What is a Blend and Extend Energy Contract—And When Should You Consider It?

Ever wish you could go back in time and sign that energy contract at today’s lower rates? A blend and extend contract can’t turn back the clock,  but it can help you capture current market savings—without waiting for your current deal to expire. Whether you manage a multi-site operation or a bustling manufacturing floor, knowing when (and how) to use a blend and extend strategy could be the difference between riding out a costly contract or locking in budget stability. 

What Exactly Is a Blend and Extend Contract? 

Blend and extend is a procurement strategy that lets your business renegotiate its current fixed-rate energy contract before it expires – typically when market prices have fallen.  Instead of waiting out your existing rate, you blend it with today’s lower market rate, then extend the contract term beyond the original end date 

• Blending: Your supplier averages your current contracted rate with today's lower market rates, creating a new, “blended” rate for the duration of the revised agreement. 

• Extending: In exchange for this reduction, you agree to extend your contract's term beyond the original end date. 

Think of it as refinancing your mortgage when interest rates fall, except instead of a monthly payment, it’s your energy bill getting some breathing room. 

Why Business Owners Like the Blend and Extend Option 

By renegotiating your rate and term, you gain more control over future costs while benefiting from today’s improved pricing, all without the hassle of starting from scratch. Here are a few reasons why business owners favor this practical solution: 

• Immediate Relief: No need to wait for your contract to expire. The new blended rate typically takes effect with your next billing cycle, so savings start quickly. 

• No Early Termination Fees: Unlike breaking a contract – you aren’t paying penalties. This is a win-win for you and the supplier. Your supplier keeps your business longer, and you gain a better rate now.  

• Budget Stability: By extending your agreement at a blended rate, you lock in price certainty and shield yourself from unpredictable market spikes with the current best rate. 

When Does a Blend and Extend Make Sense? 

Blend and extend contracts work best if: 

• You locked in a fixed rate while energy prices were high, and market rates have since dropped. 

• You value predictable energy costs over potential short-term price fluctuations. 

• You’re open to extending your supplier relationship in exchange for a lower rate. 

It's especially beneficial for businesses hit by recent market swings, whether you operate a manufacturing plant, manage multiple properties, or have consistent power needs and need better rates. 

Key Takeaways 

• Blended Rate, Not Lowest Rate: Your new price will land somewhere between your current rate and the market, so don’t expect the rock-bottom figure. 

• Longer Commitment: You’re extending your contract, so factor in your long-term plans. 

• Supplier Terms: Not all suppliers offer blend and extend contracts, and eligibility criteria vary. At Catalyst Power®, we typically require enough time left on the agreement to make the extension meaningful. 

Blend, Extend, and Breathe Easier 

When market conditions change in your favor, blend and extend contracts put stability within reach, without early exit headaches. Curious if it’s right for you? If you want to seize today’s better rates, it might be the best move your business needs this year. Contact our Energy Experts to learn more.