Ofgem reserves a separate rulebook for the smallest non-domestic energy customers, and it is narrower than most owners realise. A site that qualifies as a microbusiness picks up specific protections on rollovers, contract paperwork and dispute resolution. A site that misses the threshold by one employee or one kWh sits inside the general commercial regime, where almost none of those protections apply.
TL;DR
- Ofgem defines a microbusiness as a site meeting one of three thresholds: fewer than 10 full-time-equivalent employees and annual turnover under 2 million pounds, or annual electricity use under 100,000 kWh, or annual gas use under 293,000 kWh.
- Microbusiness protections include a ban on automatic rollovers onto new fixed terms, a 14-day cooling-off period on telephone sales, principal terms in writing, and contract-end notice rules under Ofgem Standard Licence Conditions.
- Free access to the Energy Ombudsman (Ombudsman Services Energy) is included; awards can require a supplier to act, apologise, or pay compensation up to 10,000 pounds.
- Microbusinesses still do not get the domestic price cap, and broker commission remains legal until Ofgem's non-domestic third party intermediary rules take fuller effect during 2026.
- Supplier classification is determined at quote stage; owners can ask, in writing, which threshold the supplier has applied and request reclassification if usage data supports it.
Last reviewed: May 2026
How Ofgem defines a microbusiness
The definition sits inside Ofgem's Standard Licence Conditions for gas and electricity suppliers. A site qualifies if it meets any one of three tests, not all three. The first test is a headcount and turnover combination: fewer than 10 full-time-equivalent employees and annual turnover below 2 million pounds. The second is electricity consumption under 100,000 kWh per year. The third is gas consumption under 293,000 kWh per year. Hitting one threshold is enough.
The thresholds are independent on purpose. A village pub with three staff and 180,000 kWh of electricity still counts because of the headcount test. A small textile workshop with twelve staff but only 70,000 kWh of electricity still counts because of the electricity test. The structure catches both labour-light, energy-heavy sites and labour-heavy, energy-light sites.
Classification is made by the supplier at the point of quote.
The supplier looks at the meter consumption history, any business information disclosed during onboarding, and the relevant supply point register data.
Owners often assume their company structure controls the answer. It does not. A limited company, a sole trader, a charity and a club can all be microbusinesses under the Ofgem definition if any threshold is met at the supply point in question.
What protections microbusinesses actually get
The microbusiness regime is built around five core protections, each anchored in the Standard Licence Conditions. The rollover ban means a supplier cannot move a microbusiness onto a new fixed-term contract automatically at the end of an existing one. Out-of-contract or deemed rates can still apply if no new deal is signed, but a fresh fixed lock-in cannot be imposed silently. The 14-day cooling-off applies where a contract is concluded by telephone, allowing the microbusiness to withdraw inside that window without penalty. Principal terms in writing means the supplier must set out unit rate, standing charge, contract length, termination terms and any auto-renewal language clearly before the contract starts. Contract-end notice rules require the supplier to notify the microbusiness of the end date and the available choices in advance, typically through a renewal letter sent into the 30 to 90 day window before expiry. Free access to the Energy Ombudsman gives the microbusiness an external dispute route at no cost once an internal complaint has been deadlocked or has run beyond eight weeks.
The Energy Ombudsman, operated as Ombudsman Services Energy, can require a supplier to apologise, take an action, or pay compensation. The compensation ceiling for the scheme has historically sat at 10,000 pounds per case, and Ombudsman decisions bind the supplier once the customer accepts the award.
The catch is that none of these protections survive misclassification. If the supplier has logged the account as a standard non-domestic customer rather than a microbusiness, the rollover ban and the cooling-off do not apply.
What microbusinesses still do not get
Microbusiness status does not bring the domestic energy price cap. Ofgem's price cap, set quarterly under the methodology published on the price cap landing pages, covers default tariffs in the domestic market only. The Q1 2026 cap level published by Ofgem covers a typical dual-fuel household at a specific direct-debit benchmark, but no equivalent statutory cap exists for any non-domestic site, microbusiness or otherwise.
Standing charges are not separately capped on the business side either. A small site on a half-hourly electricity meter can see a daily standing charge two or three times higher than a domestic supply, even after the unit rate is competitive.
Broker commission inside the unit rate has been a long-running issue. Ofgem's non-domestic market review of third party intermediaries set out new rules during 2024 and 2025, with rule changes phased through 2026, but during the transitional period broker commission embedded in a quoted unit rate remains legal. A small restaurant signing a four-year fixed in May 2026 can still find, on reading the broker disclosure carefully, that the unit rate carries a per-kWh uplift retained by the introducer.
Bad-debt protections are limited. A microbusiness disputing a back-billing claim has a 12-month back-billing protection broadly aligned with the domestic rule, but this applies only where the supplier failed to bill correctly through fault of its own.
The renewal letter and the rollover ban in practice
Most microbusiness disputes start at renewal. The supplier sends a contract-end notice into the 30 to 90 day window. The notice sets out the current end date, the renewal offer, and what happens if the customer does nothing.
