spread through the last third of the term — 16 TAC §25.475(e)(1)(A).
• Final-notice floors: thirty days for a term longer than four months, fifteen days for four months or less, fourteen days for a small commercial account.
• The notice must carry the expiration date in boldfaced, underlined text.
• A bold statement that establishing service with another REP can take up to seven business days.
• The expiration-notice protections are written for residential and small commercial customers; a larger account is generally governed by its signed contract.

The two fourteen-day windows in a Texas contract

The figure that recurs in the rule is fourteen days, and it does two different jobs. The first is at the end of the term: the contract-expiration notice must state in bold lettering that no termination penalty applies to residential and small commercial customers in the fourteen days before the expiration date the notice gives — so the last fortnight of a term is a period in which a customer may leave without a penalty, not only a period in which to decide whether to renew. The second is mid-term: under §25.475(e)(3) a REP must give written notice at least fourteen days before a change to the terms and conditions takes effect, and that notice must say in bold that if the new terms are not acceptable the customer may terminate and no termination penalty applies for fourteen days from the date the notice was sent. Both windows close on their own; neither is extended because the customer happened to be busy.

• At expiration, no termination penalty applies in the fourteen days before the stated date — §25.475(e)(2)(C)(ii).
• On a change to terms, fourteen days' written notice is owed, and a further fourteen days to leave without penalty — §25.475(e)(3).
• The notice must say these things in bold lettering; read the bold lines first.
• Both windows run from the date the notice was sent, not from when it was read.

The default is month-to-month with your own supplier

When the term ends and nobody acts, the rule does not hand the account to a state-assigned rescue supplier. Section §25.475(e)(2)(A) requires the REP to keep serving the customer under a default renewal product that is month-to-month and may be cancelled at any time without a fee, and §25.475(e)(7) requires the terms of service to have said so from the start. The price is not the expired fixed rate: it is the month-to-month product's price, which the rule allows to vary between billing cycles on clear terms. A provider of last resort is a different mechanism — the backstop Texas designates for customers whose REP can no longer serve them — and it is not where an account lands simply because a contract lapsed. The trap is not the label but the rate, and one further clause: under §25.480 a supplier can place a switch-hold for qualifying arrears, so an unpaid balance and an expired contract together can leave a business on the supplier's own price with no way to shop.

• Default after expiration is month-to-month with the same REP, cancellable any time without a fee — §25.475(e)(2)(A).
• The month-to-month price may vary between billing cycles; it is not the expired fixed rate.
• A provider of last resort is the backstop when a REP stops serving an area, not the result of not renewing.
• A switch-hold for qualifying arrears can remove the ability to move until the balance is resolved — §25.480.

The three-business-day window most businesses never use

Separate from renewal, Texas gives a customer the right to rescind a switch without fee or penalty within three federal business days of receiving the terms of service, under 16 TAC §25.474. That window attaches to entering an agreement, not to escaping one at renewal, which is exactly why it matters: it is the last moment at which an agreement can be undone cheaply. If a renewal is signed under time pressure and the terms turn out to differ from what was described on the call, the rescission right is the difference between a fixable mistake and a term you are held to. Reading the terms the day they arrive, inside that window, is the cheapest insurance in the process.

• Three federal business days from receipt of the terms of service, without fee or penalty — 16 TAC §25.474.
• The clock runs from receipt of terms, so the day the documents land is the day to read them.
• The right covers the switch itself; it is not a general cancellation right on an existing contract.

Outside Texas, your contract is the rulebook

Most deregulated states do not prescribe the renewal notice a supplier owes a commercial customer, so the agreement you signed is the only rulebook that applies. Commercial terms cluster around thirty, sixty or ninety days of notice, with large or multi-site accounts sometimes committed to considerably longer. The language to search for in the agreement is rarely the word “renewal” — it is the clause describing what happens at the end of the initial term: a contract that “automatically renews” unless notice is given before a stated deadline, one that continues on “successive one-month terms,” or one that converts to “month-to-month” or “holdover” service. Find that sentence once, write the deadline into a calendar, and the rest of the renewal is ordinary comparison shopping.

