Guidance for Microbusinesses

Ofgem launched the Microbusiness Strategic Review in May 2019. The review identified several key areas of consumer harm requiring intervention, including microbusinesses’ access to competitive offerings, dissatisfaction with some brokerage services and poor practice by a minority of brokers.

To address this protection gap, following consultation and Ofgem's decision in March 2022, a package of policy measures to address these harms is being introduced. Effective from 1 October, supply licence conditions will be strengthened, especially surrounding the provision of principal contractual terms. This is to ensure consumers receive key information, such as Third Party Costs. A new supply licence condition is also being introduced; when supplying energy to microbusinesses suppliers are required to only work with brokers which have signed up to a qualifying Broker Alternative Dispute Resolution (ADR) scheme. The Broker ADR scheme will come into force on 1 December 2022.

Provision of principal contractual terms, including Third Party cost information:

• Requiring that Principal Terms are brought to the attention of the consumer both pre-contract entrance (in some form) and post-contract entrance (in written form) in all cases. This will ensure that key information about a new contract, including any brokerage costs, is always brought to the attention of the consumer.
• Suppliers and brokers must ensure that consumers are fully informed about the nature and costs associated with a contract they are being offered.
• Information on brokerage costs must be provided to microbusinesses via the Principal Terms, for all contracts, and this information must be presented as a total cost in pounds/pence covering the duration of the contract.

Broker dispute resolution:

• The supply licence conditions require that suppliers must only work with brokers signed up to a qualifying Alternative Dispute Resolution (ADR) scheme on and from 1 December 2022.
• An ADR scheme offers independent dispute resolution, working with brokers and microbusinesses to offer impartial resolution. You can take your case to the Ombudsman if you have reached a “deadlock” position, where the parties involved aren’t able to agree a resolution and have reached the end of the complaint process or 8 weeks have passed without an agreement being made.
• Currently the Ombudsman Services is the sole provider but other providers may emerge in the future. Find out more about Ombudsman Services.
• View Frequently Asked Questions on the ADR scheme.

Banning termination notification requirements:

• Suppliers will be prohibited from requiring microbusinesses to provide notice of their intent to switch, except for Evergreen contracts.

View information on the different types of business contracts.

Some of the key differences between a microbusiness and other business contracts include:

• For a microbusiness a rollover contract cannot exceed 12 months. A roll over contract is normally applied if you’ve not agreed a different contract before your current contract end date and there are no renewal provisions.
• A Microbusiness wishing to terminate their roll over contract is able to do so without being required to give any form of notice to terminate. The Microbusiness is entitled to take steps to changing to other suppliers without facing a termination fee, being liable to increased standing charges, unit rates or any other charges related to the Microbusiness contract.
• For microbusiness customers, suppliers must:
  • put the contract end date and notice period on all bills for fixed-term contracts. The maximum notice period to end a microbusiness energy contract is 30 days.
  • allow you to tell them if you want to switch at the end of your contract at any time before the notice period.
• If you are a Microbusiness and receive a bill for energy used more than 12 months ago, contact your supplier and explain that you understand you are protected by the back-billing rules. This means you should not be charged for any unpaid energy use more than 12 months ago if you have not had an accurate bill (or statement of account) for this before.
  • This includes situations where a supplier increases your direct debit because it was set too low.
  • This does not apply if you have behaved obstructively or unreasonably, preventing accurate billing. This could include:
    • Blocking meter readings at your property on more than one occasion
    • Stealing gas or electricity

When we refer to Third party intermediaries (TPIs) we are referring to organisations or individuals that give energy-related advice, aimed at helping you to buy energy and/or manage your energy needs. TPIs include switching sites, energy brokers and any company that offers support with energy procurement.

Whether you approach a TPI directly or they contact you, you should not feel under pressure to use their services. Your energy supply contract will always be with an energy supplier: the TPI does not supply your energy. Ensure you work with a reputable TPI that you are comfortable working with.

If you use a TPI the monthly rate you pay to your energy supplier could incorporate the TPI fee, depending on your TPI’s agreement with a supplier. It’s best to ask for all terms of a TPI agreement and the energy contract offer to be sent in writing before you agree to it, so you are clear on the terms. As a Microbusiness, from 1 October 2022, following the Microbusiness Strategic Review decision, any broker or third-party fees must be set out separately in your principle terms.

The TPI industry is not regulated by Ofgem. But as of 1 December, any TPI working with microbusiness customers can only engage with a supplier to secure contracts on the microbusiness’s behalf if they are a member of an accredited ADR scheme. Find out more about working with TPIs and what to do if you are not satisfied with a TPI and wish to make a complaint.

Citizens Advice

Citizens Advice can help your microbusiness with a number of issues including advice about switching, helping you find out what type of contract and debt advice amongst other things.

Freephone 0808 223 1133 or use their online webchat from 9am-5pm. For textphone, dial 18001 followed by the helpline number.

To contact a Welsh-speaking adviser freephone 0808 223 1144.

Citizens Advice provide information on what to do if your small business can’t afford its energy bills and on switching your small business to a new energy supplier.

Advice Direct Scotland

If you are a microbusiness and are having an issue with your supplier or struggling to pay, energyadvice.scot, Scotland’s national energy advice service run by Advice Direct Scotland, can provide free, practical advice and information on energy-related matters to the citizens Scotland.

Freephone 0808 196 8660 or use their online webchat Monday to Friday, 9am-5pm

Business Debtline

Business Debtline is a charity giving free and independent debt advice over the phone and online

Call on 0800 197 6026 or webchat with an adviser. Monday to Friday: 9am - 8pm, webchat closes at 6:30pm.