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Microbusiness: The facts you need to know

When it comes to a business saving money on its energy supply there are facts business owners need to know and the first one is – are you a microbusiness?

That’s because a microbusiness is treated differently by the energy supply market and they have different business contracts.

Maximum notice period for a microbusiness reduced

The energy regulator Ofgem brought in rules that include the maximum notice period for a microbusiness being reduced from 90 days to switch business energy suppliers to just 30 days.

In addition, business energy suppliers must tell small firms 60 days before their fixed term contract ends how much energy they are using every year and give details of how their current deal compares with prices being offered by competitors.

Ofgem says this information helps put small businesses in a better position for renegotiating cheaper energy deals with suppliers.

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Determine whether a small business is defined as a microbusiness

To help determine whether a small business is defined as a microbusiness, Ofgem says there are now 1.6 million microbusiness energy consumers in the UK who meet this criteria:

  • A microbusiness employs fewer than 10 employees, or full-time equivalents
  • The microbusiness has an annual turnover of less than £2 million
  • The business should not consume more than 100,000 kW of electricity every year
  • The business should not consume more than 293,000 kW of gas a year

Ofgem says that any business that is using this much energy is spending around £10,000 every year, excluding VAT, on their energy needs.

To help small businesses, energy suppliers are required to take reasonable steps to identify whether their customer is a microbusiness or they may simply decide to automatically treat their small business customers as a microbusiness anyway to offer better energy supply rates for the business.