• Look for the end-of-term clause, not the word “renewal” — evergreen language hides under auto-renewal, successive terms, month-to-month and holdover.
• Notice requirements of thirty, sixty or ninety days are common; longer terms and larger accounts can carry longer notice.
• If the agreement is silent or unclear on the deadline, ask the supplier to confirm it in writing before the term ends.

The season a new term starts in is a pricing input

A forward supply contract is priced from the forward market for the months it spans, and in ERCOT that market is steeply seasonal. Texas demand peaks in summer, so a term running through June, July and August carries more price risk than one that begins in a shoulder month, and the same load can be quoted differently depending on the month a new deal starts. EIA's own commentary on ERCOT wholesale prices has repeatedly shown the annual high falling in summer and the mild spring and autumn months sitting below it. That is not a rule that summer is always dear and winter always cheap: extreme cold is its own risk, and the February 2021 event is the reason a winter term is not automatically the safe one. The point for a buyer is that the start month is a pricing input you can see and plan around, not a neutral detail.

• Forward contracts are priced for the months they cover, and ERCOT prices swing by season.
• Summer is the principal demand and price-risk season; shoulder months sit below it in a normal year.
• Winter carries its own tail risk — extreme cold can outprice any summer month.
• Start month is a visible pricing input, not a neutral detail.

The odd term as a lever on the next deadline

Because the renewal date is set by the term length, term length is a lever on the next negotiation. A twelve-month term returns you to the same month every year. An odd term moves the deadline. An eight-month term beginning in July puts the next renewal around March, in the spring shoulder ahead of the summer peak; a fourteen-month term from the same July start puts it around September, after the main procurement has passed. A fourteen-month term beginning in January lands the next renewal in March of the following year rather than in January. None of this guarantees a better price — the forward market moves for reasons that have nothing to do with the month — but it decides which season you are negotiating in, and it is a choice available before you sign rather than after.

• Term length sets the next renewal month; twelve months returns you to the same month each year.
• July start with eight months renews around March; July with fourteen months renews around September.
• January with fourteen months renews the following March, not the following January.
• A timing choice, not a guaranteed saving — forward markets move for other reasons too.

A renewal offer is a new price, not a continuation of the old one

The expiring rate is a tempting benchmark and a misleading one. It was priced when the supplier bought energy and capacity for your original term, against the market and the load shape you had then. At renewal the supplier is either reusing a position it already holds — which can make the offer tighter — or buying forward again at today's prices, which makes the offer track the current market instead of your history. Either way the honest comparison is against competing offers on the same term length, the same usage shape and the same start date, not against what you paid last year. Two details change the real cost even when the headline rate looks better: minimum usage fees, which bill a floor of consumption whether or not it is used, and ratchet clauses, which keep charging for a historical peak after the load has changed.

• Compare quotes on identical term length, start month and usage shape.
• Minimum usage fees set a consumption floor regardless of actual use.
• Ratchet clauses bill against a historical peak, so a changed load profile can raise the effective price even at a lower rate.
• Ask what happens at the end of the new term before signing it — this signature creates the next deadline.

Running a renewal as a process rather than an event

A renewal that starts ninety days out is a procurement exercise; one that starts when the notice arrives is a decision under pressure. The sequence is short and unglamorous. Pull twelve months of usage. Find the end-of-term clause and confirm the notice deadline with the supplier in writing, together with what the default product would be and what it costs. Treat the incumbent's offer as one quote rather than the answer, and put every quote on the same term, start date and usage shape, with minimums and ratchet language disclosed. Decide the term length with the next renewal in mind, not only the current rate. Nothing here requires a consultant; it requires that the calendar be read before the market is asked to respond to it.

• Twelve months of usage history and the current agreement in hand before any quote is requested.
• Deadline confirmed in writing, with the end date, the notice date and the default product.
• Every quote on the same term, start date and usage shape, with minimums and ratchet language disclosed.
• Term length decided with the next renewal in mind, not only the current rate.

Before you act on any of this

Competitive supply is not available everywhere. Whether a business can choose a supplier at all depends on the service address, the meter and the utility that serves it; municipal utilities, cooperatives and some jurisdictions offer no choice, and the rules described here are Texas's unless another state is named. HighGround may receive compensation from providers on completed purchases. Submitting an inquiry places no order, switches no supplier and commits you to nothing — it starts a conversation about what your options actually are.

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