Energy Contracts and Your Micro-Business

Did you know that a staggering 5.3 million micro businesses are thriving in the UK, making up a whopping 95% of all businesses in the country? But the question remains: is your business one of them? Fear not, as we delve into the fascinating world of micro businesses and discover how significant changes in the energy market will revolutionize the way brokers and suppliers interact with these small but mighty enterprises. Get ready to be inspired!

A tiny seedling in the world of commerce, a micro business sprouts from humble beginnings, with just a handful of hardworking individuals nurturing its growth. But what exactly makes a business micro? According to the tax man at HMRC, it's a company with no more than nine employees. However, the registrar of companies, Companies House, prefers to call these little businesses 'micro entities', and requires them to meet two out of three specific conditions, including a turnover of no more than £632,000, a balance sheet total of no more than £316,000, and no more than ten employees. Regardless of the definition, micro businesses are known for their scrappy spirit and tenacity in the face of larger competitors

The definition that truly piques our curiosity is the one wielded by Ofgem. As the overseer of energy in the United Kingdom, they adopt the EU's interpretation and clarify that a micro business is one which guzzles no more than 100,000 kWh of electricity annually or 293,000 kWh of gas annually - for non-domestic spaces only, mind you. And if you happen to fall under this category, rejoice! The regulator has heralded some modifications that should facilitate your leap to a superior business energy contract.

As a microbusiness owner, your energy supplier should provide you with vital information before signing up for a new energy plan. This includes the plan's key terms, regardless of whether you use a broker or go straight to the supplier. Additionally, within 10 days of agreeing to the plan, you should receive a copy of the contract and its terms and conditions, including renewal terms for fixed term plans. 

To ensure you're always in the know, your supplier should also furnish you with information on your contract end date and the latest date to give notice to end a fixed-term contract. When it's time to renew your contract, you can expect a timely renewal reminder outlining your options. This reminder should arrive around 60 days before your contract ends, along with details of your current rates and any new rates on offer. 

If you decide to cancel your contract, you must notify your supplier while you have at least 30 days remaining on your current contract, and they will confirm your cancellation within five working days. The Ofgem Faster Switching rules make switching business energy suppliers a breeze, with the entire process taking no more than five working days. For more on when to switch business energy suppliers, check out our guide.

As a tiny business, you may already be familiar with the distinct set of regulations and safeguards in place. But brace yourself for a welcome extension of these perks come October 1st, 2021:

Expect crystal-clear transparency – you'll receive all the pertinent details about your energy contract, including third-party expenses when entering and exiting the deal, and even the pesky broker fees.

No more lengthy termination notices – your energy supplier will no longer be able to dictate a 30-day notice period to put an end to your microbusiness energy contract. Only in the event of a commercial agreement expiry or rollover tariff will this still apply.

Take advantage of better guidance and information about your consumer rights and market operations through access to the all-knowing Citizens Advice.

Come December 1st, 2022, you can enjoy a smoother resolution for broker disputes with the introduction of approved alternative dispute resolution schemes. This will limit your suppliers' options to work only with brokers that have signed up for these approved schemes.

Note that if you've been in debt with your supplier for over 28 days, you won't be able to switch deals until the debt is cleared. Also, you cannot compare energy deals until your current one enters its switching window.

But, fear not! Our energy-experts at Originate are always ready to help. A simple postcode is all we need to start our comparison, and we'll guide you through the quotes to ensure you make an informed decision.

Once you've found the deal that suits your business best, we'll handle everything from there with our state-of-the-art Digital Renewal Service. No more worrying about being rolled over into an evergreen contract. It's smooth sailing from here on out!