Micro-business consumers: your questions answered

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Contracts - what is the earliest date that a customer can provide notification that they wish to terminate a contract?

We have put in place changes that enable micro business customers to give termination notice at any time during their contract, in order to stop suppliers requiring termination notice only during a narrow time period (typically 30 days).

Suppliers must also clearly state the contract end date and notice period on bills and statements of account for micro business consumers on fixed term contracts.

These changes must be implemented by 31 March 2014.

Micro-business - what is a micro-business? Who is captured by the new definition of a micro business?

From 31 March 2014, a non-domestic consumer is defined as a micro business if they meet one of the following criteria:

  • Employs fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million, or
  • Consumes not more than 100,000 kWh of electricity per year, or
  • Consumer not more than 293,000 kWh of gas per year.

To put this in context, a business consuming these amounts of electricity and gas would pay about £10,000-£12,000 per year for each fuel, excluding VAT.

We have increased the energy consumption part of this definition. The threshold was previously 55,000 kWh per year for electricity and 200,000 kWh per year for gas.

Standards of Conduct - who will be covered by the non-domestic SOCs and what interactions will they cover?

Under the SOC suppliers have to ensure they treat micro business consumers fairly with respect to billing, contracts and customer transfers. These three areas accounted for over two thirds of contacts to Consumer Direct in Q1 of 2012.

With regards to billing, the SOC cover the accuracy of bills, the timeframe for receiving and paying a bill, and any communications about billing. The actual amount of a bill is not covered by the SOC.

The SOC came into effect on 26 August 2013.

Standards of Conduct - what approach will Ofgem take to ensure suppliers are taking steps to comply with the SOC?

We will measure compliance with regards to the SOC through a number of ways. This will include regular stakeholder engagement with supplier to talk about their policies, practices, monitoring and reporting arrangements.

We will also review suppliers’ annual communication of the SOC, known as their ‘Treating Customers Fairly’ statement. The SOC includes an obligation on suppliers to inform consumers, on an annual basis, the main actions taken and being taken by the licensee in line with the objectives of the SOC and what services and treatment a consumer can expect from the licensee and any representative.

Third Party Intermediaries - what steps are Ofgem taking to protect consumers from exploitation by Third Party Intermediaries (TPIs)?

As part of our Retail Market Review we committed to examine the role of TPIs and consider any appropriate regulatory measures for this aspect of the retail energy market.

We have published a simple guide to dealing with TPIs as a micro-business: Third Party Intermediaries: what your business needs to know

For more information on our wider work relating to TPIs go to: Third Party Intermediaries (TPI) Programme