Don’t Make Being Micro into a Massive Problem
There are roughly 1.6 million micro-business energy consumers in Great Britain; but what is a micro-business? Perhaps a small cheese shop for mice? They are small, but usually not in that way; your company is a micro-business if:
| Employees AND Annual Turnover | <10 employees, or their full time equivalent <£2 million annual turnover |
| Electricity Use | <100,000 kWh per year |
| Gas Use | <293,000 kWh per year |
As a guide, using that amount of electricity or gas would cost around £10-12,000 per fuel per year (excluding VAT2 and the Climate Change Levy). Your business must qualify individually for both fuel thresholds in order to be considered a micro-business for dual fuel supply. If your company only meets one, then it is only a micro-business in the respect of fuel and not gas (vice versa).
If you’re still unsure whether you qualify as a micro business or not you can call 0800 051 5770 to get further guidance.
When you contact or change, a supplier, they may ask you for the above information (if they do not already have it). This is because suppliers must take all the reasonable steps to identify whether you are a micro-business. Some suppliers may just automatically treat you as a micro-business, and some extend the micro-business rules to larger businesses, too.
So, why does it matter?
Ofgem established the concept of a micro business in 2010 because they believed that some businesses in the UK needed additional protection. This protection extends across issues in the energy market such as ensuring fair contracting, billing and complaints.
The rules changed in 2015 to those outlined in this article. Ofgem altered the criteria that decided what constitutes what a micro business is in the hope that the more inclusive definition would help ‘catch’ more businesses.
Under the rules micro-business energy customer is privilege to:
1. a limit on back billing,
2. limits on rollover contracts,
3. clearer terms and conditions,
4. improved clarity of invoicing and end dates.
As aforementioned, some suppliers carry over these policies to all their SME
(Small and Medium Enterprises) customers.
To find out your supplier’s policies in this regard, visit Ofgem’s dedicated
supplier pages. They have a range of information which helps you navigate the energy market as a consumer.
Contract Clarity
The simplification of the contract renewal process for micro business in 2015 made it easier for micro business customers to compare prices and look for better deals at the end of their fixed-term contracts.
The changes resulted in:
1. the maximum notice period for terminating a contract with an energy
supplier if you’re a micro business being reduced from 90 to 30 days,
2. suppliers being forced to include current prices, new prices and annual consumption on renewal letters for fixed-term contracts (to make deal comparison easier),
3. suppliers having to take all reasonable steps to acknowledge a termination notice within five working days of receipt.
Micro businesses on fixed-term contracts should now receive a renewal letter from their supplier around 60 days before the contract ends. If you have a fixed-term contract your supplier must print your contract end date,
and the last date you can terminate on your bill or statement of account.
When you agree a supply contract the supplier must send you the terms and
conditions and the renewal terms within 10 days.
Further Protection for Micro Businesses
TOP TIP FROM THE PROFESSIONALS
It is important you check the terms and conditions of your contract to make sure you know when it ends and when you have to give notice.
Third Party Intermediaries
Ofgem is the regulatory body of the energy market. Thus, they are responsible for Retail Market Reviews. Within these they regularly examine the role of Third Party Intermediaries (TPIs) and consider any measures which may be appropriate to enforce in order to protect consumers.
Standards of Conduct – Ensuring Suppliers Conform
Ofgem measure compliance with the Standards of Conduct (SOC) in a number of ways. There will be regular stakeholder engagement with suppliers to talk about their policies, practices, monitoring and reporting arrangements.
They will also review suppliers’ ‘Treating Customers Fairly’ statement which
acts as their annual communication of the SOC. The SOC also obliges suppliers to inform customers on an annual basis about the main actions taken and being taken by the supplier in line with the objectives of the SOC. They also must communicate what services and treatment a customer can expect from the supplier, and any representative.
Where Can I Find More Information?
| Information from Ofgem On… | See |
| Contracts | Here |
| Switching | Here |
| Complaints and Enquiries | Here |
| Third Party Intermediaries | Here |
You may also find it useful to visit Citizen’s Advice for impartial advice on handling your energy supply.