Under the rollover ban a microbusiness cannot be moved to a fresh fixed deal automatically, but it can be moved to a deemed or out-of-contract variable rate, which is almost always higher than any negotiated fixed offer. In practice this is where the protection bites and where it falls short at the same time. The protection stops the worst outcome, a silent new lock-in, but it does not stop the rate floor.
A worked microbusiness classification check
A real-style example clarifies the test. A Bristol bakery with eight staff, turnover of 1.6 million pounds, electricity use of 42,000 kWh and gas use of 85,000 kWh is a microbusiness on the headcount and turnover test alone, and it would qualify on either of the consumption tests too. A Glasgow data services firm with 25 staff, turnover of 3 million pounds, electricity use of 58,000 kWh and gas use of 22,000 kWh is still a microbusiness because the electricity consumption test is met independently. A Cardiff manufacturer with 9 staff, turnover of 5 million pounds, electricity use of 220,000 kWh and gas use of 410,000 kWh fails every test and sits in the general non-domestic regime, even though headcount alone might have suggested otherwise.
How to confirm classification with the supplier
The simplest check is a written request. A short email to the supplier's business team asking which microbusiness threshold has been applied to the account, and on what data, forces the answer into the file.
If the supplier confirms microbusiness status, the rollover ban, the cooling-off and the contract-end notice rules apply automatically. If the supplier disputes status, the microbusiness can submit evidence, typically a copy of recent annual meter consumption, payroll headcount, or filed accounts at Companies House, to support reclassification. The Energy Ombudsman has previously accepted complaints based on supplier failure to apply microbusiness rules correctly. The April 2024 Ofgem update to the microbusiness consumer standards reinforced supplier duties on classification and remedy where misclassification has caused detriment.
Comparison: microbusiness vs general non-domestic protections
| Protection | Microbusiness | General non-domestic |
|---|---|---|
| Rollover ban on fixed contracts | Yes | No |
| 14-day telephone cooling-off | Yes | No |
| Principal terms in writing | Yes | Standard contract law only |
| Contract-end notice 30 to 90 days | Yes | No |
| Free Energy Ombudsman access | Yes | Limited |
| Domestic price cap coverage | No | No |
| Standing charge cap | No | No |
| Broker commission disclosure | Phased under 2026 TPI rules | Phased under 2026 TPI rules |
| 12-month back-billing protection | Yes | Limited |
Regional and operational considerations
Regional pricing matters even inside the microbusiness regime. Distribution Use of System charges, embedded in the standing charge component, vary across the 14 GB electricity distribution regions. A microbusiness in the Southern Electric distribution area can face a noticeably different standing charge from one in MANWEB or Northern Powergrid, even on the same supplier tariff. The unit rate sits closer across regions; the daily charge does not.
Operational layout also matters at the threshold. A two-site cafe operator with separate meter point administration numbers at each location is classified per supply point, not per legal entity. One site can be inside microbusiness status while another is outside it.
The microbusiness regime, taken in full, is a narrow but real protection layer. It stops the worst auto-rollover outcomes, it adds paperwork rules, and it opens the Ombudsman door at no cost. It does not cap the unit rate, it does not cap the standing charge, and it does not remove the broker uplift during 2026. Owners who understand both halves of that statement spend less time arguing renewal letters and more time pricing the market.
Editorial disclaimer. KaelTripton is an independent UK publisher. This article is editorial, not personal financial or energy procurement advice. Rates, caps, grant levels and supplier offers move; verify any figure with the named primary source before acting on it. KaelTripton does not earn commission from suppliers or brokers mentioned.
Frequently asked questions
Does microbusiness status apply per site or per company?
It applies per supply point. A company with multiple meters can have one site classified as microbusiness and another outside the threshold, depending on consumption and staffing at each location.
Can a microbusiness be auto-renewed onto a new fixed deal?
No. Ofgem Standard Licence Conditions ban automatic rollover onto a new fixed term for microbusiness customers. A deemed or variable out-of-contract rate can still apply if nothing is signed.
What can the Energy Ombudsman award?
Ombudsman Services Energy can require a supplier to take an action, apologise, or pay compensation. The published scheme has historically capped financial awards at 10,000 pounds per case.
Do microbusinesses get the domestic price cap?
No. Ofgem's price cap covers default domestic tariffs only. There is no equivalent statutory cap for non-domestic sites.
How long does the supplier have to send a contract-end notice?
The notice falls inside the 30 to 90 day window before contract end under Ofgem rules, giving the microbusiness time to take alternative offers to market.
When does broker commission disclosure become mandatory for SME contracts?
Ofgem's non-domestic third party intermediary rule changes are phased through 2026 following the 2024 and 2025 policy statements. During the transitional period some embedded broker uplift in unit rates remains legal.
Sources
- Ofgem - energy advice for businesses (microbusiness protections, accessed May 2026)
- Ofgem - energy policy and regulation (Standard Licence Conditions reference, May 2026)
- Ofgem - non-domestic market review, third party intermediaries rule changes (2024 to 2026 phased rollout)
- Ombudsman Services Energy - scheme rules and award limits (accessed May 2026)
- Citizens Advice - energy supply guidance for small businesses (May 2026)
- Ofgem - energy price cap (domestic only, Q1 2026 methodology)
