Terminating an electricity contract – key steps for companies and consumers in 2025

Key steps when terminating an electricity contract

1. Analysing the type of electricity contract

The first step is to determine whether the electricity supply contract is for a fixed term or an indefinite term. This is crucial for the termination procedure and any potential financial consequences.

• Open-ended contract: Under the Energy Act, the customer may terminate such a contract at no cost by submitting a notice of termination to the energy supplier. The customer terminating the contract is obliged to pay for the electricity consumed and the energy distribution services provided
• Fixed-term contract: Termination of such a contract before the expiry date is free of charge and does not entail any compensation other than that specified in the contract. In the case of a household consumer of electricity or gas and an end-user of electricity or gas who is a micro-enterprise or small enterprise, to the extent that they consume electricity or gas for the purposes of their core business, the amount of such costs and compensation may not exceed the amount of direct economic losses incurred by the energy undertaking as a result of the termination of a fixed-term contract by the customer.

2. Checking the customer’s status

Certain businesses, for whom the contract is not of a commercial nature in relation to their business activities, are entitled to certain consumer rights, such as more favourable terms for terminating an electricity contract or protection against unfair contract terms. It is worth checking whether your business falls into this category, as this may affect the procedure for terminating an electricity contract and any associated costs.

3. Analysis of the terms for terminating an electricity contract

Before deciding to terminate an electricity contract, it is essential to carefully review its terms, particularly those relating to:

• Notice period – you should check whether the contract specifies a particular timeframe for terminating the business electricity contract and whether there are any special conditions relating to termination.
• Contractual penalties for early termination of the electricity contract – it is worth verifying whether the contract provides for an obligation to pay a penalty, and whether the method of calculating it is lawful and does not result in an excessive burden on the customer.
• Termination procedures – the contract may specify formal requirements for termination, such as the need for written notice, the correspondence address, or the required elements of the notice.

In the case of fixed-term contracts, early termination of an electricity contract may result in the imposition of a contractual penalty. The amount of the penalty should correspond to the direct losses incurred by the energy supplier as a result of the contract’s termination. It is worth analysing whether the calculation formula used takes into account only the costs actually incurred by the supplier.

For example, if a contract was signed in 2024 for the supply period from 1 January 2028 to 31 December 2028, the energy supplier could not yet have incurred any actual losses related to energy supply at the time of contract termination. In such a case, the imposition of a penalty may be unjustified or open to challenge regarding its amount.

4. Preparing and submitting a notice of termination for electricity

For a notice of termination of an electricity contract to be valid, it must be drawn up in the appropriate form and contain the following information:

• Customer details – full name or company name and address.
• Energy supplier’s details – full name and registered office address.
• Contract number and date of conclusion – this facilitates identification of the contract.
• Statement of termination – this should contain an unambiguous statement of withdrawal from further cooperation and specify the termination date in accordance with the provisions of the contract.

The contract may provide for various methods of submitting a notice of termination of the electricity contract. The most common methods in such contracts are:

• Written form – the notice of termination of the electricity contract should be signed by hand and delivered in person, by registered post with acknowledgement of receipt, or via a qualified electronic signature and sent by email.
• Documentary form – the customer’s declaration of intent may be transmitted via electronic means of communication, provided that this allows for the subsequent identification of the person making the declaration and the content of the notice. This can be done, for example, via: email, the customer portal, SMS, or the contact form on the supplier’s website.

Where the method of calculating the contractual penalty raises legal doubts and its amount appears grossly excessive, it is advisable to include appropriate reasoning in the notice of termination of the electricity supply contract. It may be stated therein that the contractual penalty does not reflect the supplier’s actual losses and is inconsistent with the provisions of the Energy Law and the Civil Code.

5. Monitoring the electricity contract termination process

After submitting the notice of termination, it is advisable to:

• Ensure that the energy supplier has confirmed receipt of the notice.
• Check that no unjustified charges or contractual penalties have been applied.
• Keep a copy of the notice of termination and the confirmation of its delivery in case of any disputes.

Termination of an electricity supply contract – summary

Terminating an electricity supply contract in 2025 requires careful analysis and preparation. Both domestic consumers and businesses should thoroughly review the terms of their contract, verify whether contractual penalties can be avoided, and make use of the provisions applicable to quasi-domestic consumers.

For businesses no longer covered by the price freeze mechanism, renegotiating or terminating an electricity contract may be a key step towards optimising operating costs. Consumers, despite having an extended price freeze until September 2025, should also monitor their contracts and avoid unfavourable clauses.

Every situation is different, and the effectiveness of terminating an electricity contract or renegotiating its terms depends on the specific provisions of the contract and current legislation. It is advisable to seek the assistance of experienced lawyers specialising in energy law, who can help minimise the financial and legal risks associated with terminating an energy supply contract.

Our law firm, HWW Hewelt Wojnowski Lindner i Wspólnicy, has extensive experience in advising on energy contracts, analysing legal risks, and representing clients in negotiations and litigation. If you are wondering whether you can terminate your energy contract without incurring costs, or if you wish to optimise the terms of energy supply for your business, please contact us. We will help you make the best decision!

Author

Martyna Dobkowska

Associate

She specializes in civil, commercial and business law. In the corporate and energy department, her activities are mainly based on providing corporate services to companies, reviewing and preparing commercial contracts, drafting litigation and non-litigation pleadings and preparing analyses and legal opinions, particularly in the sphere of business law and energy law. She also has professional experience in administrative and civil proceedings, which she gained in Warsaw law firms. She supports the Firm's…

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