Better protection for businesses

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Ofgem wants to increase protection for business customers. In January 2010 we introduced new rules to help Britain’s smallest businesses (micro-businesses) to engage more in the market. Our 2008 investigation into the energy retail market showed that awareness among small businesses of when they can notify their supplier that they want to switch after their fixed term deals come to an end is low. The rules tackle this by requiring suppliers to provide much clearer information on contract terms and conditions so that micro-businesses can understand this information and are not rolled onto fixed term deals without realising it.

Following our retail market review last year we want to further increase protection for businesses. We are proposing to extend the existing rules for micro-businesses mentioned above, so that larger small businesses are covered.

We are also proposing new rules to better protect businesses from unfair sales practices. We do not currently have a remit to take enforcement action against brokers which deal with businesses, so we have asked Government to give us more powers to enforce against mis-selling in the business market. We want customers to have confidence in energy brokers and we are exploring what we can do to help this. We are also proposing a new licence condition to regulate how non-domestic business suppliers and their representatives interact with business customers. And we are looking closely at the actions of suppliers to make sure that they are following the rules when they prevent a customer switching to another supplier.

We published our latest proposals for consultation on 26 October 2012. Once the consultation closes on 21 December 2012 we will consider responses and then look to implement final proposals in the summer of 2013.

What are the existing rules on micro-business contracts?

They state that if you are a micro-business, your supplier will contact you setting out the details of its new fixed-term offer on a date that, as a minimum, is approximately 60 days before the end of your contract.

Once you receive this letter you will have, as a minimum, approximately 30 days to contact your supplier and let it know:

if you want to sign up to its new offer, or
if you want to switch to a new supplier once your deal ends.

Read our questions and answers section on micro-business contracts to learn more about these rules.

How do I know if my business is covered?

A micro-business is as a company which meets one of the following criteria (as set out by Government)

consumes no more than 200,000 kWh of gas a year, or
consumes no more than 55,000 kWh of electricity a year, or
has fewer than ten employees (or their full-time equivalent) and also has an annual turnover or annual balance sheet total not exceeding €2m.

Your company can be defined as a micro-business for just gas, just electricity, or for both. The gas or electricity must be supplied on non-domestic premises.