What Is a Basket Contract in Business Energy
A basket contract bundles several MPANs or MPRNs under one procurement instruction so the supplier hedges the combined annual volume instead of treating every chip shop, surgery or depot as a standalone negotiation. Pricing often blends to a weighted average unit rate. Governance shifts to whoever controls the basket—parent company, buying group or charity treasurer—so weaker sites can ride on the credit of stronger ones, or the reverse if discipline slips.
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Key takeaways
- Volume weighting decides who subsidises whom: a 3 GWh factory drags the average rate lower than a 40 MWh charity shop could achieve alone—if everyone shares the legal entity risk.
- Billing can remain split per site even when the hedge is pooled; ask whether parent sees one consolidated invoice or many.
- Exit rules get political: leaving the basket may trigger early termination calculations on the whole book, not just your meter.
- Pass-through schedules must reference each MPAN/MPRN or you cannot audit DUoS drift.
- Basket is a cousin to group contracts; the market uses the words interchangeably—read the signed definition.
Who signs up for baskets in the UK
Retail franchise networks, social-housing repairs consortia, and federations of GP surgeries already share procurement overhead. A catering group operating twelve airport units used a basket averaging 26.1p/kWh on electricity in 2025 while individual quotes for the smallest outstation ranged 27.4–28.3p—the basket saved roughly £7,800 across 640 MWh simply by removing repeated small-site risk.
Suppliers like Drax, SSE Business Solutions or specialist aggregators run the credit umbrella, but Ofgem-licensed obligations stay with the retailer on your contract. The basket operator is you.
Mechanics your FD should model
Start from billed kWh per site, multiply by the offered p/kWh, add standing charges, Climate Change Levy at the relevant rate from HMRC tables (typically just under a penny per kWh on the main electricity levy before reliefs—verify each tax year), then VAT at 20% or 5% for qualifying domestic-style supplies. Compare that stack to the same sites priced individually. Spreadsheets lie when someone forgets a passthrough line—use pass-through discipline.
Half-hourly sites with volatile demand may dilute the basket’s benefit if their DUoS red-band charges spike; sometimes carved-out flex slices sit alongside the basket for those MPANs only.
Table: basket vs site-by-site
| Topic | Basket | Per-site contracts |
|---|---|---|
| Credit | Group covenant | Each entity tested |
| Admin | One diary, one LOA pack | Many renewals |
| Flexibility | Needs governance votes | Each site chooses term |
| Transparency | Demand clear allocation keys | Naturally separated |
Checklist before the steering group votes yes
- Written rules for new sites joining mid-term—especially after acquisitions.
- Agreed method for splitting volume if one shop closes but lease liabilities continue.
- Escalation path when one member disputes a re-billed invoice that reallocates shared costs.
When baskets backfire
Poor data quality on one half-hourly meter can force estimates that distort everyone’s cash planning. A West Yorkshire machining cluster discovered a stuck CT multiplier had understated one member’s draw by 11% for eight months—the reconciliation invoice landed on the parent who guaranteed the basket. Operate multi-site energy management like an internal audit, not a favour.
Pricing mechanics: blended volume and year-weighted risk
Suppliers hedging a basket often size the forward position against an aggregate forecast: if Member A grows EV charging faster than Member B trims gas heating, the desk revisits hedge ratios at each volume refresh. A blended 27p/kWh label is therefore a portfolio outcome; do not assume each MPAN literally prints 27p when regional DUoS or profile classes diverge. Request an allocation statement showing commodity, non-commodity and fee splits per MPAN at least annually so finance can book true transfer prices between entities.
Co-ops and franchises should watch cross-guarantees: a failing branch can drag covenant reviews for siblings even when their kWh are healthy. If credit support concentrates in one parent, stress-test what happens if that parent sells—switching clauses often require replacement guarantees within 30 calendar days. Treat baskets as contingent liabilities, not just energy admin.
Finally, harmonise micro-business status thoughtfully: not every shop in a basket qualifies for the same renewal paperwork concessions. Flag mixed eligibility early with your microbusiness rules checklist so outbound marketing from the supplier does not contradict statutory protections on one site but not another.
Related guides
See flexible vs fixed contracts for how baskets interact with flex sleeves, or return to the energy hub.
What do you want to do next?
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